Is Amazon’s Marketplace Doomed?

Courts can’t quite figure out how to treat Internet companies. Amazon is an interesting mix. It sells some products itself, it offers other products that are sold and fulfilled by third parties and it does a mix (products sold by third parties but fulfilled by Amazon).

I hope Amazon is hiring a lot of lawyers because they are going to need them.

In 2020 the California Appeals court said that Amazon was strictly liable for items, in this case a battery that exploded, sold by a third party, but fulfilled by Amazon. The court reasoned that it was too hard to reach the third party seller to sue them. Then last year, the same court said that Amazon was liable for a Hoverboard that caught fire, even though all they did is match the buyer and seller.

Now a California court says that Amazon is liable to put a Prop 65 warning on products that are sold by third parties. The court said that Amazon should review the tens of millions of products that they don’t sell directly, figure out which ones need a Prop 65 warning and change the seller’s listing if the seller didn’t have a warning.

Amazon might just put a warning on everything for everyone that says DUE TO A STUPID JUDGE, WE ARE REQUIRED TO TELL YOU THAT THIS MIGHT BE HAZARDOUS TO YOUR HEALTH, EVEN THOUGH WE DON’T KNOW WHETHER THAT IS TRUE AND DON’T EVEN HAVE ACCESS TO THE PRODUCT.

The problem is that they can’t hold the seller liable since many of these sellers are not in the U.S. or are mom and pop companies, so that won’t protect them.

Alternatively, they could get out of the marketplace business, but that is a goodly chunk of their business.

But here is the real rub. Does that mean that every company that sells stuff online is at the same risk? Logic says so. Other than the judge might not like Amazon, they are no different than any other company that sells stuff online.

eBay – sure.

Craigslist – yup.

What about someone that has an ad on their site for a product and that should contain a warning – probably?

The courts are going to need to figure all this stuff out. Which is a problem for judges that have zero understanding of technology. Even those judges who have their assistants print out their emails for them.

Of course, in Amazon’s case, they have lots of money and lots of lawyers, so they might be able to tie this up in appeals for the next decade, but at some point, we have to figure this out.

Credit: Professor Eric Goldman

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