Amazon, Walmart AI bots accused of favouring foreign goods, US senators seek probe

Two US senators have urged the FTC to investigate Amazon and Walmart over claims their AI shopping tools suppress Made in USA products and miss false labels. The complaint raises questions over consumer information, third-party listings and support for American manufacturing.

Two US senators have called on the Federal Trade Commission to investigate Amazon and Walmart, claiming that their AI shopping chatbots may suppress "made in the USA" products and fail to flag fraudulently labeled goods.

In a letter sent to the FTC, senators Tammy Baldwin and Rick Scott said Amazon's AMZN.O Alexa for Shopping and Walmart's WMT.O Sparky AI shopping assistants could be undermining efforts to promote American manufacturing and misleading consumers.

They highlighted the findings of a study by a think tank led by former FTC Chair Lina Khan that showed the chatbots suppress information about American-origin products while offering data on products made in other countries such as China.

"When asked why there is no Made in USA filter, Alexa replied that it would 'redirect significant sales away from their largest seller base', referring to overseas manufacturers," the letter said, citing the study.

The study had also said AI shopping assistants can often detect when "made in USA" product labels are false, but the big retailers are not using that technology to crack down on the listings.

When researchers asked Walmart's Sparky why it did not flag suspicious "made in USA" claims, the chatbot cited limited FTC enforcement against retailers, calling it "a business calculation, not a legal justification," according to the study.

Amazon, Walmart and the FTC did not immediately respond to Reuters requests for comment. The Wall Street Journal first reported on the development.

"We all share the goal of strengthening American manufacturing and small businesses through initiatives such as Made in USA labeling, all while ensuring consumers receive accurate information about where the products they buy are made," the senators wrote in the letter.

"Following a robust investigation, we strongly encourage the Commission to consider additional enforcement measures to deter such behavior going forward," they added.

The FTC last year sent letters to Amazon and Walmart urging them to crack down on third-party sellers' "made in USA" claims, citing company policies requiring sellers to provide accurate information.

Khan sued Amazon when she was at the FTC, accusing it of holding illegal online retail monopolies. The case is ongoing.