What Amazon’s Jeff Bezos Should Expect From Tech Antitrust Audience

• The Amazon CEO will testify before an antitrust committee in Congress for the first time on Wednesday, alongside Sundar Pichai, Tim Cook and Mark Zuckerberg.
• While experts told Business Insider they expect the questioning to be primarily related to competition issues, Bezos will likely be questioned about everything from how Amazon treats third-party sellers to the company’s approach to acquisitions.
• The hearing may come at a difficult time for Bezos, who recently added $ 13 billion to his net worth in a single day, as the coronavirus is still on the rise in some parts of the U.S., contributing to widespread job loss. .
• Bezos should minimize Amazon’s size and power in favor of highlighting the benefit the company brings to small businesses and the communities in which it operates.
• Visit the Business Insider home page for more stories.

He appeared in a Star Trek movie, built a $ 42 million, 10,000-year-old clock in the desert, and survived a helicopter crash. But on Wednesday, Jeff Bezos will do something he has never done before: testify before Congress.

The founder and CEO of Amazon, 56, was called to testify before the House of Representatives Judicial Committee antitrust subcommittee, which spent last year examining the business practices and market power of the country’s largest technology firms. .

Although Bezos is likely to testify virtually, via video conference, he will be flanked, in a way, by his colleagues: Apple CEO Tim Cook, Google and Alphabet CEO Sundar Pichai, and Facebook CEO Mark Zuckerberg. .

All of the other Bezos CEOs have previously appeared before Congress in some way. However, more than 25 years after founding Amazon, Bezos has somehow avoided a hearing in Congress, until now.

His debut appearance is sure to spark a wide range of questions from lawmakers eager to delve deeper into the company’s vast business empire, explore its dominance of e-commerce, and highlight Bezos’ power and influence.

Whether Bezos appears on Capitol Hill in person or on a video screen, the only thing that is virtually certain is that he will be on the bench.

Here are some of the main issues and questions to keep in mind when Bezos testifies, starting at noon EST on Wednesday, July 29:

Questioning Amazon’s domain

John Moore / Getty Images

While committee members are likely to ask questions that apply to all the disparate businesses represented by the four CEOs, Bezos should expect Amazon to be selected for some difficult lines of questions.

Avery Gardiner, general counsel and senior member of competition, data and power at the Center for Democracy and Technology, a nonprofit organization working to shape technology policy, told Business Insider that she hopes Bezos, in First, you need to provide answers to queries. related to Amazon’s private label business.

An April Wall Street Journal report found that Amazon was using trend data obtained from outside vendors to develop its own own-brand products. While offering own-brand products in stores is nothing new, the committee is likely to explore whether Amazon wields more power as a digital market than a physical store.

By extension, Bezos will likely be asked who he sees as Amazon’s most robust competitors; In that case, Gardiner said, we’re likely to hear a lot about how Amazon competes with Walmart.

Gardiner said he also expects to see Bezos, Zuckerberg, Cook and Pichai questioned about their companies’ acquisition strategies, given that CEOs are generally heavily involved in merger and acquisition activities. It’s a timely line of questions since the Wall Street Journal reported last week that Amazon implemented a strategy for meeting and investing in startups, only to then manufacture products that directly compete with them.

“There has been concern that tech giants are using acquisitions to eliminate small competitors, so members of Congress may ask CEOs that they will actually have the right, relevant people to come up with the answer,” said Gardiner.

Reuters / Fred Greaves

Stacy Mitchell, co-director of the Institute for Local Self-Reliance and an outspoken critique of Amazon’s effect on small businesses, told Business Insider that she expects Bezos to face harsh interrogation from the committee. Looking at last summer’s antitrust hearing as an example, in which lawmakers questioned senior executives from all four companies, Mitchell noted that they dedicated a significant number of aggressive questions and follow-ups to Amazon: He expects Bezos to receive the same treatment.

Amazon shipping business will be in the spotlight

Mitchell told Business Insider that he predicts Bezos will be questioned about Amazon’s logistics and shipping business, pointing to Fulfillment by Amazon, a service where sellers send their products to a distribution center to be packed and shipped, as a way. in which Amazon exercises power over sellers. A March report by Jason Del Rey from Recode found that Amazon was hiding products from vendors that offered faster shipping but didn’t use Amazon’s FBA service, which the company said was unintentional.

