Since its founding, the website Amazon.com has attracted criticism and controversy from multiple sources, where the ethics of certain business practices and policies have been drawn into question. Amazon has faced numerous allegations of anti-competitive or monopolistic behaviour, both in and out of court. This includes documented instances of price differentiation, enforcement of controversial patents against competitors, attempts to prevent discounted direct selling by publishers, and a declared intention to cease working with third-party print on demand services in favour of its own.
Questions have been raised concerning the company's legal compliance. In 2002, Amazon faced a challenge to the legitimacy of their Canadian operations, although that case was subsequently dropped. A 2009 ruling in Japan found that the company, which had tried to avoid paying corporate tax in the country, was in fact liable to pay. Controversy over taxation has arisen on multiple occasions: It was reported in 2012 that Amazon is under investigation in the UK, while in the US the company has attracted criticism for only collecting sales tax from customers in five states. Compounding these problems, there have been reports of poor treatment of workers, with allegations of summary dismissals for health problems and anti-unionization tactics including mass layoffs.
Some controversies have centered around content. The bookstore has carried titles such as The Pedophile's Guide to Love and Pleasure and cock-fighting magazine The Game Cock, which has attracted condemnation and even legal action from various organisations. Amazon and others have cited freedom of speech as justification for stocking controversial work. In contrast however, there have been reports of potential censorship, where material in fields such as feminism and sexual identity has been flagged as "adult content" and removed from rankings. The company's commitment to liberty was further brought into question in 2010 when it stopped hosting the Wikileaks website. There have been incidents where purchased content has been remotely deleted from Kindle devices, with neither notification nor permission. Content controversy extends to Amazon's websites, with some voicing doubts over the neutrality of the product review process, and noting the ease with which those affiliated or competing with a product can contribute anonymously.
- 1 Anti-competitive practices
- 2 Differential pricing
- 3 Collection of sales tax
- 4 Product availability
- 5 Kindle content removal
- 6 Amazon reviews
- 7 Sale of Wikipedia's material as books
- 8 Nazi T-shirts
- 9 Pedophile guide
- 10 WikiLeaks hosting
- 11 Treatment of workers
- 12 Lawsuit over alleged release of personal details
- 13 Opposition to trade unions
- 14 E-book pricing
- 15 Trademark infringement
- 16 References
The company has been controversial for its alleged use of patents as a competitive hindrance. The "1-Click patent" is perhaps the best-known example of this. Amazon's use of the one-click patent against competitor Barnes & Noble's website led the Free Software Foundation to announce a boycott of Amazon in December 1999. The boycott was discontinued in September 2002. On February 22, 2000, the company was granted a patent covering an Internet-based customer referral system, or what is commonly called an "affiliate program". Industry leaders Tim O'Reilly and Charlie Jackson spoke out against the patent, and O'Reilly published an open letter to Jeff Bezos, the CEO of Amazon, protesting the 1-click patent and the affiliate program patent, and petitioning him to "avoid any attempts to limit the further development of Internet commerce". O'Reilly collected 10,000 signatures with this petition. Bezos responded with his own open letter. The protest ended with O'Reilly and Bezos visiting Washington, D.C. to lobby for patent reform. On February 25, 2003, the company was granted a patent titled "Method and system for conducting a discussion relating to an item on Internet discussion boards". On May 12, 2006, the USPTO ordered a re-examination of the "One-Click" patent, based on a request filed by actor Peter Calveley, who cited the prior art of an earlier e-commerce patent and the Digicash electronic cash system.
Amazon has a Canadian site in both English and French, but until a ruling in March 2010, was prevented from operating any headquarters, servers, fulfillment centers or call centers in Canada by that country's legal restrictions on foreign-owned booksellers. Instead, Amazon's Canadian site originates in the United States, and Amazon has an agreement with Canada Post to handle distribution within Canada and for the use of the Crown corporation's Mississauga, Ontario shipping facility. The launch of Amazon.ca generated controversy in Canada. In 2002, the Canadian Booksellers Association and Indigo Books and Music sought a court ruling that Amazon's partnership with Canada Post represented an attempt to circumvent Canadian law, but the litigation was dropped in 2004.
