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The Threats to Amazon


“If they can succeed in automating more low-level labor tasks, they will be less dependent on human labor,” Mr. Van Alstyne said. Robots are used throughout Amazon already, and the company is racing to expand their use in an effort to meet the punishing demands of Prime delivery logistics. But Amazon’s efforts to automate could open the company up to additional liabilities.

The looming threats to Amazon

For Amazon robots to be able to stock, select, pack and ship goods, all of those products need to be inside the company’s fulfillment centers, allowing Amazon to control the entire delivery process instead of outsourcing shipment to partners. Amazon is rapidly building warehouses to bring even more products in-house — a decision that could strengthen the legal case that they are liable for the safety of those products.

Lawmakers are increasingly agitating to reform Section 230, the provision of the Communications Decency Act that shields platform companies from liability for harmful content on their platforms. While the provision is most often considered in regard to hate speech and misinformation on social media platforms, reforms to Section 230 could also open Amazon up to liability for harmful or defective products sold on its platform. With more and more products stored in-house, it will be increasingly difficult for Amazon to legally argue that it is simply a third-party platform and not the seller.

Complicating these third-party claims are Amazon’s ambitions as a retailer — ambitions that Matthew Hytinen, 41, a former vendor manager at Amazon who left the country in 2015, argues are monopolistic.

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“How much should the owner of the marketplace be able to leverage and control all our data?” Mr. Hytinen asked, adding that complete visibility into customer purchasing habits allows Amazon to identify its most in-demand products and then manufacture, advertise and sell its own version, often outselling its competitors.

“The problem is that it’s unfair entry,” Mr. Van Alstyne said. “I do anticipate that will be addressed in subsequent legislation.”

Data privacy regulations, most actively being pursued in the European Union, could complicate a critical pillar of the company’s business. Amazon is one of the largest cloud computing companies in the world and is responsible for over a third of the country’s data storage market. Revenue from Amazon Web Services has grown almost 39 percent from a year ago, up to $16.11 billion in the last quarter — and any regulation that creates red tape on the storage and use of data could affect revenue for the company in this vertical.



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