Amazon Makes Money Exploiting Honest Merchants
The Market Ticker - Commentary on The Capital Markets
2017-11-24 16:39 by Karl Denninger
in Company Specific , 287 references Ignore this thread
Amazon Makes Money Exploiting Honest Merchants
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It's not enough to lobby.  Nor is it enough to buy a newspaper that then has one of its "allegedly honest" writers show up as a speaker at a hard-left political confab the purpose of which is to tilt United States political policy.

Now we've got another report -- this one from merchants, and it's ugly.

Mike Molson Hart, who sells toys on Amazon.com Inc.’s marketplace, realized earlier this month something was amiss. His company’s popular disc-shaped plastic building set, called Brain Flakes, had dropped precipitously in the ranks of Amazon’s best-selling toys as the critical gift-giving season approached.

He visited the product page on Amazon.com and suspected he was the victim of "sniping," when one merchant sabotages another by hiring people to leave critical reviews of their goods and then voting those reviews as being helpful, making them the most prominent feedback seen by shoppers. 

This is a problem trivially solved by Amazon: Do not allow "reviews" from people who haven't bought the product through the site!

But that would cut off the ability of Amazon to exploit people like Mike.

You see, Amazon basically runs a "free" slander service for Mike's competitors right in the middle of his ****ing store!

Amazon knows it too, and what's even worse is that Amazon has many "competitors" for a lot of products on their site.  As a result there is plenty of incentive for unscrupulous vendors to do this sort of thing to their competitors and there is nothing Mike can do about it, especially given the layers of indirection and the offshore location of the places selling this "service" to his competitors where he is effectively prevented from suing.

Of course Amazon will say it polices these sorts of things.  Suuuure they do.  How else, other than through willful blindness, could 10 people slander Mike's products from a nation he has never shipped them to?

Allowing this sort of fraud doesn't cost Amazon any money and in fact probably makes them money since the "competitor" who does this is doing it because he or she sells the same thing and thus Amazon gets a cut of the business either way.  They thus simply do not give a crap; if Mike gets bankrupted and someone else takes all of his business on Amazon Jeff Bezos does not care.

But this means to be "successful" if one of your competitors is slandering you in this fashion then you need to slander all of them or you will lose sales, comparatively, to them -- maybe enough to ruin you!

In other words Amazon has built an environment where not only are the incentives built-in to do actionable or even illegal things they become effectively mandatory to be successful once any of your competitors begin to engage in these tactics.

I think there's a pretty clean argument here that this is an intentional "attractive nuisance", given that Amazon could trivially prevent it -- but for commercial reasons has chosen not to.  Further, by allowing such slander right in the middle of your store with absolutely no way for a merchant to stop it how is it that Amazon escapes joint and several liability with the competitor and the slanderer?

If you're curious why I find the entire concept of opening any sort of business repugnant in today's legal and political environment here's your poster child for the reason.  My competitors could easily abuse such a capacity to damage me and I would have no means of addressing it other than engage in the same conduct aimed at them.

In other words I have to be a crook or I'm bankrupted by all the crooks since those who allegedly "partner with" in some sort of business relationship will sit back and let the crooks ruin me, effectively providing them with the means to do so!

Amazon needs to be sued out of existence for this crap and destroyed, along with any other firm that puts forward such an outrageous enticement to and protection for people engaged in these sorts of nefarious activities.

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