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Thursday 27 August 2020

Etsy CEO: Anti-Competitive Act By Amazon To Consolidate Market Power

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Etsy CEO: Anti-Competitive Act By Amazon To Consolidate Market Power

“Amazon then has turned around and supported a bill in California to say that every other online marketplace that’s not acting like a retailer (as Amazon is) should be held strictly liable,” says Etsy CEO Josh Silverman. “So Craigslist or eBay or Etsy should have liability. This is going to have tremendous consequences for the 3 million sellers on Etsy and for all sorts of small businesses all around the country should Amazon prevail in this fight. It’s really an anti-competitive act from amazon to consolidate their market power.”

Josh Silverman, CEO of Etsy, discusses how Amazon is using its financial power to cynically support legislation it was previously against for the sole purpose of crushing smaller competitors such as Etsy:

Wolf In Sheep’s Clothing To Protect Amazon’s Market Power

I think this is an important issue and it’s important for everyone in America. This is a wolf in sheep’s clothing designed to protect Amazon’s market power and extend Amazon’s market power. It’s dressed up to look like consumer protection.

Here’s what’s going on. Consumers, of course, need to be protected if something goes wrong with a purchase. There’s a long history of law that says if you buy something from a retailer and something goes wrong that retailer is strictly liable. It also says if you buy something on a marketplace the vendor on the marketplace is liable but the marketplace itself is not. Think if you buy something from a flea market, the landlord who owns the parking lot is not liable, it’s the person you bought it from at the flea market.

Tremendous Consequences For Etsy Should Amazon Prevail

So the question, and there’s been a gap in recent law, what happens when a marketplace starts to look and act like a retailer? We don’t need California to come and pass a law on that because the California judiciary just settled that issue last week. They said Amazon looks like a duck and smells like a duck so it acts like a retailer. It exerts control, it picks the inventory, it stores the inventory in its warehouses, it pick-packs and ships the inventory, it puts it in an Amazon box and it delivers the box to your door in an Amazon van. It said Amazon meets the standard of acting like a retailer and therefore it should be liable like a retailer.

Amazon then has turned around and supported the bill in California to say, well then every other online marketplace that’s not acting like a retailer should be held strictly liable. So Craigslist or eBay or Etsy should have liability. This is going to have tremendous consequences for the 3 million sellers on Etsy and for all sorts of small businesses all around the country should Amazon prevail in this fight.

Anti-Competitive Act By Amazon To Consolidate Market Power

Amazon has previously been fighting these kinds of bills for years. It’s so cynical. They lost this court case because the court found that they act like a retailer. So they’re now strictly liable in the cases where they act like a retailer. The court didn’t find that they do it every time. The court set a standard for what are the tripping points. They gave guidance for other courts on when is a marketplace actually acting so much like a retailer that they should be held strictly liable. Amazon would trip that wire most of the time.

Amazon then flipped and said well this is an inconvenience for us but it would be a crushing burden for small businesses, for our competitors, for people like Craigslist or Etsy. They’ve now backed a law saying since we have to do this because we act like a retailer we want all online marketplaces to also be held liable even if they don’t act like a retailer. The reason is that this is so complex that a smaller place, a marketplace like Etsy, which never touches the merchandise, which doesn’t fulfill, which doesn’t pick pack and ship, simply can’t comply. It’s really an anti-competitive act from amazon to consolidate their market power.