Amazon Marketplace: You've got to be there.
Jason Boyce: The premise of the book is Amazon are jerks. Amazon is not going to lift a finger to help you grow your business on amazon.com. It's a DIY platform. You've got to be there because they own more than half of the online market share.
Dave Bittner: Hello, everyone. And welcome to "Caveat," the CyberWire's privacy, surveillance, law and policy podcast. I'm Dave Bittner, and joining me is my co-host Ben Yelin from the University of Maryland Center for Health and Homeland Security. Hello, Ben.
Ben Yelin: Hello, Dave.
Dave Bittner: On this week's show, Ben looks at cellphone data gathered during the January 6 Capitol riot. I've got statements from Senator Ron Wyden to an online advertising trade association. And later in the show, my conversation with author Jason Boyce on his new book, "The Amazon Jungle." While this show covers legal topics and Ben is a lawyer, the views expressed do not constitute legal advice. For official legal advice on any of the topics we cover, please contact your attorney.
Dave Bittner: All right, Ben, let's jump into some stories here this week. Why don't you kick things off for us?
Ben Yelin: So my story comes from emptywheel.net, which is a website run by Marcy Wheeler. I'm a big fan of hers. She's just been an independent journalist in the realm of digital surveillance and privacy. I've been reading her stuff basically since the Snowden disclosures and would just highly recommend it. She's the type of person who will listen to every single preliminary hearing in the Capitol insurrection and suss out the information relevant to data privacy and security - so that recommendation to start.
Ben Yelin: So she writes about the FBI and their confidence in the granularity of cell tower dumps taken on January 6 during the insurrection at the U.S. Capitol. So she's been following cases of a couple of people who have been charged with various crimes related to the insurrection. So whether those are trespass crimes or felonies that might carry stricter sentences, she's been following how the evidence was obtained that led to these individual arrests. And oftentimes, one of the pieces of evidence is evidence from cell tower dumps and the dump that probably took place on January 6. So the FBI probably requested from these telecommunications companies all cellphones that were in this particular area on the 6, as you know, using geofencing.
Ben Yelin: So what's really interesting about this to me is it's not a crime to be outside the Capitol screaming things inside to the Capitol, right? If you're on the Capitol grounds, at least at that time, before we put up all this fencing with barbed wire, it was legal to be there. You weren't breaking any laws by protesting outside the Capitol. You were breaking laws by protesting inside the Capitol.
Ben Yelin: So we have this very clear distinction, what's legal and what's illegal. And then we have this type of evidence, geofencing, that is not quite that exact to be honest. If a tower dump leads a telecommunications company to say with some level of confidence that this person was in the building, they better be pretty darn sure that that person was actually in the building. Otherwise, you know, there isn't evidence that that person was committing a crime.
Ben Yelin: So she cited a couple of cases. One was kind of a peripheral player, somebody who's not part of the broader planning scheme that went into the Capitol insurrection. And she was looking at the affidavits that led to this person's arrest. And most of the other evidence against this person was flimsy. That person didn't post on social media. There was one picture of that person that may have been that person inside the Capitol, but the picture is a little blurry. So they are really relying on the phone data, on this location data that they obtained from AT&T. But that evidence is only going to be valuable in court if whichever representative from AT&T can attest that that geofencing is accurate.
Ben Yelin: And then she followed a couple of other cases, including a more prominent defendant who was connected with the group the Oath Keepers. So that's a very serious case 'cause if you can arrest that person, you can draw connections to people who are potentially more powerful, so that evidence needs to be airtight.
Ben Yelin: And then a third person they arrested for trespass crimes, the FBI actually included a map of how Google's geofence works in practice. And this is just very informative as to how exact of a science geofencing is. They got from this guy's Instagram account that he was on Capitol grounds. They were not sure whether that was inside or outside the actual Capitol building, and they were able to connect the Instagram account to this person's Gmail account. Obviously, this person didn't take proper security precautions before he (laughter) decided to be involved in a Capitol insurrection.
Dave Bittner: Right, right.
Ben Yelin: That's a story for another day. And they have that's just really interesting map of how geofencing works. So in any given location, Google can give sort of the radius of how exact that geofencing data is going to be. Within the U.S. Capitol, they say that it can be exact within 100 feet. However, those radii themselves - radii is the plural of radius, in case you didn't know. Those radii themselves are only about 68% accurate. So if you look at sort of the circles that they drew and the diagram of where this person was based on their location data, it very much looks like they're in the U.S. Capitol, but some portions of these radii, of these overlapping circles are actually outside on Capitol grounds now. Now, they're very small portions of the circle. But you know, if I'm a defense attorney, that to me...
