Amazon denies reports it started a business just to spy on rivals

[midian182]

A hot potato: Amazon's position at the top of the e-commerce market is one it wants to keep, even if – according to a new report – that means engaging in some sneaky tactics. The tech giant is said to have started a company so it could sell items on competitors' marketplaces to better understand how they ran their businesses - or to spy on them, to put it another way. Amazon, of course, disputes parts of the report.

Amazon set up a company called Big River Services in 2015 that sold items such as t-shirts, shoes, and beach chairs, writes The Wall Street Journal, part of Project Curiosity, a program designed to compare rival businesses against Amazon's own.

Big River's items were bought and sold on Best Buy, Overstock, and Walmart. It also joined FedEx, UPS, and other logistics services.

Amazon employees at Big River were told to take screenshots or photos of competitors' pricing, cataloging, and advertising systems, they were even sent to rivals' conferences to learn "exclusive information," the WSJ writes.

The Big River staff were told to hide their association with Amazon, minimizing the number electronic records. The Journal writes that Amazon executives had to view printed versions of reports and weren't allowed to keep them. The employees also used non-Amazon email addresses when communicating with other companies.

Amazon reportedly wanted to ensure the company and employees said the right thing should Project Curiosity ever be uncovered. An Amazon internal crisis management paper told workers to repeat the line, "We make a variety of products available to customers through a number of subsidiaries and online channels," if they were confronted.

There were a few signs that Big River and Amazon were connected. Employees of the former listed Amazon as their employer on their LinkedIn pages. There was also Big River's Japanese streetwear brand, called "Not So Ape," listing a Seattle address on its webpage. Furthermore, Big River's registration documents to the Washington Office of the Secretary of State included the address for Amazon's headquarters. The name Big River is a pretty big hint, too; it may as well have been called Strong Female Warrior.

Not So Ape clothing

Amazon has responded to the Wall Street Journal story by telling Quartz that Project Curiosity, which had a name change to Small Business Insights, is used to better understand how third parties experience its own platform more so than its rivals'. Amazon says this is evidenced by the fact that 70% of Big River's revenue comes from Amazon Stores rather than competitors. The company also told Business Insider that benchmarking, a term used for comparing a company to its competitors, is a common industry practice.

The reason Big River was a secret was to ensure that its team had real-world experience as a small business would through its interactions, Amazon said. It added that it had not identified any instances of an Amazon employee having FedEx pricing information prior to the launch of FedEx Fulfillment or using the information to adjust its pricing or pricing discussions with any sellers.

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Amazon denies reports it started a business just to spy on rivals

 

[Nelson28]

A hot potato: Amazon's position at the top of the e-commerce market is one it wants to keep, even if – according to a new report – that means engaging in some sneaky tactics. The tech giant is said to have started a company so it could sell items on competitors' marketplaces to better understand how they ran their businesses - or to spy on them, to put it another way. Amazon, of course, disputes parts of the report.

Amazon set up a company called Big River Services in 2015 that sold items such as t-shirts, shoes, and beach chairs, writes The Wall Street Journal, part of Project Curiosity, a program designed to compare rival businesses against Amazon's own.

Big River's items were bought and sold on Best Buy, Overstock, and Walmart. It also joined FedEx, UPS, and other logistics services.

Amazon employees at Big River were told to take screenshots or photos of competitors' pricing, cataloging, and advertising systems, they were even sent to rivals' conferences to learn "exclusive information," the WSJ writes.

The Big River staff were told to hide their association with Amazon, minimizing the number electronic records. The Journal writes that Amazon executives had to view printed versions of reports and weren't allowed to keep them. The employees also used non-Amazon email addresses when communicating with other companies.

Amazon reportedly wanted to ensure the company and employees said the right thing should Project Curiosity ever be uncovered. An Amazon internal crisis management paper told workers to repeat the line, "We make a variety of products available to customers through a number of subsidiaries and online channels," if they were confronted.

There were a few signs that Big River and Amazon were connected. Employees of the former listed Amazon as their employer on their LinkedIn pages. There was also Big River's Japanese streetwear brand, called "Not So Ape," listing a Seattle address on its webpage. Furthermore, Big River's registration documents to the Washington Office of the Secretary of State included the address for Amazon's headquarters. The name Big River is a pretty big hint, too; it may as well have been called Strong Female Warrior.

