At the end of each chapter of our text, we present an Ethical Dilemma for class discussion. The Wall Street Journal‘s expose on Amazon (April 19, 2024), called “Inside Amazon’s Secret Operation,” provides one such issue. Here is a summary:
For nearly a decade, workers in a warehouse in Seattle have shipped boxes of shoes, beach chairs, Marvel T-shirts and other items to online retail customers across the U.S. The operation, called Big River Services, sells around $1 million a year of goods through e-commerce marketplaces including eBay, Shopify, Walmart and Amazon under made up brand names. “We are entrepreneurs, thinkers, marketers and creators,” Big River says on its website.
What the website doesn’t say is that Big River is an arm of Amazon that secretly gathers intelligence on its competitors. Amazon publicly says that it pays little attention to competitors, instead focusing all its energies on being “customer obsessed.”
But Big River team members attended their rivals’ seller conferences and met with competitors, identifying themselves only as employees of Big River, instead of disclosing that they worked for Amazon. They were given non-Amazon email addresses to use externally, but internally they used Amazon email addresses. They took extraordinary measures to keep the project secret, disseminating their reports to Amazon execs using printed, numbered copies rather than email. In the event of a leak they were told to say they were formed to improve the seller experience on Amazon, and that such research is normal.
“Amazon, like many other retailers, has benchmarking and customer experience teams that conduct research into the experiences of customers, including our selling partners,” says the firm. This benchmarking team got top corporate approval to buy inventory, use a shell company and find warehouses in the U.S., Germany, England, India and Japan so they could pose as sellers on competitors’ websites. To get information about rival logistics services, Big River stored inventory with companies including FedEx, UPS, and DHL.
Virtually all companies research their competitors, reading public documents for information, buying their products or shopping their stores. But lawyers say there is a difference between such corporate intelligence gathering of publicly available information, and what is known as corporate or industrial espionage. Companies that misrepresent themselves to competitors to gain proprietary information are open to suits on trade secret misappropriation.
Classroom discussion questions:
- What are the ethical implications of Amazon’s actions?
- How would such benchmarking be legal?
Wow, pretty devious!