Those of us who have been around long enough have no doubt, in arguments online and off-, encountered that particular strain of libertarian, or even anarcho-capitalist, who believes that the private sector always does everything better than the government ever possibly could. Even those things they admit government should be doing. And without the private sector really even having to try much, because, y’know, profit motive.
After you talk to these people, you wonder what it would be like if someone could set up an experiment where for at least some statistically significant group of people, all government functions, or a key one, would be handled by some large private company. Everything we would normally expect the government to do, the corporation would do for its willing, paying customers.
You know it wouldn’t work out the way Mr. Who-Is-John-Galt? is convinced it would. Not quite, at least, any more than central planning kept the shelves full and made everybody happy. But at the same time you grit your teeth and say, that could never happen, so it’ll just be for argument’s sake.
Except it actually has.
About a month ago, The Verge published an in-depth story by Josh Dzieza about Amazon Marketplace , the aspect of today’s defining retailer where the company just provides the space for you and third-party sellers to connect and do commerce with each other, takes its cut, and mostly tries to stay out of the way unless buyers or sellers ask for its help. I was up late Christmas Eve reading it, often laughing.
As I have been rereading it to write this post, I had a greater and greater sense of familiarity that I had encountered this strange world somewhere before but I couldn’t quite place where. Finally it hit me: William Gibson’s early ‘80s novels of the cyberpunk future we are now living in.
If you have to sum it up in a short phrase, it’s … well, the company name has never been so appropriate: Welcome to the jungle!
Amazon Marketplace, as it turns out, is in its way exactly the sort of experiment we imagined:
For sellers, Amazon is a quasi-state. They rely on its infrastructure — its warehouses, shipping network, financial systems, and portal to millions of customers — and pay taxes in the form of fees … [H]aving annexed a vast sphere of human activity, [Amazon] finds itself in the position of having to govern it.
There is a system to it, then … it’s not total anarchy, even if one seller says he knew going in that it was “a state of constant warfare”. But that system has to include at least dispute resolution, and we learn that Hobbes’ Leviathan has reared its head towards the sellers:
They also live in terror of its rules, which often change and are harshly enforced … Sellers are more worried about a case being opened on Amazon than in actual court, says Dave Bryant, an Amazon seller and blogger. Amazon’s judgment is swifter and less predictable, and now that the company controls nearly half of the online retail market in the US, its rulings can instantly determine the success or failure of your business, he says. “Amazon is the judge, the jury, and the executioner.” ...
While Mark Zuckerberg mused recently that Facebook might need an analog to the Supreme Court to adjudicate disputes and hear appeals, Amazon already has something like a judicial system — one that is secretive, volatile, and often terrifying.
Wow. Who’d’a thunk that businesspeople would prefer any aspect of public dispute resolution to working it out privately? (Any of them who got sucked into mandatory arbitration, actually, but that’s another story). Isn’t a “secretive, volatile and terrifying” judiciary something the private sector will inevitably save us from, just by virtue of being private?
The article starts with an account of Zac Plansky, who sells rifle scopes through Marketplace. One bright morning he finds that someone has loaded up his reviews with apparently fake yet glowing ones—not all of them mentioning his products, and some of them using broken English. Since Amazon justifiably punishes sellers who try to pump their numbers up this way, he reported them, and they were removed. However, two weeks later, with no warning, Amazon suspended him since, they had come to believe, he had put those reviews there himself. The article says this ruse is apparently quite common:
As Amazon has escalated its war on fake reviews, sellers have realized that the most effective tactic is not buying them for yourself, but buying them for your competitors — the more obviously fraudulent the better. A handful of glowing testimonials, preferably in broken English about unrelated products and written by a known review purveyor on Fiverr, can not only take out a competitor and allow you to move up a slot in Amazon’s search results, it can land your rival in the bewildering morass of Amazon’s suspension system.
Apparently sellers, having perhaps realized that one can only accomplish so much to become profitable by making a quality product and then distributing it in a timely and efficient manner, especially when several other people/companies are doing exactly the same thing, have realized that what the market (at least on Amazon) truly rewards is innovation, as in: finding new ways to weaponize Amazon’s rules, meant to protect buyers and sellers alike, so you can check your competitors into the boards. And I can understand: with $175 billion, more than the GDP of quite a few countries, changing hands on Marketplace every year, why spend your competitive energies trying to make infinitesimal incremental improvements in how you design and sell your mousetraps to perhaps gain a few tenths of a percentage point in market share when you can gain near double digits by knocking the other guy’s mousetraps off the playing field entirely? Incentives, people, incentives …
Amazon’s judgments are so severe that its own rules have become the ultimate weapon in the constant warfare of Marketplace. Sellers devise all manner of intricate schemes to frame their rivals, as Plansky experienced. They impersonate, copy, deceive, threaten, sabotage, and even bribe Amazon employees for information on their competitors … In the intensely competitive world that Amazon has built, any efforts by the company to clean up seller misbehavior are quickly turned into weapons for sellers to wield against each other.
