
PopSockets CEO calls out Amazon's tactics before House committee - ilamont
https://mashable.com/article/amazon-bullying-tactics-popsockets-hearing/
======
metalliqaz
Amazon is extremely shady and it doesn't just hurt companies like PopSockets.
Amazon has a counterfeits problem and it's bad for customers. It is totally
obvious now that Amazon embraces cheap Chinese knockoffs, and I'm sick of
having to send them back.

~~~
Marsymars
I was recently searching for 1TB flash drives. Currently, when I search for
"1tb flash drive" on amazon.com, after ads and an Amazon's Choice banner, the
top result is a listing for a $20 product: [https://www.amazon.com/Flash-
Memory-Rotatable-Laptop-Compute...](https://www.amazon.com/Flash-Memory-
Rotatable-Laptop-Computer/dp/B07NY9WR28/)

~~~
untog
> an Amazon's Choice banner

For those who don't know: despite having a name that implies curation, Amazon
does not choose "Amazon's Choice" at all. It simply indicates which product is
most popular, based on reviews that are widely known to be faked. Yet another
utterly deceptive dark pattern.

~~~
zeroego
>based on reviews

That's incorrect. "Amazon's Choice" is based on sales. If you search "flash
drives" the product that has the Amazon's Choice badge is the product that is
bought most often by customers using that search term. It's one of the only
organic things on the Amazon platform.

~~~
karlding
There was actually a discussion on HN a couple of months back [0] about what
"Amazon's Choice" actually means. The consensus then was that it's not simply
based on sales.

[0]
[https://news.ycombinator.com/item?id=20098157](https://news.ycombinator.com/item?id=20098157)

~~~
zeroego
This is very useful to me, thank you for sharing.

------
blazespin
Not sure what he means by sourcing from the gray market? Does he mean that
it's illegal to produce pop sockets because of copyright or patent
infringement and Amazon is facilitating this? Or is he thinking that anyone
who produces a competitive product is somehow wrong?

If the former, that truly is (or should be) illegal and I hope Amazon is
punished dearly. If the latter, what a wimp. This is capitalism baby, and you
need to buck up.

You think walmart doesn't use it's market dominance in retail to try to push
prices down? How do you think we've got so much progress in our consumer
markets. Understand, that Amazon is not profiting here when it pushes prices
down. It's just trying to deliver a better service for it's customers and
compete with other companies like Walmart.

In fact, Amazon's margins decrease when it pushes prices down.

That all said, I really have no idea what he means by gray market and willing
to learn.

~~~
bradyd
Grey market is buying a companies items (not counterfeit copies) outside of
the official supply chain. For example, many goods are sold cheaper in other
markets. So someone could buy the item there and bring them to a market where
they are usually sold for more and be able to undercut the the official
supplier's prices. This is perfectly legal thanks to the First Sale Doctrine.
Companies don't like this though, because they don't make as much, so they
brand these goods grey market to make them seem shady to consumers.

~~~
speedplane
> Grey market is buying a companies items (not counterfeit copies) outside of
> the official supply chain. For example, many goods are sold cheaper in other
> markets. So someone could buy the item there and bring them to a market
> where they are usually sold for more and be able to undercut the the
> official supplier's prices. This is perfectly legal thanks to the First Sale
> Doctrine.

You're mixing up a bunch of ideas. The traditional definition of "grey market"
is buying an item oversees at a low cost and then importing it into the US.
For example, the identical textbook usually sells for much more in the U.S.
than it does in Asia. The supreme court has indeed ruled that the First Sale
doctrine allows people to buy that book in Asia, then sell it back to someone
in the U.S. for more.

However, the first sale doctrine only applies to copyright, not patents. It
hasn't yet been decided as to patents.

More meaningfully though, the meaning of the term "grey market" has expanded.
It used to refer to authorized items sold overseas, but now it more generally
refers to items with questionable IP rights. When Amazon is using the term
"grey market", they are referring to counterfeits and infringing products as
well.

------
birdyrooster
As a wrinkle to this conversation, Amazons product and treatment of
customers/vendors causes even more harm to the environment. People buy more
things that they are unsatisfied with than ever before. There are more returns
than ever before. There are likely millions more frivolous purchases and many
thousands of tons of cardboard and non-recyclable plastics generated each year
thanks to Amazon Prime.