Dave Bittner: Right. That's what I was going to ask. Right. I was going to ask. There's your reasonable doubt, right?
Ben Yelin: Exactly. To me, that is your reasonable doubt.
Dave Bittner: (Laughter) Yeah.
Ben Yelin: So I'm just very curious what's going to happen when this actually gets to court and the AT&T representative gets on the stand and says - or the Google representative and says, our geofencing is accurate up to 100 feet at this particular location. Well, how accurate is it? Sixty-eight percent. How is that going to look in front of a jury?
Ben Yelin: And as a defense attorney, you'd say, OK, it's 68% accurate, and we have these overlapping circles, and some parts of these circles wouldn't indicate that person is on Capitol grounds. That, to me, would be pretty persuasive reasonable doubt to a juror. Now, it would depend on whether there's enough other evidence outside geofencing to obtain an actual conviction. But it's just really interesting how that's going to be a problem. You know, you generally think of beyond a reasonable doubt as higher than 68%. It doesn't come with the exact number. But to me, I always think of it more in like the 85 to 90% range.
Dave Bittner: Yeah. Let me put on my radio frequency nerd hat here for a second.
Ben Yelin: That is pretty nerdy hat, to be honest.
Dave Bittner: (Laughter) Well, in a past life, it was something that I worked with. I actually used to work with satellite engineers and those sorts of things, so it's something I am fairly familiar with. And just sort of thinking about cellular technology 101, you have these cell zones, you know, these nodes of a cellular network. And the more - the closer together the towers are - the smaller the zones are, obviously, the more accurate you can be with your geolocation. Right?
Ben Yelin: Yes.
Dave Bittner: And generally, the way it works is if you have an area where you're expecting more people to be, you will put those towers closer together because you want to be able to serve all those people. You're going to have higher demand in an area where there are more people, so you make your cells closer together, and that allows you to have more accuracy.
Ben Yelin: Like the U.S. Capitol, for example.
Dave Bittner: Like the U.S. Capitol. Now, another interesting thing about the U.S. Capitol that some folks pointed out in the comments on this article is what the U.S. Capitol is made out of. It is made out of stone, thick stone, and it has a metal roof. Both of those things are unfriendly to the RF frequencies that cellphones use. So what that means is it's hard to get a signal into the Capitol, and it's hard to get a signal out of the Capitol.
Dave Bittner: What that means is that it is highly likely, practically a certainty, that there are cell beacons inside the building. And they refer to these as femtocells or picocells, and basically what that means is just a really tiny little cell. And it's a common thing. If you have a building or something where you want to have cell service but for whatever reason, the construction of the building or the geography is keeping you from hitting a tower, either the providers will put a tower inside the building, or the owners of the building will put basically these...
Ben Yelin: Right.
Dave Bittner: ...Repeaters inside the building. And folks are saying with pretty high confidence that that's what's going on inside the Capitol. And that would be a really good way to know that people are inside the building if they're pinging these internal cell towers. Now, in addition to that, you have all of the Wi-Fi throughout the building.
Ben Yelin: Right.
Dave Bittner: So let's say you have public Wi-Fi within the building. Let's say you even have Wi-Fi that's not public within the building. If I'm carrying my phone through the building, my phone is trying to find Wi-Fi to connect to if I have it set to do so, and most people have their phone set to do so. So as I'm wandering through a building, my phone is sending out a beacon. And it's saying, hey; are you Wi-Fi? Can I connect to you? Hey; are you Wi-Fi? Can I connect to you? And the Wi-Fi sources, the servers, are logging those requests, OK?
Ben Yelin: Right.
Dave Bittner: So what we can do is we can cross-reference the cellular connections with the Wi-Fi requests, and that allows us to make this circle even smaller because if I'm walking through the Capitol building and I happen to walk by a printer that has Wi-Fi connectivity...
Ben Yelin: Right.
Dave Bittner: ...And the printer and my phone talk to each other and try to shake hands and that gets logged, well, now we know I was within certain distance of that printer, right?
Ben Yelin: Right.
Dave Bittner: So we get time stamps. We get distance stamps. As you can tell, this stuff fascinates me (laughter).
Ben Yelin: It is fascinating. And one thing that's, I think, especially specific to the Capitol - and I think this kind of goes into what you were just talking about - is much of the Capitol complex is underground. If this were not the Capitol complex, if you are underground, you are generally not going to receive strong cell phone signals.
Dave Bittner: Right.