In March 2008, sales representatives of Amazon's BookSurge division started contacting publishers of print on demand titles to inform them that for Amazon to continue selling their POD-produced books, they were required to sign agreements with Amazon's own BookSurge POD company. Publishers were told that eventually, the only POD titles that Amazon would be selling would be those printed by their own company, BookSurge. Some publishers felt that this ultimatum amounted to monopoly abuse, and questioned the ethics of the move and its legality under anti-trust law.
In 2008, Amazon UK came under criticism for attempting to prevent publishers from direct selling at discount from their own websites. Amazon's argument was that they should be able to pay the publishers based on the lower prices offered on their websites, rather than on the full RRP. Also in 2008, Amazon UK drew criticism in the British publishing community following their withdrawal from sale of key titles published by Hachette Livre UK. The withdrawal was possibly intended to put pressure on Hachette to provide levels of discount described by the trade as unreasonable. Curtis Brown's managing director Jonathan Lloyd opined that "publishers, authors and agents are 100% behind [Hachette]. Someone has to draw a line in the sand. Publishers have given 1% a year away to retailers, so where does it stop? Using authors as a financial football is disgraceful."
In August 2013, Amazon agreed to end its price parity policy for marketplace sellers in the European Union, in response to investigations by the UK Office of Fair Trade and Germany's Federal Cartel Office . It is not yet clear if this ruling applies to direct selling by publishers.
In Japan, Amazon's business activities are conducted by several subsidiary companies. The items sold by Amazon are formally sold by Amazon.com Int'l Sales, Inc., a company registered in the State of Washington, USA. Because of this, Amazon tried to avoid paying corporate tax (法人税 hōjinzei ), but in July 2009, the Tokyo National Tax Agency (東京国税局 Tōkyō Kokuzeikyoku ) ruled that Amazon still had to pay some tax.
In September 2000, price discrimination potentially violating the Robinson–Patman Act was found on amazon.com. Amazon offered to sell a buyer a DVD for one price, but after the buyer deleted cookies that identified him as a regular Amazon customer, he was offered the same DVD for a substantially lower price. Jeffrey P. Bezos subsequently apologized for the differential pricing and vowed that Amazon "never will test prices based on customer demographics". The company said the difference was the result of a random price test and offered to refund customers who paid the higher prices. Amazon had also experimented with random price tests in 2000 as customers comparing prices on a "bargain-hunter" Web site discovered that Amazon was randomly offering the Diamond Rio MP3 player for substantially less than its regular price.
Collection of sales tax
Amazon has been criticized for its refusal to collect sales taxes from customers in states in which it does not have a physical presence, thus giving it a comparative advantage over brick-and-mortar retailers. Hypothetically, such customers should pay the equivalent amount in use tax directly to their state; however, few customers do so.
Tax avoidance in the UK
It was reported in The Guardian, April 4, 2012, that Amazon generated more than £3.3bn of sales in the UK but paid no corporation tax at all on the profits, and that it was under investigation by the UK tax authorities. Amazon's tax affairs are also being investigated in China, Germany, France, Japan and Luxembourg.
Amazon at one time carried two cockfighting magazines and two dog fighting videos although the Humane Society of the United States (HSUS) contends that the sale of these materials is a violation of U.S. Federal law and filed a lawsuit against Amazon. A campaign to boycott Amazon in August 2007 gained attention after a dog fighting case involving NFL quarterback Michael Vick. In May 2008, Marburger Publishing agreed to settle with the Humane Society by requesting that Amazon stop selling their magazine, The Game Cock. The second magazine named in the lawsuit, The Feathered Warrior, remained available.
In April 2009 it was publicized that some erotic, lesbian, gay, bisexual, transgender, feminist and politically liberal books were being excluded from Amazon's sales rankings. Various books and media were flagged as "Adult content," including children's books, self-help books, non-fiction, and non-explicit fiction. As a result, works by established authors E. M. Forster, Gore Vidal, Jeanette Winterson and D. H. Lawrence were unranked. The change first received publicity on the blog of author Mark R. Probst, who reproduced an e-mail from Amazon describing a policy of de-ranking "adult" material. However, Amazon later said that there was no policy of de-ranking lesbian, gay, bisexual, and transgender material and blamed the change first on a "glitch" and then on "an embarrassing and ham-fisted cataloging error" that had affected 57,310 books.
