The Secession of the Successful: The Rise of Amazon as Private Global Consumer Protection Regulator

In 2005, the Americans for Fair Electronic Commerce Transactions (“AFFECT”) coalition issued a list of 12 principles it hoped would contribute to a new consensus about what constitutes fairness in online consumer transactions. A decade later, a cursory review of different jurisdictions indicates that, while there has been little discernable progress in the direction of the principles in the United States, other jurisdictions such as the European Union have made more progress. However, the one jurisdiction in the world that comes closest to implementing all 12 principles across the full spectrum of consumer transactions is not a government at all, but Amazon acting as a private regulator. Amazon’s status as a regulator arises out of its ownership of a “multi-sided platform” that acts as a global retail marketplace. The rise of global platforms such as Amazon, Google, Apple, Facebook, and Microsoft that own global online marketplaces and simultaneously act as their primary regulators calls to mind the “Secession of the Successful” described by Robert Reich in 1991—the withdrawal from civil society of the wealthy and powerful
into private gated communities. Amazon’s status as the primary de facto regulator of the marketplace it owns combined with its single-minded pursuit of customer satisfaction contributes to relations with its employees and suppliers that are often profoundly problematic. When a platform operator is also the primary regulator of the market it creates, negative spillover effects may occur: squeezing employees and suppliers to insure that consumers get whatever they want merely pushes conflict from one part of the platform “ecosystem” to another. When this occurs, it does not make online commerce fairer overall, which was the implicit goal of the 12 principles. Although transaction-level norms such as those found in the 12 principles cannot ensure that all stakeholders in online marketplaces are treated fairly, other forms of regulation might be more effective in contributing to that goal.