Ben Yelin: But because they've put those nodes at various locations in these, you know, vast array of underground tunnels, I think you're right that people's devices are going to be pinging those nodes. And it might lead to a level that's more accurate than if you are in just a regular, standard-issue building that was not the U.S. Capitol.
Dave Bittner: Right. Right.
Ben Yelin: And that might really aid prosecutors in this case.
Dave Bittner: Yeah. Yeah. I would just point out just kind of for fun, there was a snarky comment in the comments here that says, note to future insurrectionists - remember to disable all communications networks during the earliest stages of the revolt. Also, remember what century you're living in. All right. Well, this is a fascinating story - lots of good information here. And if you're interested in this, do check it out. Again, it's over on emptywheel.net, and we will have a link to it in the show notes.
Dave Bittner: My story this week actually caught my attention from a tweet from a gentleman named Jason Kint on Twitter. And he was pointing out that at an IAB industry event - and IAB is the Interactive Advertising Bureau. They're a trade organization for folks who do online advertising.
Ben Yelin: It's funny because if we have law enforcement listeners, that generally means Internal Affairs Bureau.
Dave Bittner: (Laughter).
Ben Yelin: So...
Dave Bittner: Right, right.
Ben Yelin: Good for you to make that distinction. Yeah.
Dave Bittner: Right. If you're in trouble with the IAB, it's either - it's one thing or the other.
Ben Yelin: Yes, exactly.
Dave Bittner: Yeah. So Senator Ron Wyden, who's a Democrat from Oregon - he spoke to this organization. They were having a private industry event, and he spoke. And part of his presentation was posted here on Twitter. And I think it's worth sharing - certainly going to spark a little conversation here. Let's play a clip from his presentation.
Ron Wyden: A key idea in the bill is that users shouldn't have to click the same I agree button on every single site that they're visiting. There ought to be a universal opt-out. This is something where customers can, in effect with one click, protect their privacy interests. The good news is privacy experts have already made this happen, creating a technology called the Global Privacy Control, which allows their customers to exercise their right to opt out.
Ron Wyden: Forty million consumers are now using web browsers and other privacy tools that support this global opt-out. Major publishers - The New York Times, The Washington Post - have already pledged to respect it. California's attorney general has said that companies must respect global privacy control. This is a big step in Americans' privacy, a big, big step forward. Now, IAB and other major advertising associations, in my view, ought to see how important it is to stop opposing this idea and essentially say that consumers shouldn't have to opt out of each company tracking and selling their data one by one. That's got to go.
Ron Wyden: What we need to do is get away from this idea - well, you can have privacy but only if it's so annoying that most people are going to give it up entirely. Americans want control over their data. They want it to be easy. So I would urge the ad industry to recognize and respect this.
Dave Bittner: So, Ben, I mean, that's a strong statement from Senator Wyden - I mean, just saying, that's got to go. It's not fairly ambiguous there, right?
Ben Yelin: It is not. It's a real shot across the bow. And saying it to this audience is particularly interesting. Now, here I come to throw some ice-cold water on this whole thing...
Dave Bittner: (Laughter).
Ben Yelin: ...Because I love the promise of global privacy control.
Dave Bittner: Right.
Ben Yelin: I think what Senator Wyden is talking about is in the context of what would be a larger digital privacy piece of legislation. At least that's my interpretation of it. And I still think we're a relatively long way away from that type of legislation passing. It very well might pass in this Congress, but I just don't think we're there yet. So it's a warning about what could, you know, happen down the pike. But if I'm in the industry, I'm not freaking out about it right now if I'm an advertiser. I'm definitely keeping track of it. Now, it might be wise, as IAB has done here, to sort of preempt what might happen in the future by preemptively supporting global privacy controls...
Dave Bittner: Right.
Ben Yelin: ...And being willing to transition to such a thing. It's one of those things that you see happen with tech companies all the time, where they can look at the regulatory landscape and anticipate where it's changing and try and get out in front of those changes. We've talked about how, you know, Facebook, for example, has signaled its openness to modifying Section 230 of the Communications Decency Act. I don't think they would have done that if members of Congress from both parties hadn't been trashing Section 230 for all these years. So Facebook is trying to get ahead out of what they're anticipating to be future action. And it seems to me that that's what's happening here.
Dave Bittner: Now, what about the notion that this is required under the California Consumer Protection Act, I mean, and also GDPR? Are those big enough audiences that that in itself would make this become the default? Or are we in an era of advertising granularity that - they'll just say, oh, you live in Maryland. Ha-ha. Your data belongs to me - you know, that sort of thing.
