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Peak Design has been making camera bags and accessories for a dozen years, relying on Amazon for the bulk of its sales. Last year, founder and CEO Peter Dering discovered Amazon was selling a bag that looked strikingly similar to Peak’s top-selling product, the Everyday Sling Bag.

“They copied the general shape, they copied the access points, they copied the charcoal color, and they copied the trapezoidal logo badge,” Dering told CNBC. “But none of the fine details that make it a Peak Design bag were things that they could port over because those things take a lot more effort and cost.”

Amazon even snagged the name, calling its own product the Everyday Sling.

What Amazon lacked in originality and quality it made up for in price. While Peak’s bag currently costs almost $90 on Amazon, the knockoff version from Amazon’s homegrown AmazonBasics brand was selling for about two-thirds less.

That motivated Dering’s team to respond with a snarky video, poking fun at Amazon’s questionable methods.

“You don’t have to pay for all those needless bells and whistles, like years of research and development, recycled bluesign-approved materials, a lifetime warranty, fairly paid factory workers and total carbon neutrality,” a man’s voice said in the video. “Instead, you just get a bag designed by the crack team at the AmazonBasics Department.”

The video went viral and in June was featured by HBO’s John Oliver in a segment on tech monopolies. Amazon later stopped selling its version of the bag, after Peak Design fans pummeled its ratings with a flurry of negative reviews.

Peak Design CEO Peter Dering compares his company’s Everyday Sling Bag to the Amazon private label version at his San Francisco headquarters on September 6, 2022.

Katie Schoolov

For Amazon, whose expansive marketplace is in the crosshairs of regulators that are cracking down on Big Tech, stories like these from its private-labels division have caused added headaches. In 2020, the European Commission charged Amazon with using its size, power and data to push its own products and gain an unfair advantage over rival merchants that also use its platform. Earlier this year, Amazon said it would limit its use of marketplace seller data.

Meanwhile, the attorney general of California has filed an antitrust suit against Amazon, and the American Innovation and Choice Online Act being considered by Congress would crack down on Big Tech’s ability to leverage dominant market power at the expense of small businesses. The bill has yet to make it to a vote

But while Amazon may be pushing the boundaries of what’s acceptable in private labeling, there’s nothing illegal about copying brand-name products. It’s a business practice that, in some capacity, is widely used by most major retailers.

A selection of some of Amazon’s 118+ private label brands as of October, 2022.

Mallory Brangan

‘Low price’ and ‘acceptable quality’

A private label is just like a store brand. A retailer finds a manufacturer to make an affordable “white label” version of a branded product. The manufacturer puts the retailer’s own brand on the packaging, and it then sells for an average of 25%-40% less than the national brand-name product, according to Kusum Ailawadi, a marketing professor at Dartmouth College who’s been researching private labels for 25 years.

“The history of private label, in the U.S. anyway, is very much a perception of low price and at best acceptable quality,” said Ailawadi, adding that the model dates as far back as the 1950s.

Retailers more recently have tried to change the view of store brands by focusing on something that captures a consumer’s interest. For example, Safeway has an O Organics brand and Kroger offers a line of baby products called Comforts.

Others put most of their products under store brands, such as Walmart‘s Great Value and Sam’s Choice lines or Costco‘s Kirkland Signature. In other cases, store names double as brand names, such as CVS and Trader Joe’s. Many such products are copycats.

“They will put it next to the national brand with whom they are trying to compete, with a me-too packaging, a similar look and then even have a big sign that says, ‘Buy basically the same product or better at 30% lower price,'” Ailawadi said. “Some of the practices around private label that are now under scrutiny by Congress and other people have not only been around a long time, they are perfectly acceptable practices.”

But Amazon is doing something different, according to Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, an activist group that fights big corporations. She said Amazon brings a powerful data engine to the table.

“Amazon has developed a lot of these private labels by gathering data, essentially spying on the companies that have to rely on its website in order to reach consumers,” Mitchell said. “They also know what search terms people are using, what they’re clicking on, how long their mouse is hovering in a certain place. And so they are able to analyze all of that data for a level of insights that simply are not available to your typical chain retailer.”

