Etsy's CEO slams Amazon for trying to twist a California consumer protection bill into a tool to 'wipe out its competitors'

• Etsy CEO Josh Silverman accused Amazon of attempting to stifle competition by lobbying California lawmakers to make a proposed consumer protection bill overly burdensome for smaller players.
• In a blog post Tuesday, Silverman said Amazon was "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, AB-3262, would hold online marketplaces liable for defective products similarly to physical retailers, but Silverman said the version Amazon lobbied for will ultimately hurt small businesses.
• A California court ruled earlier this month that Amazon is liable for defective products sold by third-parties on its site due to the "pivotal" role it played in transactions.

Amazon came under fire Tuesday from Etsy CEO Josh Silverman, who alleged in a blog post that the company was trying to turn a proposed California consumer protection bill into a "wolf in sheep's clothing" that would stifle competition.

"Amazon is taking bold steps to wipe out its competitors by promoting complex, hard-to-comply-with legislation that only they can afford to absorb. Amazon's goal is to be the only place to buy stuff online," Silverman wrote.

Amazon did not respond to Business Insider's request for comment.

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In California, lawmakers are expected to vote this week on AB-3262, a bill that would make online marketplaces liable for defective products sold on their sites by third parties — like brick-and-mortar stores and most retailers are already — which would be the first such law in the US.

The original version of the bill exempted online sales of auctioned and handmade goods, as well as classified ads sites, meaning most products sold on marketplaces like Etsy, eBay, and Craigslist.

But on Monday, days after Amazon said in a blog post that it would support a version of the bill that applied to all online marketplaces, lawmakers amended AB-3262 to do exactly that.

Silverman accused Amazon of "working back channels to redirect this legislation to their advantage" by lobbying lawmakers to extend its scope to all stores, which he said would harm smaller marketplaces who don't have the resources to comply with its complicated provisions as well as small businesses and consumers onto whom smaller marketplaces would likely pass off those new costs.

"While AB 3262 will be an inconvenience to the e-commerce behemoth, it could be crushing to smaller e-commerce players," Silverman wrote.

"This is an abuse of market power play," he added, noting recent criticism of Amazon's potentially anti-competitive behavior from lawmakers, third-party sellers, and startups the company has invested in.

"Injured consumers should be able to seek compensation regardless of how a particular online marketplace makes money," Amazon head of public policy Brian Huseman argued in the Friday blog post. "For AB 3262 to be a successful, lasting, and meaningful law, it cannot leave open loopholes for some marketplaces to escape accountability."

Amazon has successfully evaded legal liability for dangerous and defective products for years, but a California court ruled earlier this month that the retail giant should be on the hook after a woman alleged she was severely burned when a replacement laptop battery she purchased on Amazon exploded.

Amazon argued in the case that it wasn't liable because "it did not distribute, manufacture, or sell the product," which was sold by a third-party seller, but the court disagreed.

"Whatever term we use to describe Amazon's role, be it 'retailer,' 'distributor,' or merely 'facilitator,' it was pivotal in bringing the product here to the consumer," the judge in the case concluded.

In recent years, more pressure has mounted on lawmakers and regulators to hold online marketplaces and tech platforms — such as Facebook and Twitter, Uber and Lyft, and Airbnb — accountable for how third parties behave while using their services.

Like Etsy, smaller competitors have pushed back on similar regulatory efforts by arguing that they would ultimately be hurt while the intended targets — large incumbents with massive legal teams and deep pockets — would be more able to adapt or absorb legal penalties for violating the laws.