Ben Yelin: I think that's exactly what's going to happen, at least in the short term. I think there are other provisions of CCPA and GDPR where, if you're going to change your policies and procedures to comply with those regulations, those changes are going to be applicable across the board. But I think you're right that advertised - digital advertising itself is so granular that, you know, it's probably in the financial interests of these companies to continue to avoid global privacy controls while they can because...
Dave Bittner: Yeah.
Ben Yelin: ...If you're an individual corporation, you want to sell - you know, if you want to digitally advertise to people in the 49 other states and people in those 49 other states would have to opt out of, you know, every single site that wants to advertise and, you know, track your purchases, it's far less likely that people in those states are actually going to opt out of everything. That's why global privacy control exists. And that's really good if you're one of those companies because you benefit every time a person chooses not to opt out of the specific collection happening on your website.
Ben Yelin: And so I think this is something where, you know, I think maybe in the long run, because of CCPA and GDPR and whatever comes out of our federal government and what I expect to be additional state actions on consumer privacy - maybe the long-run trend will be toward global privacy controls and global privacy control in particular. But I don't think we're quite at that point yet, to be honest.
Dave Bittner: We'll have a link to the organization that is sort of heading up this. It's globalprivacycontrol.org. It's interesting. If you go to their website, in addition to having a lot of information about all this sort of stuff, they have a - they can detect whether or not your browser is sending out the GPC beacon, which is the signal that is supposed to tell the online world that you're not interested in being tracked in this sort of way. What's interesting - when I log on to it, it says that it detects the signal from me. I think - I'm pretty sure that's because I'm running a browser plug-in called Privacy Badger, which...
Ben Yelin: How dare you, Dave?
Dave Bittner: (Laughter) I know. I'm throwing sand in the wheels of commerce.
Ben Yelin: Yeah.
Dave Bittner: (Laughter).
Ben Yelin: An interesting element of the story is Ron Wyden's willingness to chastise the ad tech industry, in the words of a journalist I saw on Twitter, for only offering consumers the choice of opting out when it's particularly annoying to do so. And so I just, you know - I always give people credit for speaking truth to an unfriendly audience. And I think I owe it to Senator Wyden to do so here.
Dave Bittner: Yeah, I agree. I mean, he was an invited guest (laughter) and told them things that they probably didn't want to hear. But sometimes, I guess, if that's the way things are going, they need to hear it from him. They need to - better for them to know than to, you know, whistle past the graveyard.
Ben Yelin: Absolutely. Yeah. And it probably is in the long-term benefit of, you know, this association to hear that from Senator Wyden and, you know, get some difficult truths. I personally have problems saying, you know, things to audiences that people don't want to hear, so I'm glad that other people have the courage to do so.
Dave Bittner: Yeah. All right. Well, we will have links to all of that in the show notes, of course. We would love to hear from you. If you have a question for us or something you think you would like to see covered on our show, you can call us. It's 410-618-3720, or you can send us an email to caveat@thecyberwire.com.
Dave Bittner: Ben, I recently had the pleasure of speaking with author Jason Boyce. His most recent book is titled "The Amazon Jungle." Here's my conversation with Jason Boyce.
Jason Boyce: The premise of the book is Amazon are jerks. Amazon is not going to lift a finger to help you grow your business on amazon.com. It's a DIY platform. You've got to be there because they own more than half of the online market share. If you've got a product, you got to be there. But if you're going to be there, learn from nearly 20 years of learning from my mistakes - go at it by laying the proper foundation and the right strategy, and you'll be a much happier seller, and it'll set you up for much, you know, greater success.
Jason Boyce: And, you know, Dave, when we started writing the book, we originally were going to write this pollyannic (ph) piece - this is a get-rich-quick scheme, right? Everyone's going to become an Amazon seller and make a million dollars. And I literally started typing that book out. And on our weekly calls, I said to Rick - I said, Rick, I'm having too many bad memories about what it's like to sell on Amazon; I can't write that book. And we both agreed, well, look; we need to be honest. And so we talk about that. We talk about the growing power of Amazon. We talk about how Amazon doesn't necessarily do right by the seller to which Amazon owes so much of their success. It's just really an eyes-wide-open look of strategy to have success on Amazon but also knowing what you're getting yourself into, Dave.
Dave Bittner: Well, let's go through some of the history that you touch on in the book. I go back far enough that I can remember hearing about this online bookseller called Amazon.
Jason Boyce: (Laughter).