In September 2009 it emerged that Amazon was selling MP3 music downloads falsely suggesting a well-known Premier League football manager was a child sex offender. Despite a campaign urging the retailer to withdraw the item, they refused to do so, citing freedom of speech. The company eventually decided to withdraw the item from their UK website when legal action was threatened. However, they continued to sell the item on their American, German and French websites.
Kindle content removal
In July 2009, The New York Times reported that amazon.com deleted all customer copies of certain books published in violation of US copyright laws by MobileReference, including the books Nineteen Eighty-Four and Animal Farm from users' Kindles. This action was taken with neither prior notification nor specific permission of individual users. Customers did receive a refund of the purchase price and, later, an offer of an Amazon gift certificate or a check for $30. The ebooks were initially published by MobileReference on Mobipocket for sale in Australia only—owing to those works having fallen into public domain in Australia. However, when the ebooks were automatically uploaded to Amazon by MobiPocket, the territorial restriction was not honored, and the book was allowed to be sold in territories such as the United States where the copyright term had not expired.
Author Selena Kitt fell victim to Amazon content removal in December 2010; some of her fiction had described incest between consenting adults. Amazon claimed "Due to a technical issue, for a short window of time three books were temporarily unavailable for re-download by customers who had previously purchased them. When this was brought to our attention, we fixed the problem..." in an attempt to defuse user complaints about the deletions.
As the customer review process has become more integral to Amazon marketing, reviews have been increasingly challenged for accuracy and ethics. In 2004, the New York Times reported that a glitch in the Amazon Canada website revealed that a number of book reviews had been written by authors of their own books or of competing books. In response, Amazon changed its policy of allowing anonymous reviews to one that gave an online credential marker to those reviewers registered with Amazon, though it still allowed them to remain anonymous through the use of pen names. By 2010, a Social Shopping Study by retailing consultant Power Reviews reported that Amazon was the largest single source of Internet consumer reviews. In that year, a number of cases emerged that were related to the reliability of Amazon reviews. In April, the British historian Orlando Figes was found to have posted positive reviews of his own books and negative reviews of those of his colleagues. In June, a Cincinnati news blog uncovered a group of 75 Amazon book reviews that had been written and posted by a public relations company on behalf of its clients. The London Daily Mail reported in November on the acknowledged use of public relations firms to post Amazon reviews, and the cases of three authors whose books had been attacked through anonymous negative reviews by rivals. In June 2011, The Daily Mail reported on the no-longer hidden hiring of writers by marketing companies to write and post positive reviews of books and other products and services on Amazon and other websites. A study at Cornell University in that year asserted that 85% of Amazon’s high-status consumer reviewers “had received free products from publishers, agents, authors and manufacturers.” By June 2011, Amazon itself had moved into the publishing business and begun to solicit positive reviews from established authors in exchange for increased promotion of their own books and upcoming projects.
Amazon.com's customer reviews are monitored for indecency, but do permit negative comments. Robert Spector, author of the book amazon.com, describes how "when publishers and authors asked Bezos why amazon.com would publish negative reviews, he defended the practice by claiming that amazon.com was 'taking a different approach...we want to make every book available – the good, the bad, and the ugly...to let truth loose'" (Spector 132). Allegations have been made that Amazon has selectively deleted negative reviews of Scientology-related items despite compliance with comments guidelines.
In November 2012, it was reported that Amazon.co.uk deleted "a wave of reviews by authors of their fellow writers' books in what is believed to be a response to [a] "sock puppet" scandal."
Following listing for sale of Untouchable: The Strange Life and Tragic Death of Michael Jackson a disparaging biography of Michael Jackson by Randall Sullivan his fans, organized via social media as "Michael Jackson’s Rapid Response Team to Media Attacks" bombarded Amazon with negative reviews and negative ratings of positive reviews.
