Etsy CEO Josh Silverman on Tuesday accused Amazon of taking abruptly bold steps to wipe out its competitors by backing the bill AB 3262. Amazon came under fire on Tuesday when Silverman, alleged in a blog post that the e-commerce giant was trying to modify a proposed California consumer protection bill into a “wolf in sheep’s clothing” that would affect its competition. In his blog post, he mentioned that Amazon is taking bold steps to wipe out its all competitors by promoting complex, hard to follow legislative rules that only they can afford to follow. According to him, Amazon’s only goal is to be the only market place to buy things online.
This week, California’s legislative assembly is coercing forward to pass a Consumer Protection Bill that is based on product liability. The lobbying around the bill is that it’s all about consumer protection and placing its major accountability on e-commerce giants like Amazon. But in reality, the bill would bolster the confidence of big players like Amazon, but stumble the small businesses. It will not be able to add protections beyond those that consumers already have under the guided law.
The bill, known as AB 3262, was initially intended to hold Amazon accountable for selling Californians cheap goods and dangerous products that are mass-produced in other shady countries. But while the state of California is burning under wildfires and no one is watching such acts, Amazon has quietly signed up in support of AB 3262 bill. And Amazon has been working back channels to take all the possible advantages from this legislation.
Amazon on Friday broke away from its peers and fellow business houses when it declared its conditional support for the bill, AB 3262. This bill seeks to hold “electronic retail marketplaces” to the same liability standards as applied to brick-and-mortar retailers. The bill has instigated opposition not only from Etsy but also from EBay’s public policy arm and a few of industry groups that feel existing law already protects consumers and that it will hamper small businesses that sell products online
Why would Amazon sign up to support a bill that is supposedly Anti-Amazon?
It is simple, with Amazon’s lobbying, AB 3262 has been modified and is an increasingly complicated piece of legislation that is going to be expensive for any small or mid-sized business to try to comply with. Amazon is sure and betting on that. While AB 3262 will be a convenience to the e-commerce colossal, it could demolish the smaller e-commerce players.
Amazon’s move comes as a shock as California’s state senate is expected to vote on AB 3262 this week right after it was approved by the California assembly. If it comes to pass, AB 3262 would be the first U.S. law of its kind to hold online retail giants like Amazon liable for defective goods sold on their platforms.
At the beginning of this month, Amazon received a huge blow after a California appeals court ruled that it could be held liable for damages caused by a defective replacement laptop battery that caught fire and gave a resident third-degree burns. The woman, named Angela Bolger, claims that she bought the laptop battery from a third-party seller, Lenoge Technology HK Ltd., on Amazon’s retail marketplace.
Amazon has successfully fought any lawsuit that tries to place liability on the company for faulty products sold through its mobile application or website that cause injury and property damage. It has long maintained that it’s merely a web channel between buyers and third-party sellers. No doubt Amazon has made buying and selling products easy for everyone across the world. But the recent California resolution over the proposed liability bill may weaken that defense. Amazon supervises an expanding marketplace that hosts millions of third-party sellers and now accounts for approximately 60% of the company’s e-commerce sales. While the marketplace has helped Amazon brings in immense revenue, it has sometimes delivered unsafe and expired goods from 3d party sellers.
Amazon faces more pressure from regulators who are examining its efforts to control the marketplace, among other issues. CEO Jeff Bezos was grilled about the sale of erroneous products on the marketplace during a July hearing before the Judiciary’s antitrust subcommittee. Bezos said Amazon thoroughly counsels sellers on its marketplace and even called for Congress to pass stringent laws to control counterfeiters.
An Amazon spokesperson directed media to the Friday blog post written by its public policy chief Brian Huseman. He wrote that the company would support AB 3262 if it were to include all the online marketplaces regardless of their differing business models. He further said that all the injured consumers should be able to seek compensation regardless of how a particular online marketplace makes a profit. Huseman also pointed to how online marketplaces profit by charging sellers to list a product, by taking a cut of sales or via advertising on the marketplace.
On Monday, US lawmakers amended the bill to include all online marketplaces that derive profit of advertising fees collected by merchants, quite similar in response to Amazon’s blog post. In recent years, more pressure has been exerted on regulators and lawmakers to hold online marketplaces and technology platforms — such as Twitter, Facebook, Uber, Lyft, and Airbnb accountable for how third parties behave while using their services.
Like Etsy, smaller competitors have been pushed back on similar regulatory compliance by arguing that they would ultimately be hurt while the bigger companies with massive legal teams and deep pockets, would be more able to absorb legal penalties for violating the laws.