Apple, Amazon, and the Shrinking Internet Landscape

November 19, 2018

In order to keep moving forward, you have to hang on to the idea that tomorrow might be better than today, and that next year might be better than this year. But that’s increasingly difficult to grasp in the repair world -- the world of fixing broken devices and putting them back into circulation. You’d think, as I did 10 years ago when I started my company, that repairing is an inherently positive activity, and that refurbishing would be considered a noble profession. Hah!

Last week I got an e-mail from Amazon letting me know that I will be prohibited from selling Apple products as of January 4th. I’ve been selling about a third of my MacBook inventory there for a few years. It’s not easy to do -- you have to keep your seller ratings up, and there is always a lingering risk of getting banned for minor offenses. Unlike eBay, which more or less treats sellers like customers, it’s well accepted on Amazon that you work for THEM. You’re lucky to have an account, and you must play by their often cryptic and stringent rules.

I’ve always accepted that, and it turns out I’m pretty good at the game. I have 100% perfect feedback, which is nearly impossible to maintain for any stretch of time. When I’ve been at fault for a bad situation, I’ve literally given away laptops to make customers happy. You will not find one red mark on my Amazon performance scorecard across thousands of transactions. Just like in Monopoly I’ve “passed go” repeatedly and converted all my houses into hotels. I’m 100% in Amazonland.

But that doesn’t matter. Amazon, it turns out, is flipping my Monopoly board and scattering the pieces everywhere. It’s abandoning the game it’s playing with me and thousands of small businesses. Amazon is moving on to a bigger game, a game of partnering with Apple so that it can sell Apple’s products directly in exchange for dumping small companies like mine. As it walks away from us, it has the gall to suggest we should be grateful that we are allowed to keep selling (and making Amazon money) through the holiday season.

Many in the Amazon seller forums ask the question: “Why do you think you have the right to sell on Amazon?” And they are correct to ask, because it is true, in fact, that we don’t have that right.

I’m not a lawyer, but I’m aware of a legal concept called the “first sale doctrine”. It dictates that a manufacturer, a copyright-holder, does not have the right to prohibit the purchaser from selling that product again. The purchaser, after all, is the new owner, and the owner can do what it wants with the product, whether that is to smash it to pieces, or repair it and sell it again. If Apple was to sue me directly for selling an Apple product I own, that would be a violation of the first sale doctrine, and they would be breaking the law.

But this is not a first sale doctrine issue. Apple and Amazon have the legal right to make an agreement between themselves. If Amazon wants to dump its small refurbishers in order to make Apple happy, that is a bargaining chip they have the right to play (in exchange for zillions in profit, certainly). It isn’t right that Amazon should dump thousands of independent small businesses, but it IS their right to do that if they want.

The problem is something else. Amazon represents about half the retail marketplace of online sales of any given product. Half of the online universe is now off limits to a certain population. Half of the sky, so to speak, has been blacked out.

And that’s OK -- we’ll survive. There’s still eBay. There’s Newegg.com. There’s Walmart.com. There’s Swappa.com, which will certainly expand substantially due an an influx of estranged Amazon sellers. We will get smarter. We will become more resourceful, more diversified, and we will make it work. Tens of millions of repairable products will still have an outlet and will not go to landfills. Yes, unfortunately, some of us will succumb to this setback, to this yet another of a thousand cuts, but the majority will persevere. This is not the final blow.

But here’s the problem: What’s to stop Apple from forcing the same agreement on eBay? Walmart? Swappa.com? The financial incentive will certainly be enticing to them. What if they succumb to pressure and 98% of the sky is blacked out? What if Apple successfully circumvents the first sale doctrine by effectively privatizing the entire public marketplace?

Does it matter that you legally have a right to sell a used product, a repaired product, a refurbished product, if you only have 2% of the Internet marketplace to work within? 2% means you’ve been pushed into the shadows -- into the black market, essentially. If you’re selling on marketplaces within the bottom 2%, it’s a given that you’ve been de-legitimized. It’s assumed there is something wrong with you if you are in that place. Something wrong with repair, something wrong with refurbishing, and even something wrong with the idea of small business in general.

Don’t be fooled. I’m talking about selling refurbished/repaired Apple MacBooks, a relatively niche business. But whatever product or service you make your money delivering, this very issue will soon be knocking on your door (or appearing in your inbox), and you will be screaming at the dark sky just as I am.

Is it OK for big business to flip thousands of Monopoly boards until it has a literal monopoly on the marketplace, leaving everyone else with nothing but the realization that the game is fixed?

We need to have a conversation about the structure of the Internet landscape. In this new world, shouldn’t we recognize that building small businesses, fixing devices, and selling our services for a profit represent values worth preserving? The question is not what big companies can legally get away with, but what kind of world we want to live in.
 

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