~~~
blakesterz
"treatment of customers"

I know I'm an N of 1 but speaking purely as a customer Amazon has been nothing
but awesome. And I know that's probably seen by many as maybe selfish and
wrong, and I get that argument totally. But I can the stuff I want* pretty
darn fast and pretty darn cheap and if it's not what I want it's easy to send
back. I understand that might be short sighted with all the drawbacks, but I
still keep ordering. The pluses outweigh the minuses. Am I being selfish?

* Not the stuff I need, but the stuff I want. I think that's an important point.I guess I go to Wegmans for the stuff I need.

~~~
jfim
They used to be pretty consumer-centric a decade ago, but personally I pretty
much stopped buying on Amazon in the last couple of years.

Having to inspect the items for counterfeits, dealing with support if the item
isn't functional (or slightly defective), getting messages from sellers to
"make sure to write us a 5 star review", eventual consistency on the shopping
cart price (eg. if the price of an item increases between adding it to the
cart and checking out, there's no big red warning like "hey this item is 30%
more expensive than when you put it in your cart three minutes ago, are you
sure you want to check out at this new price"), awful delivery experiences,
it's just not worth the hassle anymore IMO.

~~~
sdoering
wow. Am I glad to be in a country that bans most of these tactics by
regulation. I have two weeks to send back items, no questions asked. Price
isn't allowed to change negatively between when I decide to put it in my
basket and buy it.

and I have never had an email asking for a positive review.

------
ectqmbe
This is not new behaviour out of Amazon. I mean... look at what happened with
Diapers.com (Quidsi) and Zappos back in the earlier days. Amazon approaches
most deals with "Play our game our way in our stadium or we'll ruin you. Oh,
by the way, you have to pay rent on the stadium and if you make too much money
we may just ruin you anyway."

One of the most compelling reasons to not use AWS is every time a company does
something novel and has any business relationship with Amazon, they start a
competing business. From that perspective, they're a huge IP risk. If they
can't win at the competition they try to buy the company. If they can't buy
the company, they use their deep coffers and dominant e-retail position to
apply unethical (if not illegal) screws.

They're pretty much the modern equivalent of Standard Oil or U.S. Steel.

I don't really believe that it will happen, but I really hope that Congress
gets off their butt and does something about it.

~~~
blazespin
Yeah, AWS needs to be split out. But, alas, amazon can't afford to do that
because those profits are funding the rest of the company. They are extremely
vulnerable as a company here and is a strategic opportunity for other cloud
vendors. Just push down cloud margins and Amazon will slowly be out priced.

Without having some kind of control over prices, you are not a very viable
business. Amazon is in a very fragile position.

Honestly, I have no idea why government is getting involved here. Let the
market eat them.

------
rahimnathwani
'"Multiple times we discovered that Amazon itself had sourced counterfeit
product and was selling it alongside our own product," he noted.'

How do they know that Amazon sourced the counterfeit?

Amazon's own inventory may be commingled with those of third parties so, even
if you receive a counterfeit, it may have nothing to do with Amazon's own
sourcing. (Unless you consider the whole commingling approach to be part of
Amazon's sourcing.)

~~~
willis936
Does branding “amazon basics” count as amazon sourcing? Because amazon basics
are often counterfeits of the cheap items they pretend to be.

~~~
wmf
I don't think Amazon Basics counts as "counterfeit" for the purpose of this
discussion.

~~~
willis936
Not all of them. They’re branded as knockoffs. Basics are occasionally
counterfeits of knockoffs.

------
ikeboy
Popsockets is one of the biggest bullies in the marketplace. They've sued
many, many sellers that were selling legitimate products trying to bully them
off the market with various loopholes in the first sale doctrine.

