U.S. Considers Censuring Amazon Sites -- WSJ

Date : 12/07/2019 @ 8:02AM
Source : Dow Jones News
Stock : Amazon com (AMZN)
Quote : 1860.32  7.07 (0.38%) @ 4:39PM

U.S. Considers Censuring Amazon Sites -- WSJ

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By Timothy Puko and Alex Leary 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (December 7, 2019).

WASHINGTON -- The Trump administration is considering adding some of Amazon.com Inc.'s overseas operations to a list of global marketplaces known for counterfeit goods, in what would amount to a public shaming of the e-commerce juggernaut, according to people familiar with the matter..

The action would be taken by the U.S. Trade Representative's Office, which publishes an annual list of "Notorious Markets" that identifies online and physical marketplaces believed to sell or facilitate the sale of counterfeit goods and pirated content.

A retail trade group has already called for including five Amazon foreign platforms on the list, which is expected to be released in coming weeks. Some Trump administration officials are also advocating for some of Amazon's international operations to be designated as notorious markets, the people familiar with the matter said.

No decisions been made, and a similar push for Amazon's inclusion last year failed, they said.

One of the people said advocates for including Amazon have cited news reports in The Wall Street Journal and elsewhere showing that as it has grown Amazon has become a larger source of counterfeit products and dangerous items.

Third-party sales have become increasingly important to Amazon's business and in 2018 comprised about 18% of Amazon's total revenue.

The Notorious Markets list has been used as a tool to encourage other countries to change their laws and foreign companies to change their practices, which would make targeting a U.S. company of Amazon's stature -- even one with overseas platforms -- a watershed event.

"USTR is going to have to make a very strong case to put what looks like an American company on this list," said Claire Reade, senior counsel at Arnold Porter and former assistant U.S. trade representative for China affairs. "Otherwise I think the risks to USTR [and the list] are high, because then its credibility comes into question."

One of the best-known companies currently on the Notorious Markets list is the Taobao.com website owned by Chinese e-commerce company Alibaba Group Holding Ltd., which has protested its inclusion.

The American Apparel and Footwear Association, or AAFA, has formally requested that U.S. trade office add Amazon sales platforms in the U.K., Canada, Germany, India and France to the Notorious Markets list. The association said its members flagged those sites as the biggest source of problems among Amazon sites with thousands of counterfeit items and listings.

"AAFA members continue to report that it is a constant struggle to maintain a clean marketplace on Amazon platforms and that Amazon does little to vet sellers on its platform," the group said in a Sept. 30 letter to the USTR. The group didn't immediately return calls for comment.

Amazon responded to the apparel and footwear association's contentions, saying in a filing with the USTR that it invested $400 million in 2018 alone for personnel to fight fraud and abuse. The company outlined various other actions, including offering free brand registration and help for emerging brands to obtain trademark and intellectual property protection.

In a statement to the Journal, Amazon said that it "strictly prohibits counterfeit products in our store and we invest heavily to protect our store, customers, and brands and as a result, more than 99.9% of page views by our customers did not receive a notice of potential counterfeit infringement."

A USTR spokesman didn't answer requests for comment.

The Notorious Markets list names and shames companies and countries that allegedly don't take steps to stop counterfeiters. It doesn't set official U.S. policy, but its prominence can be a public-relations problem for companies on the list and bring significant pressure to Washington's international negotiations and interactions with them and their home countries.

Putting Amazon on the list would be the latest flashpoint between the administration and the online retailer led by founder and chief executive Jeff Bezos, a frequent target of President Trump.

Mr. Trump blames Mr. Bezos for unfavorable coverage in the Washington Post, which Mr. Bezos bought in 2013 for $250 million. The Post says its editorial decisions are independent.

More recently, Mr. Trump called for an investigation of a massive cloud-computing contract for the U.S. military that was considered likely to go to Amazon but ultimately went to rival Microsoft Corp. The contract award is now under protest by Amazon.

The White House declined comment.

The administration sees piracy as a rising concern for consumers and is looking for ways to improve and expand its enforcement against counterfeit goods in the growing e-commerce marketplace.

In April Mr. Trump signed a memorandum on "Combating Trafficking in Counterfeit and Pirated Goods," saying they are a risk to public health and safety and pushing the government to find new ways of coordinating efforts to stop them.

"This president has decided that it's time to clean up this wild west of counterfeiting and trafficking," Peter Navarro, director of the Office of Trade and Manufacturing Policy, said at the time.

The concern about e-commerce stretches back to before Mr. Trump's tenure, too. In 2016, the Obama administration returned Alibaba Group to the list, citing complaints about obstacles to removing counterfeit items from the site's flea-market-like Taobao shopping platform.

Recent Wall Street Journal investigations have shown Amazon sites have evolved like a flea market, too, littered with products declared unsafe or banned by federal agencies.

The company exercises limited oversight over items listed by millions of third-party sellers, many of them anonymous, many in China, some offering scant information.

Write to Timothy Puko at tim.puko@wsj.com and Alex Leary at alex.leary@wsj.com


(END) Dow Jones Newswires

December 07, 2019 02:47 ET (07:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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