Amazon, Walmart chatbots attract senator ire over 'made in USA' label snags

• A study by a think tank led by former FTC Chair Lina Khan found that Amazon's Alexa and Walmart's Sparky chatbots suppress 'made in USA' filters, with Alexa reportedly stating it would 'redirect significant sales away from their largest seller base' (overseas manufacturers)
• Walmart's Sparky cited limited FTC enforcement against retailers when asked why it doesn't flag suspicious 'made in USA' claims, calling it 'a business calculation, not a legal justification'
• Senators Tammy Baldwin and Rick Scott are calling for FTC enforcement action, arguing the chatbots undermine American manufacturing promotion and mislead consumers

Summary

Key Development: U.S. Senators Tammy Baldwin and Rick Scott have urged the Federal Trade Commission to investigate Amazon and Walmart over allegations that their AI shopping chatbots—Alexa for Shopping and Sparky—fail to properly flag fraudulent "Made in USA" product labels.

Main Finding: A study by a think tank led by former FTC Chair Lina Khan revealed that these AI assistants suppress information about American-made products while promoting goods from countries like China. When questioned, Amazon's Alexa reportedly stated that adding a "Made in USA" filter would "redirect significant sales away from their largest seller base," referring to overseas manufacturers.

Critical Issue: The research found that while AI shopping assistants can detect false "Made in USA" claims, retailers aren't deploying this technology to combat fraudulent listings. Walmart's Sparky allegedly cited limited FTC enforcement against retailers as justification, calling it "a business calculation, not a legal justification."

Market Implications: This investigation could lead to increased regulatory scrutiny of AI-powered shopping tools and third-party marketplace practices at major retailers. The senators are pushing for "additional enforcement measures" beyond investigation to deter such behavior.

Context: This development comes as former FTC Chair Lina Khan's lawsuit against Amazon for allegedly holding illegal online retail monopolies remains ongoing. Both companies had previously been contacted by senators urging stricter oversight of third-party sellers' origin claims.

Company Response: Amazon, Walmart, and the FTC have not commented on the allegations. The investigation could impact how e-commerce platforms implement AI features and verify product authenticity claims.