[https://www.courtlistener.com/docket/14939738/popsockets-
llc...](https://www.courtlistener.com/docket/14939738/popsockets-llc-v-
wilcox/) [https://www.courtlistener.com/docket/16007022/popsockets-
llc...](https://www.courtlistener.com/docket/16007022/popsockets-llc-v-
sussman/) [https://www.courtlistener.com/docket/15050057/popsockets-
llc...](https://www.courtlistener.com/docket/15050057/popsockets-llc-v-online-
king-llc/) [https://www.courtlistener.com/docket/15683859/popsockets-
llc...](https://www.courtlistener.com/docket/15683859/popsockets-llc-v-
outlook-fba-corp/) [https://www.courtlistener.com/docket/15639919/popsockets-
llc...](https://www.courtlistener.com/docket/15639919/popsockets-llc-v-
handler/) [https://www.courtlistener.com/docket/16620695/popsockets-
llc...](https://www.courtlistener.com/docket/16620695/popsockets-llc-v-
gancfried/) [https://www.courtlistener.com/docket/16620699/popsockets-
llc...](https://www.courtlistener.com/docket/16620699/popsockets-llc-v-yef-
trading-inc/)

The basic strategy is to include a bunch of FUD about how there's
counterfeiters in general on Amazon, then try to lump legitimate sellers in
with that. See the 79 page complaint from my last link, filed just last month.
They have a template lawsuit that's dozens of pages long, and they just fill
in the specific seller details. They have a bunch of screenshots of negative
customer reviews, but those are from Amazon broadly and are not connected to
the seller they're suing - they use the same negative reviews for all their
lawsuits. (It looks like they have two negative feedback for popsocket sales
traced to that account out of the many pages of negative reviews that isn't
connected to an account.)

To be clear, they are not alleging counterfeits in the lawsuits. The claim is
that the product doesn't carry the manufacturer warranty, and that sellers
don't follow the right quality controls, both of which are very shaky claims
legally (warranty restrictions are problematic under federal law, and there's
no serious quality control concern on sealed electronics accessory products -
it's the same product in the same warehouses, it doesn't magically become
lower quality just because a different seller is selling it. There's a
potential quality control concern with groceries or products requiring
temperature controls, but it stretches credibility to argue that applies to
sealed popsockets.) But a small seller can't afford the hundreds of thousands
of dollars it takes to get a court decision affirming that. I know multiple
sellers that have settled rather than fighting it. It's the path of least
resistance.

Popsockets is not the only brand that's been using these abusive tactics.
There's a string of lawsuits by Otterbox, Skullcandy, GNC, Murad, Standard
Process, Noco, and others. Most of them are being pushed by a lawfirm called
Vorys, which is associated with a large Amazon seller by the name of
iServe/Pattern (one of the top 10 third party Amazon sellers, see
[https://www.sellerratings.com/amazon/usa](https://www.sellerratings.com/amazon/usa),
note Zappos and 6PM are Amazon-owned and Asurion, LLC is selling services, not
products), that gets exclusive contracts with brands and then sues many of
their competition that's undercutting them.

It's a scheme just begging for an anti-trust investigation.

~~~
blazespin
Interesting, so is it immoral to sue someone who is blatantly copying your
product and providing a much cheaper knock off with much poorer quality?

I'm not sure how I feel about this. Maybe it's just a bad idea to copy someone
else's product unless you really plan on improving upon it.

I don't imagine pop socket has a limitless budget for lawsuits either. They
may really think they are doing the right thing here.

I guess this is the gray market that he's talking about. All these companies
that are just copying products and creating cheaper versions with worse
quality.

And amazon is facilitating that. Interesting and certainly worth shouting
about.

~~~
AnimalMuppet
> Interesting, so is it immoral to sue someone who is blatantly copying your
> product and providing a much cheaper knock off with much poorer quality?

