Last month, Klobuchar introduced bipartisan legislation to ensure major digital platforms cannot unfairly preference their own products and services
WASHINGTON - At today’s Senate Judiciary Committee hearing titled “Cleaning Up Online Marketplaces: Protecting Against Stolen, Counterfeit, and Unsafe Goods,” U.S. Senator Amy Klobuchar (D-MN), Chairwoman of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, highlighted the urgent need to protect consumers online and stop big tech companies from using private seller data to create knockoffs of products and preference their own products and services, undercutting small businesses.
“I want to focus on some bipartisan legislation that Senator Grassley and Durbin and others introduced with me, and that would prevent dominant digital platforms from engaging in behavior that unfairly harms competition, like, relevant here, knocking off products sold on their platform,” Klobuchar began.
In response to Klobuchar, Aaron Muderick, the founder of Crazy Aaron’s Puttyworld, testified that he recently discovered an AmazonBasics version of his product. “And so I was obviously concerned, then I looked a little deeper, and I saw that not only was it a knockoff of our product, but it violated a number of our trademarks...but I think it speaks also to an underlying problem that you have brought up here,” he said. He then noted that it was only after he pointed out the infringing product to Amazon that they removed their copycat product from the platform.
Klobuchar also emphasized the importance of ensuring consumer safety online, sharing the story of two young Minnesotans who died after purchasing drugs that were laced with fentanyl on Snapchat. “...when you have these new marketplaces with people making tons of money...they have to start being responsible for taking this stuff down,” she said.
Sen. Klobuchar: Very good. Thank you very much, Senator Durbin, for your leadership, long-time leadership, on this issue, and all of you for your work. I want to focus on some bipartisan legislation that Senator Grassley and Durbin and others introduced with me, and that would prevent dominant digital platforms from engaging in behavior that unfairly harms competition, like, relevant here, knocking off products sold on their platform. Recent reports in places like the Wall Street Journal have documented how Amazon has created knock-off products based on the data that they get from innocent companies that are selling on their platform -- and of course, it’s the big platform in town -- and then engages in self-preferencing of their own brands above other brands. Mr. Snowden, do you support legislation making it illegal to use special access to online seller data to create copycat versions of popular products?
Mr. Snowden: Senator, this is an issue that I have members on both sides, so I am actually, I have traditionally not taken a stance on the competition issues and I will not, I don’t plan to make news today.
Sen. Klobuchar: Okay, I just wondered, I knew that, but you know, thought I would, we have a lot of people on a lot of sides here, but just to be clear, I get this, but at some point this Congress has to take a side. And do you want to add anything, Mr. Dugan?
Mr. Dugan: No, I’m sorry, Senator, but this is the first I’ve heard of that, and I was kind of fascinated.
Sen. Klobuchar: You were nodding your head, so I thought you agreed with me.
Mr. Dugan: Well, I was learning something, Senator, you were teaching me something. So I find it amazing, but thank you.
Sen. Klobuchar: Okay, well, it's true. Mr. Muderick?
Mr. Muderick: Thank you. A few months ago, I was sent a link to a new product on Amazon, an AmazonBasics version of our product. And so I was obviously concerned, then I looked a little deeper, and I saw that not only was it a knockoff of our product, but it violated a number of our trademarks. So someone did not do their homework. And we were able to quickly get it taken down through the Amazon Brand Registry, which speaks to some of the progress they’ve made, but I think it speaks also to an underlying problem that you have brought up here.
Sen. Klobuchar: Very, very good, and I appreciate that, and I think we’re seeing so much more of it than, you know, you just happened to be on this panel. We've had people who have experienced this, as we know from the reporting, and I think there's just a lot of it, and my view is that we’ve got to update our laws, which is part of the work that Senator Durbin, Senator Grassley have been doing. I’m also of course concerned about safety when consumers buy products online. Just last week in the Commerce Committee, I questioned Snap about the heart-wrenching stories of young people in Minnesota who died after taking drugs that were purchased on Snap. In one case they didn't know that it was laced with fentanyl. Mr. Dugan, what are some of the harms consumers can experience when they unknowingly purchase unsafe goods online?
Mr. Dugan: Thank you for that question, Senator. There’s a lot of harms. I will say that there’s virtually no product integrity online, so I would caution buying sensitive products online unless you know that they’re safe. We’ve spoke about infant formula, there’s another cases that I’ve worked, unfortunately, involving organized crews that steal millions of dollars in diabetic test trips, and sell them and store them at different temperatures, and then wind up counterfeiting the diabetic test strips, and then sell them to unsuspecting patients with diabetes across the country. So there’s a lot of harm across there, the effectiveness of over the counter drugs, they expire, they get less effective, it’s really a domino effect on the type of safety hazards that are out there when there’s no product integrity.
Sen. Klobuchar: And of course, the fentanyl example is an example of drugs that shouldn't be sold at all on a platform. You know, Snap has pledged to take these down and do what they can to get, in the witness’s words at the last hearing, drug dealers off their platform. But the truth is, I continue to believe that when you have these new marketplaces with people making tons of money, that they have to start being responsible for taking this stuff down. Ms. Kammel, in your experience, when consumers are making purchases online, do they have enough information to decide for themselves whether a product might be unsafe?
Ms. Kammel: No, they don’t. Often they are looking just at an image, sometimes it’s a copy of another brand’s copyrighted image, and what information the seller decides to put on the site. So one cannot tell what they’re actually buying until they receive the product, even if it appears genuine at first glance.
Sen. Klobuchar: And whether it’s counterfeit PPE on Amazon or advertisements for fake COVID-19 vaccines on Facebook, do you think online platforms are doing enough to stop this conduct? What else should they be doing?
Ms. Kammer: There were a lot of initiatives around fake PPE and counterfeit COVID-related products for sure, and I do applaud the marketplaces for looking at that, but across the board we see counterfeits in almost every industry that we work with, almost every product line that’s successful, so I believe more should be done proactively.
Sen. Klobuchar: Very good. Well, I really appreciate it again, and again thank you very much, Mr. Chairman, for all your work on this, and for being a cosponsor of our bill, which I think is so timely given what we’re talking about here today. Thank you.
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