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Etsy CEO says proposed California bill would hurt small businesses

"I think it's really Amazon trying to use its market power to shut down competition,” Josh Silverman said.

Etsy CEO Josh Silverman is speaking out against a proposed California bill that he says would hurt small businesses in favor of Amazon.

The proposed law, AB 3262, would hold online retailers accountable for injury liability the same way brick-and-mortar retailers are. Amazon is supporting the bill, which Etsy and other online retailers oppose.

Silverman says it would help Amazon eliminate small business competitors.

“The bill would dramatically raise the cost of being a small businessperson on marketplaces like Etsy or Amazon,” he said in an interview Wednesday. “I think it's really anti-competitive. And I think it's really Amazon trying to use its market power to shut down competition.”

Both companies offer third-party sellers a platform to sell their goods, and the bill would hold online retailers liable for injuries caused by a defective product. An appeals court recently ruled against the retail behemoth in Bolger vs. Amazon, holding it liable for a product defect along with the third-party seller.

Silverman claims the bill would force more than three million Etsy sellers, mostly women-owned or businesses of one, to take on liability they don’t have the resources to afford.

“When Amazon lost the (Bolger vs. Amazon) case, it cynically changed from opposing the bill to supporting the bill, but amending the bill so that it specifically targeted Etsy and eBay sellers,” he says. “Now, the bill suddenly became not about holding Amazon liable, but about shutting down competition against Amazon.”

In a blog post on Aug. 21, Amazon’s Vice President of Public Policy Brian Huseman wrote that the company shares the California Legislature’s goal of keeping consumers safe.

“To further that goal, this legislation aimed at protecting consumers should apply equally to all stores, including all online marketplaces,” he wrote.

Other online marketplaces and business entities have spoken out as well. eBay recently encouraged sellers on their platform to reach out to legislators to oppose the bill. In a letter to the California State Assembly, the Civil Justice Association of California claims that physical and online sellers are already held accountable, and that the bill unfairly singles out online marketplaces without holding similar physical retailers to the same standard.

Silverman agrees. “That would be like saying that if you bought something at a flea market, the landlord who owned the parking lot should be responsible for every single thing you buy in that market, right? We simply don't have the control over the product,” he said.

The bill was passed by the California Assembly last week, and has been sent to the state Senate for a vote.

Gov. Gavin Newsom’s office has not said whether he would sign the bill if approved by the Legislature.

“We don’t typically comment on pending legislation,” said Press Secretary Jesse Melgar. “If and when a bill reaches the governor’s desk, it will be evaluated on its merits.”