In a bombshell investigation, the Wall Street Journal has uncovered explosive details about Amazon’s clandestine efforts to spy on and gather intelligence about its ecommerce competitors.

The Journal’s report reveals that for nearly a decade, Amazon has been operating a secretive division called “Big River Services” that has been systematically infiltrating and surveilling rival ecommerce platforms like Walmart, eBay, and others to gain a competitive edge.

The origins of Amazon’s covert surveillance operation can be traced back to 2015 when the company launched a project code-named “Project Curiosity.” This initiative saw Amazon (AMZN) create the Big River Services division, which the company then used to establish its own third-party seller accounts on a wide range of competing ecommerce sites.

The goal, according to people familiar with the effort, was for Big River to gather sensitive data and information about its rivals’ pricing, logistics, and business practices. The team would then share these findings with high-level Amazon executives, including the company’s current CEO of Worldwide Amazon Stores, Doug Herrington.

Walmart Was Amazon’s Primary Target

To carry out this espionage operation, Big River Services employees went to extraordinary lengths to keep their true identity hidden. They used non-Amazon email addresses when communicating externally, avoided discussing the project with most Amazon staff, and even attended rival companies’ seller conferences while posing as Big River representatives instead of Amazon employees.

“We were encouraged to work off the grid as much as possible”, said a former Big River Services team member.

The Journal’s investigation revealed that a key focus of the project was gathering intelligence on Walmart, Amazon’s biggest rival in the e-commerce space.

atlantic lot - a company affiliated to big river services - website on walmart marketplace

Despite initially being unable to qualify as a Walmart Marketplace seller, Big River was eventually able to gain access to Walmart’s platform, listing around 15 products there as of this month under the seller name “Atlantic Lot”.

WSJ journalists estimate that in 2023 alone, Big River managed to generate $150,000 annually in revenues by selling products through Walmart’s marketplace.

“Benchmarking is a common practice in business. Amazon, like many other retailers, has benchmarking and customer experience teams that conduct research into the experiences of customers, including our selling partners, in order to improve their experiences working with us”, an Amazon spokeswoman told the Journal in response to the findings.

However, legal experts say that Amazon’s actions could potentially cross the line into unlawful corporate espionage. While companies are generally free to gather publicly available information about their competitors, misrepresenting oneself to gain access to proprietary data and trade secrets can lead to legal issues around trade secret misappropriation.

“There is a difference between such corporate intelligence gathering of publicly available information, and what is known as corporate or industrial espionage”, said Elizabeth Rowe, a professor from the University of Virginia School of Law whose specialty is trade secret law.

This New Scandal Could Inflict Additional Reputational Damage to Amazon

The revelations about Big River Services come as Amazon is already facing antitrust charges brought by the US Federal Trade Commission and 17 states, which have accused the company of a range of anti-competitive behaviors that harm third-party sellers on its marketplace.

This latest scandal will likely inflict additional damage to Amazon’s reputation and fuel calls for stricter regulation of the tech giant’s business practices.

Neither Walmart nor eBay were aware that Amazon was operating third-party seller accounts on their platforms prior to being contacted by the Journal. Walmart said it was not previously aware that the “Atlantic Lot” seller was connected to Amazon.

While Amazon has argued that its rivals likely conduct similar research on the company, the scale and sophistication of the Big River operation appears to be unprecedented. The Journal’s investigation reveals a coordinated, long-running effort by Amazon to systematically gather intelligence on its competitors through deceptive means.

Shipping Companies Were Also Targeted by Big River

The WSJ report indicates that Big River Services also managed to spy on shipping companies like FedEx by taking advantage of its status as a Pro Seller with Walmart.

The investigation highlights that Amazon saw a competing force in FedEx when the transport company launched a service called FedEx fulfillment that offered inventory management and order fulfillment services to companies – a business that generates billions for Amazon through the Amazon Fulfillment arm.

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Big River employees concealed their links to Amazon during interviews and phone calls with the FedEx team and went on to use their services to gather intelligence on their practices, prices, and procedures.

The extent of the operations carried out by Big River crossed borders at some point as the company was also incorporated in countries including India and the United Kingdom to gather information about rival ecommerce marketplaces in those regions like Flipkart – a company that Walmart ultimately went on to acquire. This may be important because crimes committed between states immediately become federal crimes.

Other marketplaces targeted by River as per the WSJ included, Alibaba, Etsy, and BestBuy.

Amazon Faces Growing Levels of Scrutiny from Authorities in the US

lina khan teams up with 17 state attorneys to sue amazon

After decades of near complete paralysis of the bodies of the US government that police antitrust violations, namely the US Federal Trade Commission (FTC), the Biden administration seems to have given the go ahead to resume enforcement.

In September of last year, the US Federal Trade Commission (FTC) announced that it was suing the ecommerce giant founded by Jeff Bezos for allegedly “maintaining monopoly power”.

The proceeding alleges that Amazon blocks its competitors by using unfair strategies that allow it to exert monopolistic powers in the ecommerce space.

“The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them”, commented FTC Chair Lina Khan on the press release that announced the probe.

Among the many accusations contained in the document against the online retailer, the FTC says that Amazon forces companies that offer rival products to keep prices higher than those of the white-label goods that they sell.

Moreover, to gain access to the platform’s “Prime” service – which is the preferred option for most customers – vendors must select Amazon as their fulfillment partner mandatorily. This forces them to incur in higher costs as the ecommerce company charges high fees for processing orders and storing inventory from third-party vendors.

Amazon responded to the proceeding by stating that the FTC is “radically departing” from its mission of “protecting consumers and promoting competition” with this lawsuit.

In a lengthy blog post, Amazon explained why its practices should not be considered monopolistic. This document did not deter authorities from moving forward with their efforts.

It remains to be seen if this new scandal unveiled by the WSJ results in new legal proceedings against the ecommerce giant brought forward by the companies that have been spied on by Big River Services.