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Without significant changes, company will stay in the hot
seat.
Amazon Inc. investors have delivered company leadership a suit
for exposing the corporation to a “massive financial hit”
caused by news of alleged antitrust violations and an unnecessarily
rapid expansion that later had to be scaled back. The suit, filed
in federal court in Delaware, names Jeff Bezos and 19 other current
and former board members and executives.
This shareholder derivative action accuses leadership of lying
about the company’s practices in two major areas: its
private-label business selling products alongside third-party
merchants, and the ultra-fast delivery that’s a key part of the
company’s identity.
While corporate leaders were hailing the success of Amazon’s
private-label brands, the investors say they were secretly
exploiting their monopoly power over third-party sellers on
Amazon’s Marketplace. The company allegedly uses merchants’
non-public data to compete with them and give Amazon brands
preference over the third-party sellers, according to the suit.
Amazon publicly refers to sellers as “partners,” but
executives allegedly refer to them privately as “internal
competitors.”
Numerous cases have emerged of Amazon poaching the products of
small businesses and driving them out of business, exploiting
third-party merchants’ non-public data for their own gain, the
complaint states.
As they say, “the cover up is worse than the
crime.” Conduct like that alleged by the shareholders has to
lead consumers to wonder what other methods Amazon is employing to
gain an upper hand over small businesses and to take advantage of
consumers.
Amazon needs to shore up its competition practices.
Otherwise, due to its size and past behaviors, it will continue to
face intense scrutiny for some time to come.
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