That looks like a deliberate deflection. ikeboy specifically said that, while
the lawsuit alleges inferior quality, that allegation is bogus. I would say
that it _is_ immoral to sue someone alleging inferior quality when the quality
is not, in fact, inferior.

~~~
ikeboy
Just wanted to clarify a bit of the legal terminology here. There's a
loophole/exception to the first sale doctrine that says if the products are
materially different, it can be considered trademark infringement even if the
product was originally made by the brand.

In some jurisdictions, there's a "quality control" subcategory of "material
difference". The quality controls must be non pretextual. The basic argument
is that if the brands's products are subject to quality control procedures
that the alleged infringer is not following, then the products are different
enough that it can potentially create a likelihood of confusion between the
two. Only a jury can actually decide if there's such a material difference in
a particular case.

Now, quality control can be temperature controls, or it can be additional
inspections before sale, and so on. It must be something where customers would
care about the difference, so you can allege customer confusion.

In these cases and in most of the vorys cases I've seen, the quality controls
appear very pretextual. If the product is sealed, authentic, and there's no
damage to it, it's hard to see why any consumer would care about any of the
alleged differences in quality control.

The cases I've seen where quality control was accepted by a court were
typically imports, where there were actually different standards being used
for the ones the brand was selling in the US. In my view, none of these would
go anywhere if they made it to court. But that's very expensive - it's been at
least several years that similar cases have been filed, I'm aware of over 100
so far across 30+ different brands, and as far as I know none have actually
gone to a jury. Most settle well before that point, or are voluntarily
dismissed.

~~~
AnimalMuppet
> If the product is sealed, authentic, and there's no damage to it, it's hard
> to see why any consumer would care about any of the alleged differences in
> quality control.

If I understand you correctly, the only differences in quality control would
be if there were quality control tests that these units failed _after they
were sealed_. That seems... quite unlikely.

Alternately, there were quality control tests that these units failed, _but
they sealed them in the standard packaging anyway._ That also seems unlikely.

------
adaisadais
Amazon, or Wal-Mart in the Sky, is truly an incredible company and business.
But a good name is worth more than $. If they continue these negative business
practices their brand equity will slowly continue to decrease over time. The
general public is not yet as wary of their power as most HN readers but it
won’t be look until a new competitor (or preexisting) starts nipping away at
their bottom line.

~~~
CriticalCathed
Wal-mart has a hideous reputation among the general public and that doesn't
seem to stop them. Walmart grows YoY every quarter.

I'm not certain their reputation will change much so long as they can still
ship a product to my house in one day for less money than at a physical store,
and have effortless returns.

~~~
toasterlovin
> Wal-mart has a hideous reputation among the general public

Does it actually? Or does it just have a hideous reputation among the upper
classes because it is a thing of the lower classes (like country music and
pickup trucks)?

~~~
bdcravens
According to the American Customer Satisfaction Index, Walmart has one of the
lowest ratings.

[https://www.theacsi.org/?option=com_content&view=article&id=...](https://www.theacsi.org/?option=com_content&view=article&id=149&catid=14&Itemid=214&c=Wal-
Mart&i=Supermarkets)

[https://www.theacsi.org/index.php?option=com_content&view=ar...](https://www.theacsi.org/index.php?option=com_content&view=article&id=149&catid=&Itemid=212&i=Department+and+Discount+Stores)

------
JackFr
Hey Congress, maybe focus more on the price of insulin rather than pop
sockets.

~~~
btmiller
It's not mutually exclusive, Congress (whether they exercise it or not is
another question, but) has the capacity to do both.

~~~
gonational
Congress, nay, government in general, has neither the capacity nor the ability
to affect the price of anything, in the long run.

Lest we increase prices through the introduction of more regulatory in
efficiencies in what would have otherwise been a free market, our government
should not interfere in matters of a private enterprise.

~ Adam Smith

(just kidding, but he would probably agree)

------
AndrewKemendo
It's not unique to Amazon.

My company did a deal with a F50 retailer that you've shopped at. About a
month ahead of the first deliverable which was agreed to in the statement of
work, one of their VPs called me and screamed at me demanding a live demo or
they would cancel any further payments on the contract. Oh and stay on the
original delivery timeframe.

We were small enough that we couldn't afford to fight that in court and losing
that client would have been the loss of our biggest deal and a huge negative
signal.

So we made it work but it just proved to me that contracts without the ability
to enforce them don't mean anything.

------
gowld
> He asserted that Amazon representatives would tell him over the phone: "If
> we don't get it, then we're going to source product from the gray market."

Record your phone calls with customers, just like they do.

