Legal Frontiers: Amazon Marketplace

In the last two decades Amazon has become a digital behemoth that has transformed the marketplace for goods in the U.S. and in many other countries. Its reach exceeds that of many state actors and its impact on local economies can be enormous. Embedded in the Amazon structure is an entire marketplace of private vendors who use the company's website to market their own goods. Indeed, Amazon Marketplace consists of over 6 million sellers with an aggregate revenue of $175 billion per year, a sum larger than the GDPs of approximately a quarter of the world's countries.

As reported in The Verge, the sellers in the Amazon Marketplace function within a framework of rules promulgated, and ruthlessly enforced, by the company. Increasingly, unscrupulous vendors have resorted to trickery to have competitors banned from the website, and a cottage industry of legal experts and consultants has emerged to guide sellers through Amazon's complex, sometimes byzantine regulations and procedures:

For sellers, Amazon is a quasi-state. They rely on its infrastructure — its warehouses, shipping network, financial systems, and portal to millions of customers — and pay taxes in the form of fees. They also live in terror of its rules, which often change and are harshly enforced. A cryptic email like the one Plansky received can send a seller’s business into bankruptcy, with few avenues for appeal.

Sellers are more worried about a case being opened on Amazon than in actual court, says Dave Bryant, an Amazon seller and blogger. Amazon’s judgment is swifter and less predictable, and now that the company controls nearly half of the online retail market in the US, its rulings can instantly determine the success or failure of your business, he says. “Amazon is the judge, the jury, and the executioner.”

Amazon is far from the only tech company that, having annexed a vast sphere of human activity, finds itself in the position of having to govern it. But Amazon is the only platform that has a $175 billion prize pool tempting people to game it, and the company must constantly implement new rules and penalties, which in turn, become tools for new abuses, which require yet more rules to police. The evolution of its moderation system has been hyper-charged. While Mark Zuckerberg mused recently that Facebook might need an analog to the Supreme Court to adjudicate disputes and hear appeals, Amazon already has something like a judicial system — one that is secretive, volatile, and often terrifying.

For the full article, see "Prime and Punishment: Dirty Dealings in the $175 Billion Amazon Marketplace," (Dec. 19, 2018).