Dave Bittner: And, you know, soon, it was - became, oh, well, Amazon's going to sell other stuff. And here we are today; Amazon sells everything. And I think being hit with this COVID pandemic has really amplified their importance to a lot of people as well. I don't know about you, but we're probably - at my house, we're getting boxes on the front porch a few times a week.
Jason Boyce: Yeah. I mean, unfortunately, my house is getting them every day. And, you know, Scott...
Dave Bittner: (Laughter).
Jason Boyce: ...Scott Galloway nailed this. He said Amazon was built for COVID. It was absolutely built for COVID. They got caught flat-footed in March. They did a Herculean, historical effort to prepare themselves for the pending holiday shopping season. They nailed it. They're going to be studying this effort almost like a war effort, Dave. I'm not even exaggerating. You have to go back to the ship-building - a war effort in World War II to find when a company - an industry, let alone a company like Amazon, hired 400,000 people, ramped up 500,000 delivery drivers, you know, created their own COVID testing facilities in-house so they could process their own people. The effort that they made this year will be talked about in MBA programs for the next 30 years. So, I mean, we'll start with that.
Jason Boyce: And backing up to your point about - I was with you. You know, I thought they were a bookseller. In fact, I got a phone call from Amazon in 2003. We had our own direct-to-consumer e-commerce site, and we had really good search engine optimization and all the different search engines of the day, right? We're talking 2002, 2003 - AltaVista, you know, all those other, you know...
Dave Bittner: Right.
Jason Boyce: ...Insert name of old search engines that got swallowed whole by Google.
Dave Bittner: (Laughter).
Jason Boyce: And we got a call from Amazon, and they said, hey, you guys are having a lot of success selling your sporting goods online; we'd like you to sell on amazon.com. And I said, you know, to your point, what do you mean? You guys sell books. You guys sell VHS tapes. What do you mean you want to sell our basketball products and our sporting goods? And they said, no, no, we're starting a marketplace. You know, you launch your products on our site; we'll sell them. We'll send you the order. You ship them to the customer. We'll take 15 points of every sale. That's it. And it was amazing. At the time, eBay, if you can imagine, was the 8,000-pound gorilla in the marketplace space. And Amazon just came in and ate their lunch. They simplified the process. They are the best in the business of tech, focusing on the things on the, you know, front end of the website that matter most. And then by the time they added FBA - Fulfillment by Amazon, where third-party sellers like me could then use Amazon as our warehouse also with almost infinite scalability - by the time that launched, second place was far behind. It far surpassed eBay. And there was just no looking back. And to the point where today - I talked to some analysts. They say Amazon - if you look at the gross merchandise value, total goods sold through amazon.com, which is not what they report in their - we're about to have an annual report next week. They don't report that. They just report the fees they take. But if you look at the GMV, Amazon has close to 60% of the online market share. Walmart is second place with 5% or 6% online market share. So they have taken this marketplace idea. They've perfected it. They've ridden the backs of millions of Amazon sellers. They're in a frighteningly dominant position right now.
Dave Bittner: Let's explore that because, again, you know, going back a few years, I remember as Walmart made their way across our nation, you know, there was a lot of lamenting about that - how, you know, Main Streets were shutting down. Every time a Walmart opened in town, all of your mom and pop stores got run out of business and couldn't compete with the scale of Walmart. And here we are a few years after that, and now Amazon is in this dominant position. I mean, it's hard - as you describe, it's hard to imagine Walmart being in second place with anything when it comes to retail. But Amazon is the undisputed leader here.
Jason Boyce: Yeah, Amazon is the undisputed leader. And, you know, talking to my good friend and co-author Rick, you know, Rick said Sears did the same thing before Walmart came along. And Walmart came along. And, you know, the - Walmart had this great story where they were buying goods from U.S. manufacturers because that created more customers for them. And they - you know, they had this thing of low prices. And then they started moving everything offshore.
Jason Boyce: And they devastated Main Street, and then Main Street retailers had to adapt. Those that survived did well. And then Amazon came along, and it's sort of some next-level stuff. Amazon's ability to offer lower prices, to offer - I mean, let's take for example - this is why it's next-level, Dave, among other things.
Dave Bittner: Right.
Jason Boyce: You go to a Walmart superstore. There's 200,000 SKUs in a given store. That's a lot of SKUs, right?
Dave Bittner: Yeah.
Jason Boyce: Guess how many SKUs Amazon has - half a billion. They have 500,000.
Dave Bittner: Wow.
Jason Boyce: Only 15 million of those SKUs are sold by Amazon retail buyers themselves. So they have this network of millions of sellers who offer up all the selection and a majority of the sales that go through dotcom. And so we're talking about half a billion SKUs. That is a really big number that dwarfs anything that sort of Walmart was doing.