Not So Ape clothing

Amazon has responded to the Wall Street Journal story by telling Quartz that Project Curiosity, which had a name change to Small Business Insights, is used to better understand how third parties experience its own platform more so than its rivals'. Amazon says this is evidenced by the fact that 70% of Big River's revenue comes from Amazon Stores rather than competitors. The company also told Business Insider that benchmarking, a term used for comparing a company to its competitors, is a common industry practice.

The reason Big River was a secret was to ensure that its team had real-world experience as a small business would through its interactions, Amazon said. It added that it had not identified any instances of an Amazon employee having FedEx pricing information prior to the launch of FedEx Fulfillment or using the information to adjust its pricing or pricing discussions with any sellers.

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Amazon denies claims it started a business just to spy on rivals

Project Curiosity sounds shady! Even if Amazon insists it was to understand the seller experience, going undercover with a fake business selling on competitor platforms and hiding its connection feels like there's more to the story. Benchmarking is one thing, but fake identities and secret reports raise eyebrows. What do you guys think - clever business tactic or sneaky spying?

 

[Uncle Al]

Well, that's nothing new in the business world, dozen's of corporations still actively engage in such activities BUT it certainly should be illegal and if so, they need to enforce the law across the board. Far too many corporations are being allowed to get away with murder without the government taking ANY action. Where is our DOJ on this one???

 

[Endymio]

Project Curiosity sounds shady! ...going undercover with a fake business selling on competitor platforms

The business was selling real products to real consumers. What's "fake" about that?

dozen's of corporations still actively engage in such activities BUT it certainly should be illegal.

LOL, why on earth should it be "illegal"? A business watches its competitors to (a) learn policies and practices that it might copy to save money, (b) to find instances where they're being underpriced, so they have the opportunity to match prices to increase sales, or (c) to find which items are most popular, so they might choose to create a competitive product. All those cases help consumers.

 

[Lew Zealand]

Well, that's nothing new in the business world, dozen's of corporations still actively engage in such activities BUT it certainly should be illegal and if so, they need to enforce the law across the board. Far too many corporations are being allowed to get away with murder without the government taking ANY action. Where is our DOJ on this one???

Some people see that as "big government", ie: a waste of money.

 

[brucek]

The Journal writes that Amazon executives had to view printed versions of reports and weren't allowed to keep them.

If I'm on the jury and I believe this happened, this is where I become convinced the person who made this rule intended to break the law, and the executives who were OK with those conditions were willing to be part of it.

The strange thing is the rest of it doesn't necessarily sound criminal to me, unless there was fraudulent paperwork filed.

But the first part is actually a really, really big problem in my mind. I'm not that fussed by some honest competitive research. But a culture in which top executives are OK with taking action designed to shield criminal behavior from authorities is a culture that is deeply broken. If they're willing to do it for the relatively innocuous activities in this article, what else are they doing it for?

 

[nitebird]

Shady, but doesn't sound illegal? It's no different from, say, a celebrity traveling incognito to be treated the same as anyone else.

 

[Endymio]

If I'm on the jury and I believe this happened, this is where I become convinced the person who made this rule intended to break the law

What law do you believe was broken?

 

[brucek]

What law do you believe was broken?

Read the rest of my post. I don't believe competitive research to be illegal. This is the only point alleged in the article that makes me believe that someone at Amazon believed a law was being broken, and that other someones were willing to be part of that conspiracy.

The intent of my post was how unbelievably stupid anyone at Amazon was to suggest this condition or to go along with it, because it by itself turns a vague allegation of possible wrongdoing into evidence strongly suggesting all at once an underlying crime, prior intent to execute it, and conscious attempt to conceal it. (Not so much the paper distribution part, but the "can't keep it" part.)

If I was an officer or director (meaning I face personal accountability) at a company where someone presented a document to me in that manner (not involving say the design of nuclear weapons or other actual justification), my #1 goal and concern would immediately become figuring out what had broken in the culture and common sense of my company.

 

[nitebird]

(Not so much the paper distribution part, but the "can't keep it" part.)

That's more common than you might believe, for example creative companies will reference other people's works (like art) but don't keep it around to prevent plagiarism. Amazon would want to prevent accusations of price setting as well, which would be illegal, but ball parking - are we more or less expensive than our competitors? - is fine and expected of a competitive company.

 

[brucek]

That's more common than you might believe, for example creative companies will reference other people's works (like art) but don't keep it around to prevent plagiarism. Amazon would want to prevent accusations of price setting as well, which would be illegal, but ball parking - are we more or less expensive than our competitors? - is fine and expected of a competitive company.