Amazon also has more power to steer shoppers to particular products than a typical brick-and-mortar retailer.

Amazon has the “ability to take one particular product and shove it on page 10 of the search results while giving another product, say, their own product, lots of space right there on the first page of search results,” Mitchell said. “We know that really alters and steers buying behavior.”

In 2020, Congress questioned Amazon founder and then-CEO Jeff Bezos about whether his company uses third-party seller data in making business decisions.

“We have a policy against using seller specific data to aid our private-label business,” Bezos said. “But I can’t guarantee you that policy has never been violated.”

An Amazon spokesperson told CNBC in September, “We do not use data about individual sellers that isn’t public to determine which private brand products to launch, and we have a policy to protect seller data that goes further than any other retailer we know of.”

How private labels are made is often shrouded in mystery, leading to speculation around certain products. For instance, Grey Goose has had to dispel rumors that it makes Costco’s Kirkland Signature vodka.

Ailawadi said some private labels are made by national brand manufacturers, who use their excess capacity to make products for others. Then there are specialty firms that only do private labels, and some store brands have their own devoted manufacturing facilities. Although Amazon released a list of more than 100 suppliers in 2019, it didn’t respond to questions about who makes its private labels today.

AmazonBasics batteries are shown on September 29, 2022.

Andrew Evers

Amazon first entered the private-label business around 2009, with its AmazonBasics brand of staple goods such as discount batteries. It now has at least 118 private-label brands, according to data from e-commerce analyst company DataWeave. Some of its brands carry the Amazon name or logo, such as Happy Belly snacks, Amazon Collection jewelry and Amazon Essentials clothing. Others such as Solimo home products and clothing lines Lark & Ro and Goodthreads give little indication they’re Amazon brands.

Private labels make up just 3% of Amazon’s sales volume by dollar share in grocery, household and health and beauty categories, according to a recent study by Numerator. By comparison, private labels make up a whopping 77% of Aldi’s sales, followed by Trader Joe’s at 59% and Wegmans at 49%. 

Amazon continues to invest in private labels

Numerator data also found that AmazonBasics came in third for fastest-growing private label. That comes after a Wall Street Journal report that found Amazon drastically reduced the number of private-label items on its site in the first half of this year. The Journal reported that executives had discussed exiting the private-label business entirely to ease antitrust scrutiny.

In a statement, Amazon disputed that notion.

“We never seriously considered closing our private label business, and we continue to invest in this area, just as our many retail competitors have done for decades and continue to do today,” the company said.

Private labels clearly represent a lucrative opportunity. Target told CNBC that 12 of its 48 “owned brands” are each worth at least $1 billion. 

Although Amazon doesn’t share sales data on individual brands, seller consultant Jason Boyce from Avenue7Media said internal data from his firm shows that Amazon sells tens of millions of dollars in AmazonBasics batteries each month.

“I don’t think that there’s any credence to the fact that Amazon’s sunsetting AmazonBasics products that are doing well,” Boyce said. “Are they culling the herd for products that are doing not so well? Absolutely. And any good business would do that.”

Ailawadi says private-label goods bring in around 25% higher profit margins for retailers than national brands, because of savings on things such as packaging, marketing and promotion.

A variety of Amazon’s private label goods are shown on September 29, 2022.

Andrew Evers

“There is nothing anti-competitive about comparing one product with another and saying that these products are very similar, and I’m selling you one at a lower price,” Ailawadi said. “That is as competitive as it gets.”

Internally, Amazon has to skate a fine line between creating profitable products that consumers want and protecting third-party sellers, who have become the lifeblood of the retail business. Amazon says third-party merchants make up more than 60% of its ecommerce business, and those businesses pay Amazon for services such as fulfillment and shipping.

Boyce said that “45% of every dollar goes back to Amazon” when an outside merchant makes a sale on the platform. “Why would they bite the hand that feeds them in that way?”