“We tell people: whenever you’re successful on the Amazon, you have a target on your back” says Cynthia Stine, a Dallas woman, who started as a seller herself, a so-called “scanner monkey” who “hit up local Targets armed with a barcode scanner on her lanyard and a phone in her armband[, then using] an app to check prices on Amazon to find goods she could resell for a profit.” She now makes her money as a consultant, helping other sellers resolve their issues with Amazon, essentially an Amazon virtual lawyer despite no legal background. She gets enough business, and makes enough money, that she has 25 full-time employees.
Tactics range from the standard array of sneaky underhanded things like hijacking a competitor’s name and other intellectual property (apparently even the Patent and Trademark Office has been complicit in this through weak security), then not shipping products that have been paid for, resulting in dissatisfied customers and the nasty reviews they leave, to hacking into their accounts and reclassifying their product category as “sex toys”, which Amazon won’t show unless you click a button swearing you’re an adult. One guy found himself the only purveyor of “sexual childproof door locks” on the site (he wound up purveying nothing to anyone).
One practice, though, that is unique to Amazon, I had to admit, made me laugh. A competing seller will order the competitor’s product, then, once it arrives, set it on fire and take a picture of it burning. They will then post the image along with their one-star comment to the effect of “I bought this and it exploded when I used it!” (see image at top)
You might think this escaped from an unproduced screenplay and thus would not work in real life, at least not more than once, but apparently it is quite effective. The purported buyer doesn’t even have to complain to Amazon that the seller is pushing something unsafe; Amazon’s Performance team sometimes finds them on their own and, especially after the very real problem with exploding hoverboards a couple of years ago, shuts the seller down pronto.
And:
There are more subtle methods of sabotage as well. Sellers will sometimes buy Google ads for their competitors for unrelated products — say, a dog food ad linking to a shampoo listing — so that Amazon’s algorithm sees the rate of clicks converting to sales drop and automatically demotes their product. They will go on the black market and purchase or rent seller accounts with special editing privileges and use them to change the color or description of their rival’s products so they get suspended for too many customers complaining about the item being “not as described.” They will exile their competitor’s listings to an unrelated category — say, move a product with a “Best Seller” badge in the office category to lawn care, taking the badge for themselves.
Now that’s adding value! I have no doubt that Murray Rothbard and David Friedman would be so proud!
Spend some time laughing and then calm down, because the next part isn’t so funny. It’s about what it’s like to be a seller defending yourself against one of these complaints. In a word, and an overused word that seems somehow to still be inadequate to the task at that, it is Kafkaesque. Your first step is to file what Amazon terms an appeal, but “[i]n reality, they’re more like a plea bargain crossed with a business memo, the core of which is a ‘plan of action’ — an explanation of how you’ll make things right. And to make things right, you need to admit to having done something wrong.” So maybe it’s more like Kafka meets Edward Deming.
Perhaps because it is a private company which prioritizes “customer experience”, Amazon takes a caveat venditor—let the seller beware—approach to these complaints. There is nothing, I think readers of this site will agree, intrinsically wrong with that, especially when we have seen the results of the standard caveat emptor doctrine in the real world get taken beyond the point of logic and conscience … but Amazon, in a way that one would have to attribute to some hysterically satirical novel if one weren’t aware that this actually happens, takes it too far in the other direction.
First, customer complaints are taken seriously without any regard for the complainant’s complaint history. Amazon appears not to have considered that, if vexatious litigants are common enough in the real world that there is that legal term for them, they would naturally come to exist online as well.
But at least there is the possibility, you’d think, that complaints would have to clear some bar of severity to be taken seriously in Seattle (or wherever it’s outsourced to; Amazon purposely keeps a lot of information about its Performance team, which handles these things, to itself to make the team less susceptible to undue outside influence. Not that that’s worked, as we’ll see later).
Again (are you getting used to this by now?), you’d be wrong.
The actual infraction can be as slight as the indictment is broad. Stine has a client whose listing for a rustic barn wood picture frame was deemed unsafe and taken down; it turned out the offense was a single customer review that mentioned getting a splinter. (The customer had actually given it five stars.) The seller was allowed back when he promised to add “wear gloves when installing” to his listing. Another seller was suspended for selling Nike shoes that were “not as described.” After he’d filed appeal after appeal proving the shoes were genuine Nikes, Stine’s team figured out the problem: some buyers complained the shoes were too small. That seller was let back on after promising to add a line to the listing recommending customers wear thin socks.