Jason Boyce: The good side of the story is - and, you know, giving Amazon credit where credit is due, there's a lot of multimillion-dollar sellers. And I was a big top 200 eight-figure seller for 17 years and built a business and fed my family and my brothers' families with it, right? We were a family business. And there are millions of sellers that have had that experience where, if not for Amazon building this great marketplace, they maybe wouldn't have a private label brand, or they wouldn't have a business, or they never would have considered starting a business. So there's good news there, right?
Jason Boyce: The dark side of that more recently, Dave, is a couple of things. Amazon continues this squeeze because I truly believe power corrupts, and I don't think Amazon's immune to this. They continue to squeeze dollars out of these third-party sellers, in some cases, where they're just putting them out of business by purpose or by accident. And they've gutted a lot of these third-party sellers in the march to lower prices by cutting out a lot of U.S. sellers that have been so important to their growth but also add a protective layer between factories and the U.S. consumer by bypassing these sellers and going direct to China factories and rolling out the red carpet for them in a way that I think is not good for the consumer nor society.
Jason Boyce: And so that's sort of the dark side, right? These guys have more data collected than Facebook collects on us. Walmart never had that kind of layer of data. You know, Amazon owns the utility of on-demand computing power called AWS. I mean...
Dave Bittner: Right.
Jason Boyce: ...For Pete's sake, they are the computer for the CIA. You know, they had one region of their six or seven regions go down at the end of last year; scores and scores of brand-name websites went down because they were all housed on AWS. It is a company that has been the forefront standard-bearer for the post-industrial age. Amazon is in an extraordinarily dominant position that dwarfs what - any kind of dominance Walmart ever had in the '80s and '90s that we lived through.
Dave Bittner: And so what is the hazard here when regulators are looking at a company with the meteoric growth of and rise of Amazon? In your mind, you know, what are the areas where regulators need to take a closer look?
Jason Boyce: Well, it's a great question. There's two concerns that I have. The first concern - you know, I was a third-party seller. I consider myself a big advocate for these third-party sellers. Amazon wouldn't be what they are today without them. These hardworking sellers provided the product knowledge, the product selection, the capital to help Amazon grow into what it is today. And they're a dying breed. You know, there was an article that came out in Marketplace Pulse that resellers, where you're reselling someone else's good, are a dying breed.
Jason Boyce: But even folks that are creating their own private-label brands on Amazon are really struggling because of this policy of Amazon recruiting factories direct, and they're continuing to put the squeeze on the margin. For every dollar sold by a third-party seller, you know, they're giving probably 45 to 50 cents of every dollar back to Amazon. And it's not getting smaller - it's getting bigger. Amazon has copied, famously, in Wall Street Journal reports and the House Judiciary report, some of the hard work from these third-party sellers, made their own brand, and they're at a significant pricing advantage compared to third-party sellers. Amazon, when they copy a third-party seller's product, list it; they can offer it for - you know, they're not paying themselves the 15% seller fee. They don't have to pay for ad space. So that's - you know, they have a 30% pricing advantage, which can kill some of these folks. Small business, in my opinion, is not only the life's blood of what makes Amazon work, but also what makes America work. And so that's a big hazard to me. Amazon is in this place of judge, juror and executioner to far too many small businesses. And remember, small businesses provide half of the jobs in America. That's a big concern for me. That's No. 1.
Jason Boyce: The second concern is, there's no scenario that I can see right now where the next Amazon can come about. Let's rewind all the way back to the antitrust complaints against Microsoft in the - you know, in the early '90s. The U.S. government, 10-year case - they lost. They made this case against Microsoft because Microsoft was doing something called tying, where they were bundling all of these services together, offering these free things, and it was cutting out competition. Well, the good news about that case with Microsoft is the government was able to get enough concessions out of Microsoft where they unbundled and untied some of these products that created an environment where Google could be born. And Google's another one of these outsized monopolistic companies. You know, they - for God's sakes, they started with the mantra of don't be evil, and now their behavior gets evil more and more by the day.
Dave Bittner: (Laughter).
Jason Boyce: And so Google's in the same position. There's no scenario at all where the next search engine can compete with Google. Same with Amazon - there's no scenario where a new e-commerce marketplace or e-commerce company can come, have any chance of ever catching Amazon under the current scenario. And so, again, it goes back to what makes a thriving democracy and thriving capitalist society - is when there's opportunities for small businesses to innovate and to come about and to create these new growth stories. And, you know, Facebook, Google, Amazon - they're just sort of blotting the sun. There's no opportunity. There's no daylight for some of these small companies to grow like they were able to grow when they first started because of their dominant position in the marketplace, in my opinion. And look; I'm not a lawyer, but that's my opinion.
