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Two U.S. senators have asked the Federal Trade Commission to investigate AI shopping assistants from Amazon and Walmart, citing research suggesting the tools may suppress information about American-made products and fail to flag fraudulent country-of-origin labels. The letter from Senators Tammy Baldwin and Rick Scott references a study led by former FTC Chair Lina Khan, which found that Amazon’s Alexa for Shopping and Walmart’s Sparky AI provided more information on foreign-made goods while offering less on U.S. products. Amazon rejected the allegations, calling them fundamentally wrong and saying the assistant directs origin questions to product detail pages for accuracy. Walmart did not immediately respond. The request builds on prior FTC warning letters to both retailers regarding third-party seller origin claims.
Key Elements
A bipartisan pair of U.S. senators is pressing the Federal Trade Commission to open an investigation into AI-powered shopping assistants from Amazon.com Inc. (AMZN) and Walmart Inc. (WMT), arguing the tools may steer consumers away from American-made goods while failing to police fraudulent country-of-origin labels.
Senators Tammy Baldwin of Wisconsin and Rick Scott of Florida sent a letter to the agency on Thursday requesting the probe. They contend that Amazon’s Alexa for Shopping and Walmart’s Sparky AI could undermine federal efforts to boost domestic manufacturing and leave shoppers with misleading information about where products are made.
The lawmakers leaned heavily on research from a think tank led by former FTC Chair Lina Khan. That study found the two chatbots handled origin information unevenly, offering details on goods produced in countries such as China while providing less information on U.S.-made alternatives.
In one exchange cited in the letter, researchers asked Alexa why the assistant lacked a “Made in USA” filter. According to the senators, the chatbot responded that adding such a feature would “redirect significant sales away from their largest seller base,” a reference to overseas manufacturers.
Walmart’s Sparky gave a similar account when pressed on why it did not flag suspicious origin claims. The study found the assistant described the inaction as a business decision, pointing to what it characterized as limited FTC enforcement against major retailers.
The research also concluded that the AI shopping tools are often technically capable of identifying potentially false “Made in USA” labels, but that Amazon and Walmart are not deploying that capability to crack down on problematic listings. The senators argued this failure harms American factories and small businesses that manufacture products domestically.
Amazon pushed back forcefully on the allegations. A company spokesperson said in an emailed statement that the suggestion the retailer intentionally withholds country-of-origin information from customers is “fundamentally wrong.” The spokesperson added that Alexa for Shopping is a continuously improving service and that, to prioritize accuracy, the assistant currently directs customers who ask about product origin to detail pages.
Walmart did not immediately respond to a request for comment. The FTC declined to comment.
Regulatory Pressure Builds
The senators’ letter arrives against a backdrop of escalating federal scrutiny of large retail platforms. Last year, the FTC sent warning letters to both companies instructing them to verify origin claims made by third-party sellers on their marketplaces. The agency is also pursuing an ongoing antitrust lawsuit against Amazon over allegations that it maintains an unlawful online monopoly.
Regulators have grown increasingly concerned that algorithmic bias in shopping tools could give foreign sellers an unfair advantage over domestic businesses. If the FTC launches a formal investigation, both companies could face new rules governing how their automated software recommends products to online shoppers.
The letter urged the FTC to consider additional enforcement measures following what the senators described as a strong basis for investigation. They argued that federal action is necessary to ensure shoppers receive accurate information about product origins.
Market Reaction and Analyst Sentiment
Investors appeared to take the news in stride. Amazon shares were trading about 2.2% higher on Thursday afternoon, while Walmart stock was down nearly 1%. The divergence was modest given the broader regulatory context, with Amazon having gained more than 8% year-to-date and Walmart declining nearly 5% over the same period.
Retail sentiment on Stocktwits was bearish for both tickers at the time of the report, with message volume described as normal for Amazon and low for Walmart.
Wall Street analysts, meanwhile, have maintained constructive long-term outlooks on both retail giants. Amazon currently holds a Strong Buy consensus rating, trading near $252.00 with an average price target of $333.89, implying roughly 32.5% upside potential. Walmart trades near $106.30 and also carries a Strong Buy consensus, with analysts setting a price target of $128.27, pointing to about 20.7% upside.
The regulatory risk adds a new dimension to the competitive landscape for AI shopping assistants, a category both companies have positioned as a key growth area. The outcome of any FTC action could shape how these tools disclose product origin information and handle seller claims across the e-commerce sector.
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