Not all of Amazon’s private-label efforts succeed. The company no longer sells a pair of shoes called the Galen that look eerily similar to AllBirds’ wool running shoes. With the Everyday Sling Bag, Dering says Peak Design came out on top thanks to all the media attention.

Dering has also learned one key lesson from the Amazon drama. He now gets a design patent for every one of Peak Design’s products, which number over 200. Each patent costs about $1,000, he said.

“I really recommend that for anyone who’s bringing a product that they don’t want to be knocked off,” Dering said.

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Amazon shuts down secret project to develop fertility tracker

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Amazon shuts down secret project to develop fertility tracker

Amazon CEO Andy Jassy speaks during the GeekWire Summit in Seattle on Oct. 5, 2021.

David Ryder | Bloomberg | Getty Images

Amazon has discontinued a secretive effort to develop an at-home fertility tracker, according to internal documents and people familiar with the matter.

The company had been working to launch a fertility monitoring device and companion smartphone app for the past four years as part of a project codenamed “Encore,” said the people, who asked not to be named because they weren’t authorized to speak to the press. The team sat within Amazon’s Grand Challenge, also known as its Special Projects division, the sources said.

Last month, Amazon told people working on the tracker that it was disbanding the team. Those being laid off will remain on Amazon’s payroll until Dec. 27, but won’t be expected to work during that time, according to documents reviewed by CNBC.

If staffers don’t secure another job by that date, Amazon will provide them with a “lump sum” severance payment equal to one week of salary for every six months of tenure at the company, the documents said.

Amazon CEO Andy Jassy has been reeling in costs companywide since late 2022, when inflationary pressures and rising interest rates led to a slowdown across the tech and consumer markets. In addition to slashing more than 27,000 jobs, Jassy has shuttered several projects, ranging from a roving sidewalk robot to a telehealth offering and a rapid delivery service.

The wave of frugality marks a distinct departure from the approach taken by Amazon founder Jeff Bezos, Jassy’s predecessor, who was known for greenlighting experimental projects and giving employees extended runway to develop them, even if they burned cash along the way. Grand Challenge was one of the hallmarks of that era.

Bezos launched Grand Challenge in 2014 as a way for Amazon to tinker with riskier projects that may or may not see the light of day. Grand Challenge was the brains behind a pair of connected eyeglasses equipped with Amazon’s Alexa voice assistant and a machine learning tool for analyzing medical records.

Other Grand Challenge projects, like the Amazon Care telehealth service, a video-calling device for kids, a virtual tours service and an augmented reality headset for meetings were discontinued.

On the morning of Oct. 28, employees working on the fertility tracker were told to join a videoconference where a director of the team informed them that the project was ending. The call lasted about two minutes, one of the people said.

Amazon CEO says layoffs will continue into 2023

A layoff notice viewed by CNBC was signed by Doug Weibel, who took over as the head of Grand Challenge after its founding leader, Babak Parviz, left in 2022 and joined Madrona Venture Group.

Margaret Callahan, an Amazon spokesperson, confirmed the layoffs and the existence of the project in a statement to CNBC. Roughly 100 employees will be laid off, Callahan confirmed.

“Following a recent review, we’ve decided to discontinue this project within Grand Challenge, and we’re working directly with employees whose roles are impacted to support them through the transition and help them find other opportunities within Amazon,” Callahan said.

Predicting fertility with saliva

The project was born out of the company’s 2020 acquisition of Wisconsin-based startup bluDiagnostics, the sources said.

BluDiagnostics was founded in 2015 by Weibel, Katie Brenner and Jodi Schroll, all of whom joined Grand Challenge following the purchase. The startup had developed a thermometer-like device, called FertilityFinder, to help women track their fertility from home by testing their saliva and measuring two key hormones, estradiol and progesterone. The results of the test were viewable through a corresponding app.

Business Insider reported on aspects of the fertility device in 2022, when its codename was Project Tiberius.

The team was working to develop its own saliva collection device and mobile app, which could predict when a user might be in the fertile window. Users could also log their period symptoms, sexual activity and other data to assist with tracking their fertility. There are similar offerings on the market from companies including Inne, Oova, Ava and Mira, along with fertility and ovulation tracking apps like Flo, Clue and Max Levchin’s Glow.

