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Shopify COO says Amazon-backed California regulation would make it ‘more difficult’ for entrepreneurs

A Shopify executive is the latest e-commerce operation to come out against a consumer protection bill that has received the backing of Amazon, telling CNBC it would stifle small businesses that operate online.

“We unequivocally believe that for the future of commerce to survive and thrive it has to be in the hands of the many, not the few,” Shopify COO Harley Finkelstein said in a “Mad Money” interview with Jim Cramer Wednesday.

Consumer protection is very important “but it cannot come at the expense of independent businesses who are, frankly, the backbone of our economy,” he said, joining Etsy, eBay’s public policy team and other industry groups in opposition to the proposal.

The measure, Assembly Bill 3262, being considered by state lawmakers would subject “electronic retail marketplaces” to product liability requirements as brick-and-mortar retailers. If passed into law, California would be the first state to make online marketplaces be responsible for defective goods listed on their websites.

While Shopify is not itself a marketplace, but provides tools for businesses to open an internet storefront, “we still believe that the world is better with many entrepreneurs and many independent entrepreneurs, and anything that makes it more difficult we don’t is a great thing,” Finkelstein said.

AB 3262 was amended on Monday to add internet markets that make money on what merchants bring in from advertising. The changes were made after Amazon’s public policy arm said it would back the measure under such conditions.

“Injured consumers should be able to seek compensation regardless of how a particular online marketplace makes money,” Brian Huseman, the company’s policy chief, wrote in a blog post on Friday. The position follows a court ruling earlier this month that said Amazon could be liable for damages from a defective product that was sold on the platform by a merchant and burned a customer.

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On Tuesday, Etsy, a handmade goods marketplace, came out against the move by Amazon, accusing the tech giant of “abuse of power market play.”

“Amazon is taking bold steps to wipe out its competitors by promoting complex, hard-to-comply-with legislation that only they can afford to absorb,” Etsy CEO Josh Silverman said. “Amazon’s goal is to be the only place to buy stuff online, hobbling mom-and-pops that sell unique items in their own shops, or more frequently since COVID, through marketplaces like Etsy. Small businesses, struggling now more than ever, will ultimately bear the brunt of the overbearing burdens of AB 3262.”

The news comes as Big Tech, including Amazon, faces scrutiny over anti-competitive practices. Last month in a congressional hearing, Jeff Bezos, the head of Amazon, was questioned on the company’s use of third-party merchant data for its own product development projects.

California is also embroiled in a legal fight with the travel segment of the tech sector over labor regulations. Uber and Lyft threatened to pull the plug on business in the state before the ride-hailing apps would have ben forced to reclassify drivers as employees.

An appeals court last week extended a stay on an order that the companies abide by a new law that sought to provide protections to gig workers.

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