WH Executive Order Could Crush Amazon and eBay

Trump Administration order slams Amazon and eBay's counterfeit marketplace.

February 12, 2020, Los Angeles, CA – President Trump is angry over the trade of counterfeit goods on Amazon, eBay, and other e-commerce websites, and “thinks it’s outrageous what the e-commerce platforms are getting away with” at the expense of brick-and-mortar retail stores in the United States, says Peter K. Navarro, Ph.D., top economic and trade advisor to the President. “Online counterfeit trafficking is defrauding consumers at the very least and harming or even killing Americans with the fakes coming into our homes and businesses.”

The White House issued a crushing Executive Order and strong sanctions for e-commerce websites including Amazon, eBay, Walmart, and Alibaba, for not following new "best practices" recommendations. The order describes the active role e-commerce platforms, online third-party marketplaces, and other third-party intermediaries such as customs brokers, fulfillment shippers, and express consignment carriers must take for monitoring, detecting, and preventing trafficking in counterfeit and pirated goods.

E-commerce websites have long enjoyed profitable immunity claiming to be "just a venue" while enabling and facilitating the sale of an inexhaustible supply of counterfeit, fraudulent, and replica goods.

"When you purchase brand-name goods through online third-party marketplaces like Alibaba, Amazon, and eBay, there's a good chance you'll end up with a counterfeit," said Dr. Navarro in a WSJ interview.

The Trump administration said it would begin imposing fines and other penalties on merchants, warehouses, and third-party websites that facilitate the import and sale of counterfeit and pirated goods.

The Department of Homeland Security will make the determination of whether such conduct affects that entity's opportunity to participate in transactions with the Federal Government. The consequences can be severe. Recently, the U.S. Department of Defense awarded its $10 billion cloud computing contract to Microsoft over Amazon. How much Amazon's nefarious activities influence the decision?

“For all practical purposes, these e-commerce hubs are basically laundries for counterfeits,” Dr. Navarro said at a news conference announcing the measures. “The thrust of the recommendation is to get e-commerce hubs to accept their fair share of the responsibility.”

This has escalated a long-simmering tension between the Trump administration and the United States’ largest e-commerce company. Amazon claims it already spends millions of dollars on the issue, including $400 million (just 3.6% of profit) in 2018 on things like fraud and abuse. In contrast, Amazon is criticized for not paying any federal income tax on $11 billion in profit in 2018, taking advantage of the U.S. Postal Service, and investing $6 billion in Amazon's India operations.

Legislative and judicial intervention is long overdue and warranted for e-commerce website's indifference to the damage they cause to consumers, legitimate sellers, and manufacturers.