Tag: Amazon

University of Washington School of Law

Kill Quill: Volume 2

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By Michael Rebagliati

2017 ended with a legislative bang as Congressional Republicans (rapidly) passed the most sweeping overhaul of the tax code in a generation. For many tax lawyers, 2018 has begun with a whimper as they scramble to understand what this means for their clients.

And yet, another major change to U.S. tax law still looms on the policy horizon. But this time, the change is coming not from Congress, but from the Supreme Court. On January 12th, the Supreme Court granted certiorari in the case of South Dakota v. Wayfair, Inc. Read More

University of Washington School of Law

Antitrust Implications of Amazon’s Purported New Delivery Service

Amazon-Shopping-in-KenyaBy Gardner Reed

Amazon’s recent acquisition of Whole Foods has renewed the debate surrounding the proper role of antitrust regulation. The traditional approach to antitrust law aims to protect consumers by keeping prices down and quality up. The Whole Foods acquisition, along with the growing dominance of large tech firms such as Google, has helped popularize a new approach to antitrust: “hipster antitrust.” Hipster antitrust widens the objectives of traditional antitrust regulation, not only protecting consumers through fostering competition, but also using antitrust enforcement to attack problems such as economic inequality and environmental degradation. While the Federal Trade Commission promptly approved the Whole Foods acquisition, recent reports that Amazon is developing a delivery service to rival FedEX and UPS may raise a new round of competitive questions and continue the debate surrounding the proper role of antitrust regulation.

To begin, it is important to understand why Amazon’s acquisition of Whole Foods was not an antitrust violation. First, Amazon itself only sells a small amount of groceries and Whole Foods only accounts for two percent of the American grocery market. Second, the grocery market contains far larger and more entrenched competitors, such as Walmart with a twenty percent market share and Kroger with a seven percent share. Third, antitrust regulators, applying the traditional approach to antitrust, believe that fostering competition is the best way to promote low prices and high quality. Because this merger accounted for only a small share of the grocery market, consumers were left with plenty of competitive alternatives whether or not it led to lower prices or higher quality services.

However, recent reports indicate that Amazon is planning to launch a new delivery service similar to FedEX and UPS. According to Bloomberg, project “Seller Flex” began a trial run on the West Coast in 2017 with an expansion planned for 2018. The purpose of the system is to decrease the crowding in Amazon’s warehouses and increase the number of products available through two-day delivery. Under this new system, Amazon will directly oversee the pickup and delivery of packages from the warehouses of third-party merchants who market their items on Amazon.com. Traditionally, when delivering to end consumers, merchants had the choice to ship their products directly through Amazon or to use third-party carriers such as FedEX and UPS. Amazon may still elect to use FedEX and UPS to make deliveries, but merchants will no longer be able to make the decision on their own. Amazon expects that its increased control of the shipping process will allow it to save money through volume discounts, avoiding congestion, and increasing its flexibility.

By drawing comparisons with Amazon’s acquisition of Whole Foods it is possible to identify potential competitive concerns implicated by the new delivery system. The key difference is the amount of competitive power Amazon wields in each market. In the grocery market, Amazon is not an antitrust risk because it is a small player with only a two percent market share, which gives it essentially no ability to affect its competitors’ businesses or the market as a whole. In the e-commerce market, however, Amazon provides an essential platform and acts as a gateway for businesses to reach consumers across the United States. In the past, merchants could participate on Amazon’s platform, but retained the option to select their preference of delivery service. By requiring the use of its own delivery service, however, Amazon will be depriving its merchants of choice. Given Amazon’s power in the e-commerce market, merchants have limited alternatives to Amazon’s platform and thus may have no other realistic option outside of using Amazon’s in-house delivery service. This lack of competition in delivery methods could potentially raise end prices for consumers.

Ultimately, it is too early to predict the competitive effects of Amazon’s delivery service, but different schools of antitrust may reach different conclusions. Consistent with its track record, it is likely that Amazon will do everything in its power to lower prices and offer a better service by integrating delivery into its e-commerce platform. Under these circumstances, a traditional antitrust review would not likely find a problem. A review under “hipster antitrust”, however, may find a problem regardless of the cost or quality outcome. As part of a larger policy matter, such as protecting small businesses, Amazon’s acquisition of more power and the reduction of choice for its merchants may simply be unacceptable. Regardless of the outcome, Amazon’s continued expansion of its operations has all but guaranteed that it will remain a focus of antitrust discussions for the foreseeable future.

University of Washington School of Law

Slippery Slope for Online Service Providers with New California Appellate Court Ruling

ispsBy Tyler Quillin

The most important law governing the internet just had its 20th birthday earlier this year, the Communications Decency Act (CDA). Signed by President Bill Clinton in 1996, the CDA grants online service providers immunity from liability for most illegal activities of their users. What’s more, the CDA not only allows large internet-based companies like Facebook, Amazon, and Yelp! to survive because they don’t have to individually each user’s activity, it also enables a large portion of the freedom of speech the general public enjoys online daily.

Yet, despite 20 years of precedent, the CDA has come under scrutiny. Most notably, a California appellate court issued a ruling that included an order for Yelp!, a nonparty to the case, to take down a defamatory post involving an attorney who sued a former client for posting defamatory comments and reviews on Yelp!. Along with the court order to take down the reviews, the attorney won on a default judgment to the tune of over $500,000.

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University of Washington School of Law

Legal Tender? Amazon’s Refusal to Accept Cash at its Bookstores and the Move Towards a Cashless Society

amazonBy Christian Kaiser

In late 2015, Amazon opened a physical bookstore in the University Village shopping center in Seattle. From what I can tell, it appears to be popular. My dad, an avid Amazon shopper, trekked over to check it out; it was “pretty cool.” However, there is something odd about this store, ignoring the irony of Amazon opening a physical bookstore, of course. The store does not accept cash as a form of payment. I have been to businesses that are “cash only,” but never “credit/debit” only. Read More

University of Washington School of Law

‘Freaky Fast’ Sandwich Maker’s Non-Compete May Inspire Quick Changes to the Law

IMG_2237By Grady Hepworth

Last year, national sandwich chain Jimmy John’s garnered widespread media attention after it was revealed that the company requires many of its sandwich makers, and some delivery-drivers, to sign non-compete agreements for entry-level jobs. The Huffington Post originally obtained Jimmy John’s non-competition covenant, and Jimmy John’s has since become the center of litigation, as well as Congressional legislation, to protect the mobility of low-wage workers.

Jimmy John’s non-compete agreement shocked some, and outraged others, for its potentially far-reaching effects and the hardship it could impose on low-wage workers. The agreement prohibited former employees from working for any sandwich-making restaurant within a three-mile radius of a Jimmy John’s location within city limits, for at least two years. As drafted, the agreement could preclude former employees from working for any competing restaurant within an entire city (the covenant applies to any restaurant that derives at least ten percent of its profits from sandwich-like products). Jimmy John’s justifies the agreement due to the “substantial time, effort, and money in developing the products sold to customers” and effort spent “refining the procedures to be used in operating” Jimmy John’s restaurants. Subsequently, the controversy has inspired media outlets to expose similar low-wage non-compete agreements utilized by other companies, including Amazon. Read More