I agree that there are this and other content categories that makes sense for. The problem here is that an honest competitive or market research report is not one of them. If I spent good money on a legitimate market study, of course I want my top executives to have full benefit of that study, including retaining access in convenient forms.

So like I said, this unusual provision for an otherwise legitimate report is what makes something smell dirty to me. I have no idea what the dirty part is yet, but that's not the point. If I'm Amazon's trial counsel, I'd be worried that if any regulator anywhere wanted to bring a criminal case for anything -- and of course someone somewhere does, for good cause or not -- this is the kind of behavior that a regular juror is going to understand and interpret as guilty conduct, even if every other legal & economic point made by both sides is otherwise incomprehensible jargon.

 

[nitebird]

If I'm Amazon's trial counsel, I'd be worried that if any regulator anywhere wanted to bring a criminal case for anything -- and of course someone somewhere does, for good cause or not -- this is the kind of behavior that a regular juror is going to understand and interpret as guilty conduct, even if every other legal & economic point made by both sides is otherwise incomprehensible jargon.

Which brings us back to, how can any of this be illegal? The way the article is written makes it appear something criminal happened, but at worst I see it being "unnecessarily shady" like a child playing at being a spy. They wanted to do something legal but in the attempt to be inconspicuous at it, they stood out more. It's kinda funny in all honesty.

 

[brucek]

like a child playing at being a spy. They wanted to do something legal but in the attempt to be inconspicuous at it, they stood out more.

Yes, now we're on the same page, minus the funny part. Like they say, "It's not the crime, it's the cover-up."

I still have questions though. What else was in this report? Are top execs at Amazon accustomed to regularly making and receiving clandestine briefings in this manner? If so, why? Is at least one copy of each briefing retained in a manner accessible to legal discovery, or is an explicit goal of this process to evade legal process? Even if this particular operation is all or mostly legal, what else is going on whereby these procedures would have been put in place?

 

[yannus]

Amazon is definitely a monopoly and that isn't legal in many places but corporations own the DOJ and GOV of every country. Like microsoft or google with their browsers and search engines.... one more dirty trick.

 

[nitebird]

Amazon is definitely a monopoly and that isn't legal in many places but corporations own the DOJ and GOV of every country. Like microsoft or google with their browsers and search engines.... one more dirty trick.

I'm not sure how it is "definitely" a monopoly, there's walmart, newegg, ebay, etc

 

[Endymio]

Amazon is definitely a monopoly and that isn't legal in many places.

It's legal in the US, which is what matters. What isn't legal is *abuse* of monopoly power.

 

[anastrophe]

Amazon is definitely NOT a monopoly

Fixed that for you. They aren't even close to being a monopoly. "Big" is not equivalent to "Biggest". Nor is it illegal.

 

[brucek]

Not my horse race, but purely for commenter's FYI, the US FTC and the attornies general for 17 states have sued Amazon for "illegally maintaining monopoly power". The trial date is October 2026. I am not saying I agree with them:

FTC Sues Amazon for Illegally Maintaining Monopoly Power

The Federal Trade Commission and 17 state attorneys general today sued Amazon.com, Inc.

www.ftc.gov

If Amazon ever does lose a monopoly action, my guess is it will be in regards to specific markets and/or business processes, not for being a monopoly e-tailer generally (which of course it's not.) I know people most associate the Amazon brand name with their online store that sells a lot of 3rd party products plus some of their own, but the Amazon corporate empire does a lot more than just that and at various times has been closer to the only game in town in some of those other items.

 

[anastrophe]

Not my horse race, but purely for commenter's FYI, the US FTC and the attornies general for 17 states have sued Amazon for "illegally maintaining monopoly power". The trial date is October 2026. I am not saying I agree with them:

FTC Sues Amazon for Illegally Maintaining Monopoly Power

The Federal Trade Commission and 17 state attorneys general today sued Amazon.com, Inc.

www.ftc.gov

If Amazon ever does lose a monopoly action, my guess is it will be in regards to specific markets and/or business processes, not for being a monopoly e-tailer generally (which of course it's not.) I know people most associate the Amazon brand name with their online store that sells a lot of 3rd party products plus some of their own, but the Amazon corporate empire does a lot more than just that and at various times has been closer to the only game in town in some of those other items.

