Is Amazon Restricting Rivals from Advertising on Its Site?

Amazon appears to be giving itself preferential treatment. The e-commerce behemoth reportedly places limits on advertising from makers of smart speakers, video doorbells, and other devices that may compete with similar products it produces. The actions could attract more attention from several regulating bodies already examining Amazon's business practices.

Advertising from other companies brings in a lot of money for Jeff Bezos' company, including the placement of ads bought to appear inside search results for competing products. However, an investigation by The Wall Street Journal reveals Amazon blocked some of its own large competitors from buying these placed ads when searches were for the company's own devices like Fire TV, Echo Show and Ring Doorbell.

Amazon is accused of limiting advertising from rivals on its site Smith Collection/Gado/Getty

The authors of the Journal piece, Dana Mattioli, Patience Haggin and Shane Shifflett, cite anonymous Amazon employees and others close to the organization who are familiar with this policy that gives an edge to Amazon's own devices, which the company considers integral to building consumer loyalty. These sources say Roku can't even buy advertisements on the site for its TV streaming devices. There are some cases in which competitors have apparently been completely barred from selling certain devices on Amazon.

38% of online shopping occurs on Amazon, while roughly half of all online shopping search in the U.S. start on the site. Amazon works with more than a million businesses and entrepreneurs selling to its shoppers, but by also being a product manufacturer, this reported advertising policy exhibits conflicts. Since Amazon's digital advertising ranks only behind Google and Facebook, the first page of search results a shopper sees makes an enormous impact on the seller, especially since a majority of shoppers buy from that first page.

When the Journal reached out for comment, they were met with derision.

"News flash: retailers promote their own products and often don't sell products of competitors," Amazon spokesman Drew Herdener replied in a written statement. "Walmart refuses to sell [Amazon brands] Kindle, Fire TV, and Echo. Shocker. In the Journal's next story they will uncover gambling in Las Vegas."

But the Journal also found the advertising restrictions Amazon places mean that products sold directly by companies like Roku often don't appear atop the search results for Roku products. In an Amazon search for "Roku Streaming Stick," the Journal found that Amazon featured its Fire TV products four times under "Featured from our brands" and then listed twice more on the the first page of search results, which generally show about 20 to 25 results. Meanwhile, a search for "Fire TV" displayed an Amazon "Fire TV" banner with the Amazon logo followed by three Amazon products. No sponsored results came up during that search. The Journal's inside sources claim the company won't allow that it calls "Tier 1 Competitors," or the largest rivals, from buying search keywords tied to Amazon-branded products.

jeff bezos
Amazon Founder and CEO Jeff Bezos finds his company under scrutiny once again Mark Ralston/Getty

Of course, this isn't the first time the company has been accused of using predatory pricing practices to suppress rivals. Jeff Bezos testified before Congress this past July about the company's practices and its brands. Also already examining Amazon's dealings are The Federal Trade Commission, the Justice Department, the European Union, and Canadian regulators.