California lawmakers have staked their claim as national leaders when it comes to regulating the tech industry in recent years, often demonstrating more in common with their European peers than they do those back home in reining in the power of these tech giants. Now, with the announcement of new allegations against Amazon coming from Europe, California lawmakers once again have an opportunity to send an unmistakable message and join alongside these regulators to address the unyielding power that Amazon has amassed.
E.U. Competition Commissioner Margrethe Vestager launched an investigation in July 2019 into whether Amazon misuses — or worse, abuses — data from its third-party marketplace sellers. What resulted was a harrowing report that Amazon takes critical data from the 800,000 sellers on its French and Germany websites, such as sales figures, page views, and shipping information, to inform decisions about what products it should sell itself.
California third-party marketplace sellers — those who Amazon has depended on for years to fuel its massive growth — are all too familiar with these accusations. Working closely with online sellers in the state and worldwide, I have witnessed first-hand how Amazon is able to pick winners and losers in its marketplace at the expense of these small businesses— and have even had my own products copied by Amazon’s private label and offered for sale with preferential placement not available to me as a seller.
If regulators have found these instances of Amazon taking advantage of seller data to benefit its own private label and retail businesses taking place in France and Germany, they can certainly find such instances here in California and across the nation as well. With more than one in five Amazon sellers located in California, it is clear that the state must get serious about protecting sellers who depend on these online marketplaces for their livelihoods.
Meanwhile, this would not be the first time that officials in California took a leading role in challenging the most dominant tech companies. California lawmakers looked across the Atlantic when crafting their sweeping data privacy laws, which mirror the European General Data Protection Regulation and are now among the most stringent in the world.
And when it comes to Amazon in particular, California officials have already begun following in Europe’s footsteps. In fact, earlier this year Attorney General Xavier Becerra launched his own investigation on how Amazon treats sellers in its online marketplace, with a focus on Amazon’s practices for selling its own products in competition with third-party sellers just as Commissioner Vestager has done in the E.U.
There are any number of important measures California lawmakers could take that would help level the playing field. For instance, third-party sellers should be allowed to file suit in California against Amazon both individually and collectively for unfair practices, which current agreements make impossible to do now. At the same time, lawmakers could explore new rules that would prevent Amazon from punishing third-party sellers when Amazon finds them offering a lower price on another e-commerce platform — a hallmark of competition that the company is actively stifling.
Now is the time for California lawmakers to approach these issues with a fresh perspective. Taking a stand alongside Commissioner Vestager would be a welcome sign to sellers that policymakers in one of the leading states for tech policy, California, are serious in their commitment to ensuring a level playing field for all competitors on the digital marketplace.
Small businesses in California that depend on the digital marketplace need a champion in their corner. Lawmakers in the Golden State must take the lead to help support these sellers as we confront this challenge.