~~~
gruez
Legal in 2 party consent states like California?

~~~
inetknght
Just announce that the call "may" be recorded for "quality assurance purposes"
just as California businesses do.

------
someonehere
I discovered that when you receive a random Amazon package sent to your home,
it’s a scam for the product.

From what I’ve read and been told by people, it’s a seller from Amazon
shipping you their product using a gift card. They create an account using
your info (not sure how they get it, maybe public info web sites), ship you
their product and pay for it with a gift card. They then create a review of
the product you received as you. It’s then considered a verified buyer of the
product. So it’s essentially buying reviews.

It’s happened to a few of my friends.

------
plandis
I’m a bit skeptical of this for a few reasons. If Amazon is in breach of
contract then why is PopSockets not taking them to court? What is the gray
market in this case? Buying a product similar from a different company? That
just seems like a smart business tactic, IMO

~~~
speedplane
> I’m a bit skeptical of this for a few reasons. If Amazon is in breach of
> contract then why is PopSockets not taking them to court? What is the gray
> market in this case? Buying a product similar from a different company? That
> just seems like a smart business tactic, IMO

The "gray market" indicate cheap knock-offs of new products.

For example, literally days after Tile released their bluetooth powered device
locators, you could find cheaper knock-offs from China. These products may
very well infringe Tile's patents and trademarks, but proving infringement in
court takes years and costs millions of dollars. Even if you win, during that
time many other knock-off manufacturers will pop up and you'll have to start
all over. At that point your company will be dead. Intellectual property
litigation is simply not strong enough to protect smaller companies.

So a threat to go to the gray market from Amazon, can effectively spell the
doom for your company.

As an aside, while this is a problem for small companies, larger companies can
usually afford to wage these large IP litigation campaigns. A good example is
Bosch which sells patented windshield wiper blades. There are numerous knock-
offs from China, but Bosch goes to war with each and every one. Eventually,
Bosch starts earning a reputation and the knock-offs slow down. But this takes
many years of heavy investment in IP enforcement and never entirely goes away.
It only makes sense at very large scales, no small company could take on this
burden.

------
blt
I stopped buying anything expensive and simple to manufacture from Amazon. I
now only use it for things where I want the no-name version anyway, like RGB
LED strips and curtains. Essentially treat it like AliExpress with fast
shipping.

------
wufufufu
Everyone keeps talking about cheap Chinese clones but I don’t know what
they’re talking about. Are you talking about generic products that have a
Chinese sounding brand name?

------
pbiggar
If congress wants to investigate Amazon's anti-trust stuff, they should spend
some time looking at AWS.

------
legitster
On one hand, I don't necessarily mind that established brands get sent down a
peg. Especially when they sell an entirely commodified product and expect a
retailer to help pad their "brand".

On the other hand - the Amazon shopping experience has sucked lately. Ever
since they allowed foreign sellers, every product line is flooded with cheap
options and you never know what kind of crap you get.

I honestly think their e-commerce may have peeked. They only allowed foreign
sellers to keep up with growing competition, are dumping huge amounts of money
into ads, and from personal experience of myself and those I know, Amazon
Prime feels much less essential than it used to be.

~~~
JackFr
> On one hand, I don't necessarily mind that established brands get sent down
> a peg. Especially when they sell an entirely commodified product and expect
> a retailer to help pad their "brand".

For any product that's basically extruded plastic, Amazon is literally Robin
Hood taking brand equity and distributing it to the people.

------
jamisteven
Ok? If it wasnt for AMZN do you think popsockets would have scaled that quick?
No. Would this CEO have even 1/4 his net worth? Not likely. Seriously if AMZN
is such a pain in his side why doesnt he just drop them? Thats right, because
THEY are the retailer, not him.

~~~
tehwebguy
Highly doubtful, PopSockets are distributed in basically every brick & mortar
shop in the US.

Also:

> "Multiple times we discovered that Amazon itself had sourced counterfeit
> product and was selling it alongside our own product," he noted.

~~~
toasterlovin
> > "Multiple times we discovered that Amazon itself had sourced counterfeit
> product and was selling it alongside our own product," he noted.

If this is true, then the right venue to take this up is in a court of law.

~~~
untog
Who's to say that they aren't? Seems like you could do that _and_ talk to the
House when invited.