Dave Bittner: If, for example, you know, U.S. antitrust regulators were to come after Amazon, do you have any thoughts on a viable way to split them up and what that might look like?
Jason Boyce: Well, I tell you, the laws on the books for antitrust are outdated. And somehow in the '80s, somewhere in the '80s, everyone got in the case law that the only thing that makes a monopoly is if somebody gains monopoly power, then they start raising prices on consumers. Well, Amazon's never going to do that, right? So there's other concerns now that legislators should be aware of, and I just named two of them. And so the existing antitrust law does not set the stage for a lot of success. I mean, I think there's a much stronger case with probably Google and Facebook, probably Google more than anyone because of the sort of collusion case that came out recently. But I don't think there's a scenario where, if the - you know, the regulators try to break up Amazon, that it's going to be an easy fight. It's going to be a long fight, and they may lose just like they did with Microsoft, but at least they could gain some concessions.
Jason Boyce: What I think has to happen first - I think we need to update the laws, right? And I think the Biden administration dropped some press pieces recently where they're looking to reevaluate the existing case law and existing FTC rules, et cetera for, you know, what constitutes antitrust. I think the government absolutely should be in a position where they allow for more competition, more startups, because that's what gives America, our society its edge - its ability to innovate. And it's really hard. It's really hard for anyone to come in and attack these giants. And so I think that's step one.
Jason Boyce: There's a couple of other things that are very interesting. And I think instead of hitting some home runs, the legislators could hit some singles. You know, apologies for the baseball analogy. I'm huge Dodger fan. But one of the things on the seller side, on the small business side, that makes it really hard for sellers to group together in a class action suit and combine forces to ask Amazon in courts, which is where - which is a much better place to do this, by the way - in the courts. It's much more cost-effective for everyone, and they'll get more concessions.
Jason Boyce: The thing that prevents third-party sellers from combining forces together to reverse things like Buy Box suppression, like stealing of private sellers' information to copy their product lines, et cetera - what's preventing sellers from doing that is this really nasty forced arbitration clause that's required - that Amazon requires of sellers before they sign up for the marketplace. And look; there's a lot of #MeToo analogies with this, too. There's nothing good about forced arbitration, right? This is good for the powerful. It's not good for the folks that are so important to the success of these powerful companies.
Jason Boyce: So I think some legislation that would outlaw the practice of forced arbitration in exchange for access to a marketplace as powerful as Amazon would go a long way. And then the courts could sort it out, right? Then sellers could bind together and, you know, work with Amazon, either settle court cases or get them to change their behavior on the platform. I think that would go a long way.
Jason Boyce: Amazon, in my opinion, is 100% price fixing. What do I mean by that? They have this practice called Buy Box suppression. And if you as a seller sell your product for $10 on Amazon and then you offer the same product for sale on Walmart for $8, Amazon will technologically and automatically suppress your listing because you can no longer drive traffic. And it just destroys your ranking with the algorithm. And you just - I mean, you can lose 30, 40, 100% of your sales, like, almost overnight.
Jason Boyce: So that's a price fixing thing. And they're very smart, and they've used really smart technology to do, and it should be illegal. And I think that the legislators should make that practice of price fixing illegal, and that alone would free up and make it much more possible for other competitors to also be able to compete with Amazon as well. And it would make life a lot better for sellers.
Jason Boyce: So, I mean, those are just a couple of things. Do I think legislators should update the laws for the 21st century? Yes - long overdue. Do I think that legislators should go after Amazon and these other companies and do their best to break them up and untie them from these tremendous advantages that they have? Yes, I absolutely do. I don't know that it'll work, but I think they should do it anyway and get as many concessions as they can.
Jason Boyce: But I think changing the laws to prevent Amazon from rejecting a seller if they don't agree to forced arbitration - and then, you know, that's the same for employment contracts, et cetera. This forced arbitration in confidentiality is nasty. This is just allowing powerful companies to have bad behavior without anybody knowing about it. If they change those laws, I think then, you know, the skies will open up again. And it'll open up for a better, healthier small business environment and a better startup environment and open up these giants to more competition. Again, Dave, I'm not a lawyer. I study this a lot, and I pay attention to it because I think it's important, and it's way beyond just in the marketplace. I'm talking about as a citizen, I think they're important for our country.