A fair analysis. Amazon faces competition at every turn. The FTC is helmed by an aggressively anti-capitalist chair, and state attornies general are notorious for going for a cash-grab at the drop of an allegation.
Amazon's cloud services used to be nearly the only game in town. I run several cloud servers for personal use, and I'm gradually consolidating everything onto Oracle's cloud, as their free and low-cost tiers offer massively more horsepower for far fewer dollars than Amazon. And of course there's Azure and Google Compute and many other smaller players.
The monopoly accusations are politically driven.

 

[yannus]

Fixed that for you. They aren't even close to being a monopoly. "Big" is not equivalent to "Biggest". Nor is it illegal.

Largest online retailers in the U.S. 2023 | Statista

According to estimates, Amazon claimed the top spot among online retailers in the United States in 2023, capturing 37.6 percent of the market.

www.statista.com

And just talking about the US. Imagine an american football match and replace the players size by the bar size in the chart.

 

[yannus]

It's legal in the US, which is what matters. What isn't legal is *abuse* of monopoly power.

Even a blind man could see the abuse. Only those who don't want to see can't spot it.

"This law aims to promote fair competition and prevent unfair business practices that could harm consumers. It prohibits certain actions that might restrict competition, like tying agreements, predatory pricing, and mergers that could lessen competition."

 

[Endymio]

And just talking about the US [market share of online retail sales].

If you define any market narrowly enough, you get a "monopoly". Walmart is a larger retailer than Amazon. You have to add "online" for Amazon to win. Is that valid, when most of Amazon's products are available at local retailers?

Also, the original landmark antitrust cases were against true monopolies, like Standard Oil with 90% of the world oil market, Alcoa with 80% of aluminum, or GM with (then) 60% of autos. Amazon has less than 40% of the US market, and a negligible percentage worldwide.

More importantly, Amazon has literally tens of thousands of competitors, ranging in size from thousands of employees down to mom-and-pop websites. A basic axiom of antitrust law is that it doesn't exist to protect competitors, but competition in general. The online market is about as competitive as it gets ... and as large as Amazon is, firms like Alibaba and Temu could potentially topple it literally overnight.

Even a blind man could see the abuse. Only those who don't want to see can't spot it.

Then point out that "abuse" that's harming consumers. Amazon is large because it literally single-handedly reinvited online sales to remove consumer's primary problems with it. Before Amazon, an online sale meant waiting two to six weeks for your goods, sometimes longer -- and for smaller products, the dreaded "shipping and handling" fees could double the price. But with Amazon, I often receive orders within two hours of placing the order. Two hours! Shipping is free ... and they have the best return policy in the business.

Amazon is large because they provide a better product selection at better prices, with superior shipping and return polices. That's good for consumers. Not bad.

 

[anastrophe]

Largest online retailers in the U.S. 2023 | Statista

According to estimates, Amazon claimed the top spot among online retailers in the United States in 2023, capturing 37.6 percent of the market.

www.statista.com

And just talking about the US. Imagine an american football match and replace the players size by the bar size in the chart.

37.6% isn't even remotely near a 'monopoly'. Please take care to note that that chart is specific to e-commerce, not to retailers as a whole. WalMart's total retail sales are nearly double Amazon's; you can buy nearly anything on WalMart that you can buy on Amazon.

Further below you present a quote without identifying the source. Ima have to pull a wikipedia on you:

[[citation needed]]

 

[Che Cazzo]

Meh.
But this funny nugget stood out and is hilarious...and shows both carelessness but creativity on the part of Amazon:

"The name Big River is a pretty big hint, too; it may as well have been called Strong Female Warrior."

Ha!!

 

[toooooot]

Project Curiosity sounds shady! Even if Amazon insists it was to understand the seller experience, going undercover with a fake business selling on competitor platforms and hiding its connection feels like there's more to the story. Benchmarking is one thing, but fake identities and secret reports raise eyebrows. What do you guys think - clever business tactic or sneaky spying?

I do not know. What I do know is that greed has no limit.
If you ask me, could Amazon spy on smaller sellers to
adopt their business tactics and phase them out completely,
I would say hell yeah! They would do it in a heart bit.
This is why humongous corporations need to be sliced into smaller ones eventually.
They devour smaller ones that never stand a chance. Then the corporations pick up their
work, and give it to people in countries where they do not ask as much money like India for example.
They are not helping our economy grow, they are destroying it in a long run.