Reining in an unbound Amazon

[Bloomberg]( Follow Us [Get the newsletter]( Hi folks, it’s Brad. Like a lot of other kids over the holiday season of 2015, 9-year-old Ethan Ritter received a hoverboard, one of those two-wheeled self-balancing scooters that have since passed mercifully out of vogue. On New Year’s Day, while charging in his mother’s bedroom in Oroville, California, the lithium ion battery inside the device [exploded](, engulfing the bed, blinds and sheets in flames and burning the boy’s mother on her hand and feet as she tried to extinguish the fire, the family alleges. The hoverboard had been purchased from an independent seller called TurnUpUp on Amazon.com Inc.’s fast-growing marketplace. Because the seller is based in China and presumably out of legal reach, Ritter’s family sued Amazon, claiming it should be held responsible for facilitating the sale and earning a 15 percent fee. Amazon argued it acted merely as an online mall and was not at fault. Last month, a California appeals court ruled that Amazon [can be held liable](, even though the seller stored and shipped the device itself. The decision sent shockwaves through the e-commerce world. Though it will probably be appealed again, the ruling raises the possibility that Amazon might have to exert more control over the activity on its own website. “Courts are rejecting the internet exceptionalism idea when it comes to a company like Amazon,” Agnieszka McPeak, a Gonzaga University professor, [told Bloomberg Law](. The question of whether Amazon should be responsible for the transactions on its platform, even when it doesn’t technically control them, is similar to one facing a [range of internet companies](, including [Facebook](, [Google]( and [Reddit](. It’s also a thread that runs through [my new book](, Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. At the heart of the book is an examination of how Amazon builds large systems with impressive speed but often without enough consideration for the potential consequences and then tries to evade responsibility when havoc predictably ensues. A lot of this starts with Bezos himself. In the mid-2000s, when Bezos was looking for someone to lead the Amazon Marketplace, he routinely asked executives, “How would you get a million sellers” to sign up? They couldn’t possibly recruit a million sellers one by one, so there was really only one answer to the question: They would have to build a self-service platform and let sellers come to Amazon. That’s exactly what happened. By 2015, the value of goods sold through the marketplace surpassed Amazon’s own retail sales. But by lowering the barrier to selling products on Amazon—or practically removing it altogether—low-quality items, knockoffs and defective products flooded onto the site. Numerous lawsuits followed, with Amazon often arguing that it wasn’t a conventional retailer but a technology platform that connects buyers and sellers and thus should not be held responsible. Courts are still trying to sort it all out. A similar dynamic played out in Amazon’s fulfillment network. In 2013, Bezos and colleagues realized that package carries like UPS weren’t going to invest enough in their own operations to keep up with Amazon’s torrid growth. So they rapidly built an in-house logistics arm and a way for drivers and delivery providers to sign up and almost immediately begin ferrying packages to customers’ doors. By 2019, Amazon was [delivering a majority]( of its own parcels in the U.S. But in the early years, once again, quality control was poor. Reports showed drivers [flinging boxes]( into gardens, [relieving themselves]( on lawns and running into and even [killing pedestrians](. As it had in the Marketplace kerfuffle, Amazon claimed in the inevitable lawsuits that it was only a bystander and that the transportation companies and their drivers were at fault. One case [that drew attention]( involved Telesfora Escamilla, an 84-year-old grandmother in Chicago who was struck and killed in late 2016 by an Amazon driver who already had a spotty driving record. The Escamilla family sued Inpax, the company that employed the driver, as well as Amazon, accusing it of putting excessive pressure on drivers to make deliveries on time. The case wound its way through Illinois courts for years and in March 2020 was settled quietly. Companies typically ask judges to seal such negotiated resolutions from the public, claiming the financial details are a private matter. But when I checked the case file one last time earlier this year, as I was just days away from sending my book to the printers, there was the eye-popping figure hiding in plain sight: Amazon and Inpax had agreed to pay the Escamilla family $14 million. Amazon had seemingly taken a share of responsibility for the unintended consequences of its business. As the ruling in the hoverboard case also indicates, the days of Amazon’s uninhibited and unbound growth may finally be coming to an end. —[Brad Stone](mailto:bstone12@bloomberg.net) If you read one thing A ransomware attack forced a shutdown of the biggest gasoline pipeline in the U.S. The decision to close the Colonial Pipeline, part of an effort to contain the cyber-threat, could [upend gasoline and diesel supplies]( on the East Coast. A group called DarkSide is believed to be behind the attack. Paid Post Maximize revenue in every deal. Put your best foot forward to accelerate your company revenue with beautiful, accurate proposals. [Download Conga’s Guide to Proposals]( And here’s what you need to know in global technology news An Amazon warehouse worker died at a company facility in Bessemer, Alabama, the site where employees voted against an [effort to improve working conditions]( by unionizing. The price of Dogecoin, a cryptocurrency promoted by Elon Musk, fell after the billionaire made a joke on Saturday Night Live that “[it’s a hustle](.” Clubhouse is finally available on Android. The social networking startup, which inspired an army of copycats, looks to [significantly expand its audience](. Didi vowed to improve pay for drivers while keeping fares affordable. [The statement]( came after a critical commentary last week in China’s official news agency Xinhua.  Like Fully Charged? | [Get unlimited access to Bloomberg.com](, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters.  You received this message because you are subscribed to Bloomberg's Fully Charged newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022