Amazon initially aimed to release the product this year, but the timing was pushed out after the team encountered technical issues with the device, one of the people said. It was a costly endeavor and required significant upfront investments for lab research and development, in addition to the high salaries for scientists and engineers, the sources said, adding that the team’s weekly overhead was roughly $1.5 million. Amazon didn’t comment on the figure.

Only one project now remains active within Grand Challenge. Its focus is on health tech, the people said.

WATCH: Amazon could make Anthropic ditch Nvidia chips in potential new deal

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BlackRock expands its tokenized money market fund to Polygon and other blockchains

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BlackRock expands its tokenized money market fund to Polygon and other blockchains

The BlackRock logo is pictured outside the company’s headquarters in the Manhattan borough of New York City on May 25, 2021.

Carlo Allegri | Reuters

BlackRock has expanded its tokenized money market fund to include several more blockchains.

The investment manager said Wednesday that its USD Institutional Digital Liquidity Fund (BUIDL) is now available to investors on the Aptos; Arbitrum; Avalanche; OP Mainnet, formerly known as Optimism; and Polygon blockchains. It initially launched the fund on Ethereum in March.

The BUIDL fund, which BlackRock debuted two months after iShares Bitcoin Trust, its popular bitcoin exchange-traded fund, gives investors an opportunity to earn U.S. dollar yields through a blockchain-based vehicle. The idea of tokenizing “real world assets” such as gold, a key aspect of decentralized finance, or DeFi, has gained popularity among financial institutions that are cautious on crypto assets but keen on the underlying blockchain technology.

“There’s some irony in the fact that with … [iShares Bitcoin Trust], we took a crypto native investment exposure and we put it in a traditional finance wrapper … and with tokenization, we’re taking traditional finance investment exposure, and we’re putting it in a crypto native wrapper,” Robert Mitchnick, BlackRock’s head of digital assets, said in March.

“That dichotomy will persist for a while,” he added at the time. “But eventually, we expect there will be some convergence that looks like the best of the old system and the best of this new technology fused into a next generation infrastructure set in finance.”

The announcement follows a weeklong rally in cryptocurrencies after Donald Trump’s victory in the U.S. presidential election. Polygon’s token climbed 28%, according to Coin Metrics. On the campaign trail, Trump promised more supportive regulations for crypto projects and businesses, a reversal from Biden administration policy, in which the U.S. Securities and Exchange Commission has largely regulated the industry through enforcement actions, hampering growth.

DeFi is one of the most popular sectors among crypto market participants but has suffered from the lack of regulatory clarity, with tokens of some DeFi projects being classified as securities in SEC lawsuits against Binance and Coinbase last year.

Don’t miss these cryptocurrency insights from CNBC PRO:

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Bitcoin climbs above $93,000 for the first time as investors digest postelection gains, inflation data

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Bitcoin climbs above ,000 for the first time as investors digest postelection gains, inflation data

Chesnot | Getty Images

Bitcoin rose above $93,000 for the first time on Wednesday, adding to its postelection rally, as traders pored through October inflation data.

The price of the flagship cryptocurrency was last higher by more than 3% at $92,612.27. At one point, it briefly rose to a fresh record of $93,469.08.

Traders were digesting the most recent consumer price index, which showed prices increased 0.2% in October, bringing the 12-month inflation rate up to 2.6%. That was in line with expectations.

Bitcoin, which has recently benefited from a big postelection rally across risk assets, is seen by many investors as a hedge against potential fiscal policy that could spark inflation.

Other cryptocurrencies got a small boost as traders digested the past week of postelection gains. Ether and the Solana token were each higher by about 1%.

Dogecoin added 3%. It has been one of the biggest winners since the election due to Tesla CEO Elon Musk’s involvement in President-elect Donald Trump’s campaign and forthcoming role in his administration, which was announced Tuesday night.

Don’t miss these cryptocurrency insights from CNBC PRO:

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