(OK, this was funny again) Stine can practically tell when this is going to happen. While sitting with Dzieza and trolling the site herself (she says that, contrary to what you might think, it is the low-value mundane everyday product categories in which this chicanery is most likely to occur, not luxury items) she happens across a listing for dog toys in which some customers complained the toys were too chewy for their dogs. “Amazon’s not gonna like that,” she predicts.
Even in seemingly clear-cut cases where most sane people would agree the customer was wrong (yes, wrong) or at best mistaken, and you have proof, that’s not enough. One seller who got dinged for “used products sold as new” submitted emails with copies of their receipts for purchase from the manufacturer for the goods. That would be enough for any court in the real world to grant summary judgement in their favor, but not Amazon.
“The thing Amazon wants you to fix is the buyer perception,” Stine says. “Just proving to Amazon that your goods are new is not good enough because Amazon wants you to address why the buyers thought they were used.”
Apparently that perception arose because … the label on the box was peeling off! Call it Total Quality Bureaucracy.
Planksy at least found his issue was easily identifiable and fixable, and he’s back online, sadder and $150,000 poorer but infinitely wiser. Nevertheless, he described the resolution of the process as “I felt like I was in prison for a crime I didn’t commit, and the only way out was to plead guilty.” Another seller says something similar about the infraction (all vaguely defined, something apparently even the Performance team complains about) they got suspended over, which was harder to ascertain. “[It was like] Amazon saying, ‘I’m putting you in jail but not telling you what you did, now give me a justification for why I should let you out and you won’t do it again.’” I’ll take the rule of law, thank you very much.
Which maybe Amazon Marketplace is evolving toward. Stine isn’t the only one charging a few large a pop to help sellers navigate this confusing yet ruthless system to resume their livelihoods; there are a few former Amazon employees and actual lawyers getting in on the action (Job creation! Yay!) One of the latter has actually produced a tome of, we’ll say, case law; it can be yours on (where else?) Amazon for the low low price of $95 in paperback. Stine has also written a book too, if you don’t have that much lying around because Amazon suspended your account after someone posted a picture of the underwear you sold them burning and said it exploded when they put it on.
And yes, sometimes their interventions lead to people who really should be kicked off Amazon managing to stay on:
There are plenty of justified suspensions. The prospect of an easily accessible global market attracts counterfeiters, money launderers, and fencers of stolen goods. Stine had a client who was suspended for trying to sell hand grenades, and another who thought he’d found the deal of a lifetime buying bagfuls of children’s costumes out of a warehouse in Salt Lake City, only to get suspended when the rightful owner reported the costumes stolen. She got him back on a technicality: the company had contacted the seller on the Amazon platform, a violation in itself. A typical seller, she says, he was more concerned about getting back on Amazon than about the fact that police might be waiting for him when he returned to the US from vacation.
It’s hard to keep a straight face writing this, even when you know you should be.
So, we have at least advocates—actually “consultants”; the sellers actually sign the emails or letters—for the accused (and effective ones at that). But what of those who do the accusing and judging? As noted above, Amazon insulates its Performance team from exterior contact: it doesn’t give out its phone number and the only way to clarify what, exactly, led to a violation of its Terms of Service is to file an appeal, cross your fingers and hope. There is a Seller Support team, and they’re apparently as helpful as they can be, which isn’t much as they have no contact with Performance.
Needless to say, nobody knows who these people are, even though they’re potentially deciding the fate of millions of dollars worth of business. But that doesn’t mean people won’t try, and apparently some have succeeded in getting to team members, who are based (reportedly) in the U.S., China, India and Costa Rica.
And, having done so, they have successfully pleaded their own cases and, indeed, many others … with eloquently written checks (Well, not really, nobody who does this sort of thing would be that dumb; it’s just an expression. But the operative point is that palms have been thoroughly greased) Not only have the team members responded by nearly instantly lifting suspensions in many cases, having thus been touched by the entrepreneurial spirit themselves, they have offered for sale insider information like access to the accounts that can be used to bounce the competitor one slot up from your own or, as one later vendor promised, to “Spy on your competitors!”
