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Amazon reportedly prevents some device rivals from advertising competing products

Amazon CEO Jeff Bezos on October 02, 2019.

Elif Ozturk | Anadolu Agency | Getty Images

Amazon restricts some of its biggest device rivals from buying advertisements tied to search results for its own products, giving its devices an advantage over competitors, a Wall Street Journal investigation has found.

The company won’t allow some device makers to buy sponsored ads tied to products made by Amazon, including the voice-activated Echo Show, Ring Doorbell and Fire TV, despite allowing them to buy ads tied to other competitors’ products on the site, the Journal said.

Sponsored products on Amazon are keyword-targeted ads that let advertisers promote certain items. To get the sponsored label, advertisers bid on certain terms, and ads with higher bids are more likely to be displayed.

Amazon said in a statement that it disputes the Journal’s findings but acknowledged that some keywords related to Amazon devices may have limited advertising inventory. The company said such limitations are an example of retailers deciding what products to promote or feature on their website, which it said is standard practice. Amazon added that it’s possible the companies are bidding for ads and don’t win the bid. 

“News flash: retailers promote their own products and often don’t sell products of competitors,” Amazon spokesperson Jack Evans said in a statement. “Walmart refuses to sell Kindle, Fire TV, and Echo. Shocker. In the Journal’s next story they will uncover gambling in Las Vegas.”

The probe found that Roku, which competes with Amazon’s Fire TV, hasn’t been able to buy ads tied to both Amazon’s devices and its own products for several years. Roku search results on Amazon’s website often displayed ads for Roku’s competitors, Roku products offered by resellers and promoted ads for Amazon’s Fire TV near the top of search results, the Journal said.

Roku declined to comment.

Other rival device makers experienced similar issues buying sponsored ads on search results for Amazon’s products, including Facebook, which makes voice-activated smart displays that compete with Amazon, and Arlo Technologies, which makes smart security products that rival Amazon-owned Ring’s smart doorbells.

The actions could attract attention from regulators who are already examining Amazon’s business practices.

The Journal found that members of Amazon’s devices team flagged products from larger rivals, referred to as “Tier 1 Competitors,” to block them from buying ads on Amazon’s own products. Additionally, when Amazon’s devices team launches a new product, employees are charged with determining which keywords to suppress in advertising and are told to discuss these matters in emails labeled “privileged and confidential,” in order to prevent regulators from accessing related emails, the Journal said.

Amazon told CNBC that employees are only instructed to mark emails as privileged when they’re seeking legal counsel.

Amazon faces ongoing probes in Europe and in the U.S., where the House Judiciary Subcommittee on Antitrust has examined how Amazon uses data from third-party sellers to create private-label products. Amazon’s competitors have previously accused the company of using predatory pricing practices to suppress rivals.

Read the full story from The Wall Street Journal.

— CNBC’s Megan Graham contributed to this article.

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