“The algorithm that controls who gets the ‘Buy Box,’ who is chosen as the default vendor for a particular product, seems to include a couple of components that really make it essential to use Fulfillment by Amazon,” said Mitchell. “That is one way that it has effectively harnessed its monopoly power as an online marketplace to build a dominant business in a completely different industry.”

Mitchell also predicts that Bezos will be questioned about counterfeit products on the Amazon site, the tactics he uses to encourage sellers to offer lower prices on Amazon on other platforms, and whether he is using sponsored ads to squeeze more money from vendors.

However, what we should not expect is a bombast from public officials. In past hearings, lawmakers seemed to use the opportunity to ask CEOs like Zuckerberg or Pichai about issues unrelated to the issue at hand. But Mitchell believes the antitrust hearing will be different because it is the culmination of a year-long investigation into these companies.

“What I suppose is on the committee’s mind is getting to the bottom of the questions Amazon has so far avoided answering,” Mitchell said. “I anticipate that lawmakers won’t necessarily focus on the most important types of questions because they want to put Jeff Bezos under oath to compel him to actually answer a set of questions they have as part of this investigation.”

‘Everything is interconnected’

Tommaso Boddi / Getty Images

Bezos’ testimony comes in what could be a challenging time for the CEO. Earlier this month, Bezos added $ 13 billion to his fortune in a single day, his biggest one-day gain. With a net worth of close to $ 190 billion, he is still on his way to becoming the first trillionaire by 2026.

While Mitchell said Bezos is unlikely to face direct questions about his wealth, it is becoming increasingly difficult to separate his wealth and Amazon’s power.

“It has basically built a large toll booth, or several large toll booths in various streams of commerce. It is a very remarkable and incredibly powerful place,” Mitchell said. “I think there is this relationship between the power of Amazon’s guardians as the central infrastructure for the economy and the company’s ability to impose those tolls and therefore Bezos’ wealth. I think everything is interconnected.”

The problem becomes more thorny due to the continuing financial impacts of the coronavirus crisis, which resulted in nearly 53 million unemployment claims filed in recent months, more than during the Great Recession. While Amazon expanded hiring and raised wages early in the pandemic, it also fired workers after they spoke about working conditions at company facilities during the outbreak. And it’s not the first time Amazon has come under fire for its treatment of workers: Warehouse workers and delivery drivers have long complained about the exhausting cost of working for the company.

Bezos’ personal wealth may make him a target, but he could change the script and become a small business savior.

While not necessarily antitrust issues, Bezos may not be able to avoid juxtaposing his wealth with the humans who feed Amazon.

REUTERS / Joshua Roberts

While Bezos will be on the bench, however, we can also expect him to come prepared to delay some of the issues in question. In the past, Bezos has not backed down from his goal to continue to expand Amazon’s business, and has touted the ability of large companies to revolutionize products and industries in a way that benefits consumers. While receptive to scrutiny by Amazon’s businesses, Bezos has also argued that politicians and lawmakers should also not “smear” big business.

“All great institutions of any kind will and should be examined. It is not personal. It is something we want to see happen as a society,” Bezos said during an interview at the Economic Club in Washington, DC in 2018. “There are certain things that only big companies can do it. No one in their garage is going to build a low-fiber Boeing 787. “

Gardiner predicted that Bezos will minimize Amazon’s size and power in favor of talking about the benefit the company brings to its suppliers and the communities in which it operates.

“I hope we will hear a lot about empowering small businesses to gain a broader reach for their products,” said Gardiner. “I think we will hear about the efforts around COVID to stop the pandemic and the donations they have made in their local communities. I hope we will hear a lot from Amazon about the benefits of free shipping and the ability to shop where the home is important, particularly in a pandemic. “

And given the high-profile nature of the audience and the current cultural moment, more people are likely to pay attention. Particularly given the Bezos customer obsessed mantra, their responses are likely not just for the benefit of the congressmen and women present, but also for Amazon customers.

“They have an opportunity to stand up and say what they do that they think benefits Americans,” said Gardiner. “I think [he] It will be great to find opportunities to say all the things they do that they want Americans to hear. “