FTC Says Amazon Execs Used Messaging App's Auto-Delete, Even as Antitrust Probe Unfolded
"It is highly likely that relevant information has been destroyed as a result of Amazon's actions and inactions," the Federal Trade Commission said in a filing last week.
April 29, 2024 at 04:55 PM
7 minute read
What You Need to Know
- The FTC notified Amazon of its antitrust probe in June 2019 and told the company to retain all relevant documents and electronic correspondence.
- Even so, the agency said executives for many months continued to the encrypted-messaging app Signal, including its auto-delete feature.
- Amazon says it has provided the FTC with 1.7 million documents and says the agency
In a new filing in its antitrust lawsuit against Amazon, the Federal Trade Commission blasts the tech giant for its executives' "widespread deletion of Signal messages" in the months after it learned it was under investigation and was supposed to be preserving relevant communications.
"Amazon executives deleted many Signal messages during plaintiffs' pre-complaint investigation, and Amazon did not instruct employees to preserve Signal messages until over fifteen months after Amazon knew that plaintiffs' investigation was underway," the FTC claimed in the April 25 filing.
It says that notable users of the messaging app included Amazon founder Jeff Bezos, General Counsel David Zapolsky and current CEO Andy Jassy. The app encrypts messages and has an auto-delete feature that, when activated, permanently eliminates any record of the message on the devices of both the sender and receiver.
The FTC in September filed its antitrust suit against Amazon in its home state of Washington, alleging the company abuses its market power by inflating prices and overcharging sellers. Amazon denies the claims and says the practices the FTC challenges "have helped to spur competition and innovation across the retail industry."
The FTC leveled the allegations involving Signal in a 19-page motion to compel production of documents related to spoliation—the intentional or negligent withholding, altering or destroying of evidence relevant to a legal proceeding.
The filing says Amazon so far has deflected the FTC's effort to learn more about the company's "document preservation efforts (or lack thereof)," citing privilege. The agency asks the court to make a preliminary finding of spoliation, thereby stripping the company of privilege over document-preservation practices. The FTC says what it's already learned "easily" meets that standard.
The FTC's filing does not foreshadow what the agency's next steps would be if federal Judge John Chun finds spoliation occurred. Courts can impose a variety of remedies, including monetary sanctions or advising jurors to make an adverse inference regarding missing evidence or testimony—in other words, to infer that if the information had been available it would have been unfavorable to the party that committed spoliation.
In response to questions from to Law.com, Amazon provided a statement from Tim Doyle, its director of policy communications for the Americas, saying the FTC's "contentions are baseless"
"The FTC has a complete picture of Amazon's decision-making in this case including 1.7 million documents from sources like email, internal messaging applications, and laptops (among other sources), and over 100 terabytes of data," Doyle's statement says.
The FTC's motion on spoliation is the latest evidence of federal regulators' deep frustration with so-called off-channel communication—messages sent through messaging apps or collaboration tools, including WhatsApp, Signal and Slack.
In January, the agencies said in a press release that they have updated the document-retention notice they send to companies under investigation to underscore that they extend beyond their official communication channels.
"These updates to our legal process will ensure that neither opposing counsel nor their clients can feign ignorance when their clients or companies choose to conduct business through ephemeral messages," Manish Kumar, deputy assistant attorney general of the DOJ's antitrust division, said in the press release.
"The Antitrust Division and the Federal Trade Commission expect that opposing counsel will preserve and produce any and all responsive documents, including data from ephemeral messaging applications designed to hide evidence. Failure to produce such documents may result in obstruction of justice charges."
The Securities and Exchange Commission, exercising its regulatory authority of broker-dealers and investment advisers, also is cracking down. For more than a year, it's been unleashing enforcement actions alleging the highly regulated firms' off-channel communications put them in violation of its strict message-retention rules. So far, the SEC's probes and parallel inquiries by the Commodities Futures Trading Commission have yielded more than $2.7 billion in fines.
For regulators, use of Signal is particularly problematic because of its unique "disappearing message" feature.
The FTC's filing says, "Although the contents of deleted messages are impossible to recover, the app shows when a user turns the disappearing message feature on, off, or changes the timer for deletions, leaving breadcrumbs showing Amazon executives' deletions were widespread."
According to the agency, Amazon executives began using Signal in April 2019, two months before the FTC notified the company that it was investigating it for possible antitrust violations. That notification highlighted Amazon's obligation to preserve documents and information that might relate to the inquiry.
Though Amazon in July 2019 sent out the first wave of document-preservation notices to employees, Bezos did not receive one until April 2020, according to the FTC. It says Signal, and its disappearing-message feature, were still being used by executives as recently as May 2022.
The use was continuing even though Amazon had issued guidance to senior leaders on use of secure-messaging apps in October 2020 and issued another round of guidance in August 2021 on how to turn off the disappearing-message feature.
In addition, in March 2022 General Counsel Zapolsky sent an email to several executives instructing them how to download Wickr, a new, Amazon-owned secure-messaging app that allows the company to save messages of individuals on legal hold in a central location.
The FTC says Amazon did not disclose executives' use of Signal to the FTC until March 4, 2022, six days before The Wall Street Journal disclosed it in an in-depth article on the company's strained relationship with political leaders in Washington, D.C.
In his statement, Amazon's Doyle said that that timeline is false. He said the company had disclosed its employees' use of the app years ago.
Included in Amazon's filing is a partly redacted, four-page letter that Amazon attorney Thomas Barnett, a partner at Covington & Burling, wrote to the FTC in March 2022 responding to the agency's document-production concerns.
In the letter, Barnett said the company had gathered and provided to the FTC a mountain of information, including hard copies and information gathered from more than 130 individuals' work and personal devices.
It was a massive undertaking, he said, made more difficult by the COVID-19 pandemic, which had emptied out offices and caused nearly all the custodians of information responsive to the FTC's discovery requests to be working from home.
He said Amazon's inquiry turned up 22 employees who used Signal for work, though most did so for "non-substantive purpose," such as arranging travel. He said it found six executives who used Signal for substantive work communications, including Bezos, the executive chairman, and Mike Hopkins, the head of Prime Video and Amazon MGM Studios.
However, Bezos' phone and Hopkins' phone were beyond the scope of the collection process used to respond to the FTC's February 2022 civil investigative demand, the letter from Covington's Barnett said.
The four covered under the CID who used Signal for substantive work communications were Senior Vice Presidents Jeff Blackburn and Peter Krawiec, devices chief Dave Limp and worldwide consumer chief Jeff Wilke.
In the letter, Barnett acknowledged that "it is possible some responsive communications have not been preserved," though he downplayed the likelihood of significant gaps. "We believe [there] was a de minimis number of potentially responsive documents that were not available for production."
In its motion, the FTC said it suspects otherwise.
"It is highly likely that relevant information has been destroyed as a result of Amazon's actions and inactions," the filing said.
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