Dave Bittner: All right, Ben, what do you think?
Ben Yelin: That's fascinating. And, you know, probably during the time between when his interview was recorded and when we're recording now, I received, like, 30 Amazon packages.
Dave Bittner: (Laughter).
Ben Yelin: And so maybe I should start thinking twice about that. I mean, I think everything he brought up here is really critical, especially for third-party sellers on Amazon sites who are getting a raw deal here. And there are, you know, monopoly implications because it's impossible, at this point, after Amazon has taken such control over this market, for another similar business to pop up. It's just not going to happen. There's no way, you know, within any conceivable time frame that we could have an actual competitor to Amazon. And that's dangerous to our free market economy. I mean, one of the foundations of having a free market is easy entrance and exit into that market. And, you know, because Amazon has this market so particularly saturated, we don't have that. And I think, you know, usually the correct check on that is, you know, people will be angry because Amazon will have raised prices 'cause they're a monopoly.
Dave Bittner: Right.
Ben Yelin: But what Mr. Boyce is saying is that's not happening, either. Amazon doesn't raise prices because they can work with these economies of scale. So, yeah, I just - I found it fascinating. Now I want to read the book.
Dave Bittner: (Laughter) I've been trying to think of, like, who would be the second-place competitor, and all I can think of is Walmart. Walmart has been really deliberate about growing their online presence. Walmart offers all sorts of things in their online store that you can't buy at a regular Walmart brick-and-mortar store. So, you know, they have the money behind them, certainly, to be able to do this. But the flip side to that is Walmart certainly does not enjoy a reputation for being friendly with their providers. They negotiate hard with them.
Ben Yelin: They sure do. Not only that, but, you know, there's a reason that Googling something became a verb, is that, you know, Google ended up saturating the search engine market in the early 2000s to the point that it became anonymous with using a search engine - to Google something. That's where we've gotten with Amazon, where people just kind of instinctively think of them as the way to get stuff delivered to your house. Just like there are alternative search engines, I think there are going to be alternative sellers in the way that Amazon is, but it's just going to be so hard to even approach their market share.
Dave Bittner: Yeah.
Ben Yelin: You know, Walmart is probably best positioned to do it because they're Walmart, and they're a multibillion-dollar successful company.
Dave Bittner: Right.
Ben Yelin: But I still think it would be exceedingly difficult to get even in the same realm of where Amazon is.
Dave Bittner: That attracts the attention of folks looking for antitrust violations, right?
Ben Yelin: Yeah. Yeah, it does. And, you know, we have this sort of new antitrust movement that might sort of have bipartisan support, based on what's going on in the tech world. Obviously, they support breaking up these Big Tech companies for different reasons. I haven't seen that focused as much on Amazon...
Dave Bittner: Yeah.
Ben Yelin: ...As, you know, some of the other platforms that we've discussed, and now we know that there's going to be ongoing litigation on some of those other platforms. But, you know, yeah, I mean, the reason we have antitrust laws on the books is to prevent exactly what's happening with Amazon, where they exert such control over the market that it's impossible for competitives (ph) to enter and exit and where these third-party sellers get the raw end of the deal but have no options of going elsewhere. So you'd certainly hope that that would be an effort of the trustbusters.
Dave Bittner: Yeah.
Ben Yelin: But if Jeff Bezos is listening, don't take it personally.
Dave Bittner: I'm sure he doesn't (laughter).
Ben Yelin: Please deliver my packages on time.
Dave Bittner: I mean, I'm sure he doesn't take it personally. Obviously, he's a listener. I mean...
Ben Yelin: Of course, he's a listener to our podcast, yeah.
Dave Bittner: (Laughter) Yes, he sits by his mobile device, waiting for the new episodes to drop. I mean, I think we can safely assume that, yeah (laughter).
Ben Yelin: Absolutely. Get your Washington Posts, your Whole Foods delivery and your "Caveat" podcasts. Yeah, sounds like a good day to me.
Dave Bittner: Yeah, absolutely. All right. Well, again, our thanks to Jason Boyce for joining us. The book is titled "The Amazon Jungle." Do check that out.
Dave Bittner: That is our show. We want to thank all of you for listening. The "Caveat" podcast is proudly produced in Maryland at the startup studios of DataTribe, where they're co-building the next generation of cybersecurity teams and technologies. Our senior producer is Jennifer Eiben. Our executive editor is Peter Kilpe. I'm Dave Bittner.
Ben Yelin: And I'm Ben Yelin.
Dave Bittner: Thanks for listening.
