Josh Silverman, CEO of Etsy.
Adam Jeffery | CNBC
Amazon on Friday broke away from its peers when it voiced conditional support for the bill, AB 3262, which seeks to hold “electronic retail marketplaces” to the same liability standards applied to brick-and-mortar retailers. The bill has garnered opposition from Etsy, EBay‘s public policy arm and a slew of industry groups who say existing law already protects consumers and that it will stifle small businesses that sell products online.
Silverman argues Amazon’s support of the bill is in bad faith, calling it an “abuse of power market play.”
“Amazon is taking bold steps to wipe out its competitors by promoting complex, hard-to-comply-with legislation that only they can afford to absorb,” Silverman wrote. “Amazon’s goal is to be the only place to buy stuff online, hobbling mom-and-pops that sell unique items in their own shops, or more frequently since COVID, through marketplaces like Etsy. Small businesses, struggling now more than ever, will ultimately bear the brunt of the overbearing burdens of AB 3262.”
An Amazon spokesperson pointed CNBC to the Friday blog post written by its public policy chief Brian Huseman. Huseman wrote that the company would support AB 3262 if it were to include “all online marketplaces regardless of their business models.”
“Injured consumers should be able to seek compensation regardless of how a particular online marketplace makes money,” Huseman wrote, pointing 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, lawmakers amended the bill to include online marketplaces that profit off of advertising fees collected by merchants, seemingly in response to Amazon’s blog post.
Amazon’s move comes as California’s state senate is expected to vote on AB 3262 this week, after it was approved by the California assembly. Should it come to pass, AB 3262 would be the first U.S. law of its kind to hold online retailers like Amazon liable for defective goods sold on their platforms.
Earlier this month, Amazon was dealt a blow after a California appeals court ruled it could be held liable for damages caused by a defective replacement laptop battery that caught fire and gave a woman third-degree burns. The woman, Angela Bolger, alleges she bought the laptop battery from a third-party seller, Lenoge Technology HK Ltd., on Amazon’s marketplace.
Amazon has successfully fought lawsuits that try to place liability on the company for faulty products sold through its site that cause injury and property damage. It has long maintained that it’s merely a conduit between buyers and third-party sellers.
But the recent California ruling and the proposed liability bill may weaken that defense. Amazon oversees a sprawling 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 bring in record revenue, it has sometimes hosted counterfeit, unsafe and expired goods.
Amazon faces added pressure from regulators who are examining its efforts to police the marketplace, among other issues. CEO Jeff Bezos was grilled about the sale of counterfeits on the marketplace during a July hearing before the House Judiciary’s antitrust subcommittee. Bezos said Amazon thoroughly vets sellers on its marketplace and called for Congress to pass tougher laws targeting counterfeiters.