Amazon Falls After Report That the Company Prioritized Profit in Its Search Listings
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Amazon.com shares fell following a report that the e-commerce giant adjusted its product search results to emphasize items that are more profitable to the company.
The Wall Street Journal reported Monday that, following an internal debate, Amazon late last year changed its secret algorithm that ranks search results to lift more profitable items, a departure for a company that typically emphasized customer satisfaction and bestsellers.
Digital giants including Amazon, Apple, Google and Facebook are under scrutiny for how they govern their sprawling online platforms. Critics of the companies have accused each of favoring their own products over those of rivals, potentially stifling competition.
The change to the search algorithm could steer customers toward Amazon private-label products that deliver higher profit margins than competing listings, the Journal reported.
Amazon shares fell 1.8% to $1,806 at 3:35 p.m.
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Angie Newman, an Amazon spokeswoman, said the Journal’s characterization of events inside Amazon was incorrect. “The fact is that we have not changed the criteria we use to rank search results to include profitability,” she said. “We feature the products customers want, regardless of whether they are our own brands or products offered by selling partners.”
She added that while Amazon does consider long-term profitability in evaluating search features, the company was not making decisions based solely on that metric.
Sam Weinstein, a professor at Cardozo Law School at Yeshiva University, said the practices the article describes could draw the interest of regulators but that it’s unclear whether they ran afoul of antitrust law.
“The optics are bad, because it lines up with these theories about how we think the platforms are abusing their power, favoring their own business,” said Weinstein, who was previously an attorney in the Justice Department’s antitrust division. But the article stopped short of showing the changes harmed other sellers for Amazon’s benefit or limited competition in potential violation of U.S. antitrust law, he said.
Bloomberg reported last week that a team of Federal Trade Commission investigators has begun interviewing small businesses that sell products on Amazon to determine whether the e-commerce giant is using its market power to hurt competition. A House panel investigating big tech companies for potential antitrust violations is seeking information from customers of Amazon, Apple, Google and Facebook about the state of competition in digital markets and the adequacy of existing enforcement, Bloomberg reported on Sunday.