Sale of Wikipedia's material as books
The German-speaking press and blogosphere have criticized Amazon for selling tens of thousands of print on demand books which reproduced Wikipedia articles. These books are produced by an American company named Books LLC and by three Mauritian subsidiaries of the German publisher VDM: Alphascript Publishing, Betascript Publishing and Fastbook Publishing. Amazon did not acknowledge this issue raised on blogs and some customers that have asked the company to withdraw all these titles from its catalog. The collaboration between amazon.com and VDM Publishing was started in 2007.
An article published in the Czech weekly Tyden in January 2008 called attention to shirts sold by Amazon which were emblazoned with "I Love Heinrich Himmler" and "I Love Reinhard Heydrich," professing affection for the infamous Nazi officers and war criminals. Patricia Smith, a spokeswoman for Amazon, told Tyden, "Our catalog contains millions of items. With such a large number, unexpected merchandise may get onto the Web." Smith told Tyden that Amazon does not intend to stop cooperating with Direct Collection, the producer of the T-shirts. Following pressure from the World Jewish Congress, Amazon announced that it had removed from its website the aforementioned T-shirts as well as "I love Hitler" T-shirts that they were selling for women and children. After the WJC intervention, other items such as a Hitler Youth Knife emblazoned with the Nazi slogan "Blood and Honor" were also removed from Amazon.com as well as a 1933 German SS Officer Dagger distributed by Knife-Kingdom.
On November 10, 2010, a controversy arose over the sale by Amazon of an e-book by Phillip R. Greaves entitled The Pedophile's Guide to Love and Pleasure: a Child-lover's Code of Conduct.
Readers threatened to boycott Amazon over its selling of the book, which was described by critics as a "pedophile guide". Amazon initially defended the sale of the book, saying that the site "believes it is censorship not to sell certain books simply because we or others believe their message is objectionable" and that the site "supported the right of every individual to make their own purchasing decisions". However, the site later removed the book. The San Francisco Chronicle wrote that Amazon "defended the book, then removed it, then reinstated it, and then removed it again".
Christopher Finan, the president of the American Booksellers Foundation for Free Expression, argued that Amazon has the right to sell the book as it is not child pornography or legally obscene since it does not have pictures. On the other hand, Enough Is Enough, a child safety organization, issued a statement saying that the book should be removed and that it "lends the impression that child abuse is normal". People for the Ethical Treatment of Animals, citing the removal of The Pedophile's Guide from Amazon, urged the website to also remove books on dog fighting from its catalogue.
Greaves was arrested on December 20, 2010 at his Pueblo, Colorado home on a felony warrant issued by the Polk County Sheriff's Office in Lakeland, Florida. Detectives from the county's Internet Crimes Division ordered a signed hard copy version of Greaves' book and had it shipped to the agency's jurisdiction, where it violated state obscenity laws. According to Sheriff Grady Judd, upon receipt of the book, Greaves violated local laws prohibiting the distribution of "obscene material depicting minors engaged in harmful conduct," a third degree felony. Greaves pleaded no contest to the charges and was later released under probation with his previous jail time counting as time served.
On December 1, 2010, Amazon stopped hosting the website associated with the whistle-blowing organization WikiLeaks. Amazon did not initially comment on whether it forced the site to leave. The New York Times reported: "Senator Joseph I. Lieberman, independent of Connecticut, said Amazon had stopped hosting the WikiLeaks site on Wednesday after being contacted by the staff of the Homeland Security and Governmental Affairs Committee."
In a later press release issued by Amazon.com, they denied that they had terminated wikileaks.org because of either "a government inquiry" or "massive DDOS attacks". They claimed that it was because of "a violation of [Amazon's] terms of service", because wikileaks.org was "securing and storing large quantities of data that isn't rightfully theirs, and publishing this data without ensuring it won’t injure others".
Amazon's action led to a public letter from Daniel Ellsberg, famous for leaking the Pentagon Papers during the Vietnam war. Ellsberg stated that he was "disgusted by Amazon’s cowardice and servility", likening it to "China’s control of information and deterrence of whistle-blowing", and he called for a "broad" and "immediate" boycott of Amazon.