Amazon understandably says this is against company policy, and that it has fired and otherwise disciplined those employees it has caught doing this. Certainly they should. But it’s hard not to feel a little sympathetic with these people, who also seem to be playing with a deck stacked against them (assuming, of course, that they took the job with the intent of establishing a reputation for fairness):
An algorithm flags sellers based on a range of metrics — customer complaints, number of returns, certain keywords used in reviews, and other, more mysterious variables — and passes them to Performance workers based in India, Costa Rica, and other locations. These workers choose between several prewritten blurbs to send to sellers. They may see what the actual problem is or the key item missing from an appeal, but they can’t be more specific than the forms allow, according to Rachel Greer, who worked as a fraud investigator at Amazon before becoming a seller consultant. “It feels like it’s a bot, but it’s actually a human who is very frustrated about the fact that they have to work like that,” she says.
The Performance workers’ incentives favor rejection. They must process approximately one claim every four minutes, and reinstating someone who later gets suspended again counts against them, according to McCabe and others. When they fall behind, Stine says, they’ll often “punt” by sending requests for more information ...
So what’s a seller to do if they (correctly) sense they’re getting this runaround? A Chinese man who’d reached this wit’s end scraped together his remaining money, flew to Seattle, bought a Honda Pilot off Craiglist and lived out of it for two weeks while he wandered around Amazon’s headquarters looking for someone who could help him. The best he was able to do was the same phone number for Seller Support that he had already gotten in an email to his business back home.
But most people don’t quite go to those lengths. Instead, they do what any citizen of the Roman Empire, or most medieval monarchies, would have—throw themselves upon the mercy of the crown. Yes, they petition directly to His Royal Highness King Jeffrey, First of that Name, the Breaker of Bricks and Mortar, Slayer of the Shopping Mall, Lord of the Label Scar, Ruler of All Retail, Maker of Billions, Chief Executive Officer, Chairman of the Board and Soon to be Single Again.
“Once you’ve gone to Jeff, there’s nowhere else to go,” Stine says. She believes Plansky’s “Jeff Bomb”, as these are called in the consultant community, was what got him back on the site. Most of these, Chris McCabe, a former Amazon employee turned consultant believes, are actually read and decided by the (ahem) royal court—Bezos’s personal staff—but he does think that His Jeffness personally peruses at least some, since he recalled getting a few back from the CEO’s office with just a question mark, which is apparently recognized as the Privy Seal within the upper echelons of the company.
Of course, some rogue sellers just dispense with any kind of company involvement and get their justice frontier style, by doing unto as they have been done unto. One guy tells of reporting another seller for pirating the headphones he sold, which usually worked since he had himself pretty well wired into Amazon and had some sharper tools at his disposal. But this was the one guy who wasn’t so impressed … he retaliated with an infringement claim against another product the seller sold. it was accompanied with an email in Chinese that, when translated, read like dialogue from a triad leader in a Hong Kong action film: “The Amazon circle is very small. Evil deeds must be returned in kind.”
****
So, to recap, without having really tried to, Amazon created an entirely privately-run judicial system that operates to resolve disputes not only between buyers and sellers, but among sellers, without any state involvement and (at this point) largely beyond any. One where billions of dollars in commerce take place every year, a market that for many of the sellers in it is their sole source of income. But rather than a more efficient and humane system evolving naturally from this shared devotion to the bottom line, as many extreme free-market theorists insist would happen, instead Amazon Marketplace has managed to duplicate many of the “features” of an emerging-market judicial “system”:
- Minimalist, vague and confusing rules, that are …
- … in turn enforced capriciously, and therefore …
- … weaponized by market actors against each other, forcing them to spend time and money to defending against such attacks and/or thinking up new ways to use them against other actors.
- Drastic and draconian enforcement (sellers are either suspended or nothing whatsoever happens)
- Ajudication of complaints under the rules by an opaque and corrupt body of triers of fact, with few avenues for appeal, but one of the clearest being a direct one to the executive.
- The concurrent rise of an elite community of knowledgeable quasi-insiders whose unofficial, expensive help is nevertheless absolutely necessary to adequately resolve cases and resume doing business, something that, in this context, does validate the beneficial effect of market forces (outside Marketplace, that is), but would probably be a lot less necessary if the Amazon judicial system had arisen more through an overall design—i.e., the way a government would do it—rather than through a series of ad hoc responses to problems that had gotten way out of control.
I have not written all this to urge you to boycott Amazon—there are many other reasons to do so if you wish. I have instead written it so you have some sort of example to point to the next time you hear or read some libertarian windbag go off about how the profit motive would make everything the government does work better if some private operator were allowed to do it.
Here, as we have seen, the private sector has demonstrated that it can exceed the government most surely only in creating a system with greater dysfunction and chaos than its real-life public counterpart.