California blames Amazon. Ohio doesn't

Fully Charged
Bloomberg

Hey it's Josh. The Ohio Supreme Court said Thursday that Amazon.com Inc. wasn't legally liable for a 2014 incident in which a teenage boy died after ingesting a product called "Hard Rhino Caffeine Powder" purchased through the company's website. It's the latest in a string of court decisions on whether e-commerce companies—but, really, one e-commerce company in particular—should be held responsible for defective products purchased on their platforms. It won't be the last.

The stakes for Amazon could be very high. Nearly 60% of the physical goods purchased on its website are sold by outside companies. It made $53.8 billion from third-party seller services last year. Amazon describes its role in these sales as mere facilitator, and has traditionally argued it should therefore not be seen as a party to those transactions.

Angry customers have taken issue with that explanation for a few reasons. First, it's not always easy to bring the companies selling defective goods  to account. Some people who have attempted to sue individual Amazon sellers have found they exist entirely outside of U.S. jurisdiction, or failed to even uncover who they were. (Amazon did say this July that it would stop allowing merchants to remain anonymous, which was a good reminder that it had been allowing anonymous sales up to that point.)

In many third-party seller transactions, Amazon is also a pretty active participant. This August, a California appeals court ruled that the company was liable for injuries caused to a customer who sued after a laptop battery she bought exploded. In its decision, the court noted that Amazon stored the battery in its warehouse, took payment for it and shipped it in Amazon-branded packaging.

By contrast, in the Ohio caffeine powder case where Amazon was not found liable, the seller did its own shipping. There are the seeds of a middle ground. In the future, Amazon theoretically could assume legal responsibility for transactions it exerts more control over, while avoiding it for those it has less control over.

Then again, Amazon could keep appealing cases it doesn't find satisfying and see if it can get the U.S. Supreme Court to settle the matter altogether.

If you have more than a passing knowledge of U.S. internet law, the contours of this dispute may sound familiar. They track closely with the debate over Section 230 of the Communications Decency Act, which shields internet companies from certain legal liability related to content their users post, and which many people credit with enabling the creation of social media and the modern internet.

In recent years, dissatisfaction with the behavior of companies like Facebook Inc. and Twitter Inc. has led to mounting momentum to overhaul Section 230. And on Thursday, a Senate committee voted to subpoena the chief executive officers of Facebook, Twitter and Alphabet Inc.'s Google to a hearing about the law. Legislative proposals are proliferating. 

A similar dynamic may be set to emerge about Amazon's liability. One of the justices in the Ohio case wrote that Amazon was only avoiding liability because the current law had outlived its utility. "Applying the 1980s retail-sales paradigm to modern e-commerce produces results that strike me as inequitable," wrote Justice Michael Donnelly. "The divide between the pre-internet age and the current age is so profound that laws like this Act might as well have been written in the stone age."

Amazon seems to know a change is coming. After California lawmakers laid out a plan to hold e-commerce platforms liable for what is sold on their sites, the effort got an unlikely supporter: Amazon itself. Apparently betting that additional liability was unavoidable, the company said it would support such a law, so long as it eliminated "loopholes for some marketplaces to escape accountability." The CEO of Etsy responded by accusing Amazon of "taking bold steps to wipe out its competitors by promoting complex, hard-to-comply-with legislation that only they can afford to absorb."

The bill in California eventually died, though it may come back up next session. This debate is far from over. Joshua Brustein

If you read one thing

Almost 20,000 Amazon workers tested positive for Covid-19 over a recent six-month period, the company said. Amazon employed about 1.37 million front-line employees over that period, translating to an infection rate of 1.44%. Amazon noted that infection rates among its workers were lower than in the U.S. population as a whole. 

And here's what you need to know in global technology news

Facebook is pushing users to join more groups, while also giving group administrators more power to crack down on problematic content.

Coinbase asked its employees to refrain from political talk in the workplace (or take a buyout). Now, some staffers fear being muzzled. 

Google will pay news publishers more than $1 billion over three years to display their content in a curated app, a concession unlikely to mollify public officials who continue to accuse it of abusing its gatekeeper status. 

Video game powerhouse Roblox is reportedly planning to go public as soon as next year

People are borrowing more e-books through library apps, and publishers are worried

 

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