Treatment of workers
In September 2011 Allentown, Pennsylvania's Morning Call interviewed 20 past and present employees at Amazon's Breinigsville warehouse, all but one of whom criticized the company's warehouse conditions and employment practice. Specific investigatory concerns were heat so extreme it required the regular posting of ambulances to take away workers who passed out, strenuous workloads in that heat, and first-person reports of summary terminations for health conditions such as breast cancer. The Morning Call also published, verbatim, Amazon.com's direct response to a query by OSHA, where amazon.com detailed its response when heat conditions reach as high as 114 °F (46 °C), including water and ice treatment, electrolyte drinks, nutrition advice, and extended breaks in air conditioned rooms. Five days after the Morning Call article was published, Amazon stated that it had spent $2.4 million "urgently installing" air conditioning at four warehouses including the Breinigsville facility. However, the original investigator states that when he checked back with current employees for his September 23 follow-up story, "they told him nothing had changed since his original story ran." Amazon.com also encountered similar but lower grade complaints about its Marston Gate, UK facility, prompting a threatened protest from Billy Bragg in 2001; claims of mistreatment in the U.K. resurfaced in 2008 with fresh reports of "sweatshop conditions".
In June 2012, Amazon began the installation of a $52 million investment in cooling its warehouses around the country, a major cost for the company equivalent to 8.2 percent of Amazon's 2011 total earnings. Experts speculated Amazon made such a massive investment either to dampen negative publicity over workers conditions, and/or to better protect goods in the warehouse such as food and electronics equipment.
- "Amazon ships a lot of electronics and food now. It's not good to have that stuff in extreme temperatures," said Sucharita Mulpuru, an analyst with Forrester Research. "I would like to think there was an element of humanity to the decision but there's nothing in Amazon's history or in Jeff Bezos' public persona that would lead me to think that was the driver of the decision. … Rarely has Amazon made any business decisions that didn't affect the bottom line."
Lawsuit over alleged release of personal details
In October 2011, actress Junie Hoang filed Hoang v. Amazon.com, a $1 million lawsuit against Amazon in the Western District Court of Washington, for allegedly revealing her age on the Internet Movie Database, which Amazon owns, by using personal details from her credit card. The lawsuit, which alleges fraud, breach of contract and violation of her private life and consumer rights, states that after joining IMDBPro in 2008 to increase her chance of getting roles, the actress claims that her legal date of birth had been added to her public profile, revealing that she is older than she looks, causing her to suffer a substantial decrease in acting work and earnings. The actress also stated that the site refused her request to remove the information in question. All claims against Amazon, and most claims against IMDB, were dismissed by Judge Marsha J. Pechman; the jury found for IMDb on the sole remaining claim.
Opposition to trade unions
Amazon has opposed efforts by trade unions to organize in both the United States and the United Kingdom. In 2001, 850 employees in Seattle were laid off by Amazon.com after a unionization drive. The Washington Alliance of Technological Workers (WashTech) accused the company of violating union laws, and claimed Amazon managers subjected them to intimidation and heavy propaganda. Amazon denied any link between the unionization effort and layoffs. Also in 2001, Amazon.co.uk hired a US management consultancy organization, The Burke Group, to assist in defeating a campaign by the Graphical, Paper and Media Union (GPMU, now part of Unite the Union) to achieve recognition in the Milton Keynes distribution depot. It was alleged that the company victimized or sacked four union members during the 2001 recognition drive and held a series of captive meetings with employees.
Following the announcement of the Apple iPad on January 27, 2010, Macmillan Publishers entered into a pricing dispute with Amazon.com regarding electronic publications. Macmillan asked Amazon to accept a new pricing scheme it had worked out with Apple, raising the price of e-books from $9.99 to $15. Amazon responded by pulling all Macmillan books, both electronic and physical, from their website (although affiliates selling the books were still listed). On January 31, 2010, Amazon "capitulated" to Macmillan's pricing request.
In 1999, the Amazon Bookstore Cooperative of Minneapolis, Minnesota sued amazon.com for trademark infringement. The cooperative had been using the name "Amazon" since 1970, but reached an out-of-court agreement to share the name with the on-line retailer.
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