Over the past two decades the extraordinary growth of Internet giants like Amazon, Facebook, Google, Alibaba, AirBnB, EBay and YouTube has been accompanied by the evolution of a complex network private legal systems designed to regulate the behaviour of users, vendors and customers, systems of Virtual Law that act in parallel with or occasionally at odds with national regulation.
Virtual Laws comprise complex sets of internal rules, company policies, shrink wrapped T&Cs, privacy policies, standards of conduct, credit arrangements, payment terms and business systems, some of which are publicly accessible, but many which are often opaque to external scrutiny.
For companies whose instantaneous cross-border operations and user generated content and commerce, the necessity of complex internal rules to govern their relationships with consumers and vendors are self evident. Yet the lack of transparency or accountability around dispute resolution is one of the most challenging areas for Tech Giants to manage.
The emerging bribery scandal at Amazon, as reported by Recode, is a case that highlights the challenges for corporations when implementing Virtual legal regimes.
According to Recode Amazon insiders and merchants were indicted in relation to a $100 million bribery scheme “in which insiders allegedly accepted payments to help certain Amazon merchants on the platform and hurt others.,“
The scandal demonstrates the manner in which Virtual Laws often lack the transparency, consistentcy and accountability that is hard coded into real world legal systems with vendors accusing Amazon of creating an environment that potentially fosters corruption:
“Amazon’s inability or refusal to consistently offer adequate support to its 1.7 million sellers when they have issues, especially when it comes to suspensions that Amazon hands down with little explanation and sometimes no warning…“
The lack of transparency around Amazon management decisions and clear mechanisms to appeal decisions puts Amazon vendors at a clear disadvantage when suspended and makes them vulnerable to exploitation by unscrupulous insiders.
“…it’s not uncommon for sellers to languish in Amazon purgatory for weeks or months trying to reinstate their business, either on their own or with the help of an ecosystem of consultants — some of whom prey on merchants’ desperation“.
With over 60% of all Amazon sales being fulfilled by independent merchants, the scale of the problem for Amazon is clear. The question remains as to whether Amazon will take sufficient action to provide greater transparency for its vendors and customers following this scandal.