Reclaim Democracy!

How Amazon Wins: By Steamrolling Rivals and Partners

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By Dana Mattioli
First published in The Wall Street Journal, Dec. 23, 2020

Jeff Bezos built Amazon.com Inc. from his garage with an underdog’s ambition to take on the establishment. He imbued staff with an obsession to grow fast by grabbing customers using the biggest selection and lowest prices. Today, he has more than 1.1 million employees and a market valuation around $1.6 trillion.

But Amazon never really grew up. Mr. Bezos still runs it with the drive of a startup trying to survive.

That ethos helps keep Amazon booming. Aggressive competition—including wresting market share from rivals—is often a hallmark of a successful business. It’s also why the tech-and-retail giant is the target of rivals, regulators and politicians who say its tactics are unfair for a company its size, and potentially illegal. As the company has grown, so has its capacity to take on an ever-growing array of competitors.

Bull Market
To keep customers happy, which Mr. Bezos has long said is Amazon’s fixation and growth strategy, executives behind the scenes have methodically waged targeted campaigns against rivals and partners alike—an approach that has changed little through the years, from diapers to footwear.

No competitor is too small to draw Amazon’s sights. It cloned a line of camera tripods that a small outside company sold on Amazon’s site, hurting the vendor’s sales so badly it is now a fraction of its original size, the little firm’s owner said. Amazon said it didn’t violate the company’s intellectual-property rights.

When Amazon decided to compete with furniture retailer Wayfair Inc., Mr. Bezos’s deputies created what they called the Wayfair Parity Team, which studied how Wayfair procured, sold and delivered bulky furniture, eventually replicating a majority of its offerings, said people who worked on the team. Amazon and Wayfair declined to comment on the matter.

Amazon set its sights on Allbirds Inc., the maker of popular shoes using natural and recycled materials, and last year launched a shoe called Galen that looks nearly identical to Allbirds’ bestseller—without the environmentally friendly materials and selling for less than half the price.

“You can’t help but look at a trillion-dollar company putting their muscle and their pockets and their machinations of their algorithms and reviewers and private-label machine all behind something that you’ve put your career against,” said Allbirds Co-CEO Joey Zwillinger. “You have this giant machine creating all these headwinds for us.”

An Amazon spokesman said the company’s shoe didn’t infringe on Allbirds’ design, adding that the company has previously said: “Offering products inspired by the trends to which customers are responding is a common practice across the retail industry.”

This year, Amazon has zeroed in on Shopify Inc., a fast-growing Canadian company that helps small merchants create online shops. Amazon has established a secret team, “Project Santos,” to replicate parts of Shopify’s business model, said people familiar with the project.

Amazon executives often initiated efforts like these on their own, though in some cases examined by The Wall Street Journal, Mr. Bezos himself was involved, according to former Amazon executives and internal emails.

From its start as an online bookstore 26 years ago, Amazon has expanded into an online retailer with a presence in nearly every major category. It is also the leading provider of cloud-computing services, a gadget maker, a major entertainment player and a rival to United Parcel Service Inc. and FedEx Corp. Mr. Bezos is the world’s richest man, with a net worth Forbes estimates at $187 billion.

He still exhorts employees to consider Amazon a startup. “It is always day one,” he likes to say. Day two is “stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death.” Mr. Bezos originally considered calling his company Relentless, and www.relentless.com still redirects to Amazon’s site.

Mr. Bezos declined to be interviewed. Amazon declined to provide an overall comment on the topic of this article and responded only to specific examples.

Some rivals and partners say Amazon’s competitive zeal looks like unfair practices. The Journal this year reported that Amazon employees used data about independent sellers on its platform to develop competing products and that it has used the investment and deal-making process in ways that entrepreneurs and others said helped it develop products that competed with its would-be partners. Journal reporting showed how Amazon has limited some competitors’ ability to promote rival streaming devices and other gadgets on its dominant e-commerce platform.

Mr. Bezos in July testimony to the House Antitrust Subcommittee about the Journal’s private-label article, said: “I can’t guarantee you that that policy has never been violated.” The Amazon spokesman said the company doesn’t use confidential information that companies share with it in the mergers-and-acquisitions and venture-capital processes to build competing products. Amazon didn’t directly address the question of whether it hobbles rivals’ marketing, saying it is common practice among retailers to choose which products they promote.

The Justice Department last year launched a broad investigation of the market power of large technology companies including Amazon, and the Federal Trade Commission has oversight of Amazon as part of a broader look into the business practices of big tech. Europe’s antitrust regulators last month charged Amazon with violating competition law. Amazon said it disagreed with the allegations and would continue to engage with the commission.

In October, the House Antitrust Subcommittee concluded a 16-month investigation into tech companies with a report accusing Amazon of exerting “monopoly power” over sellers on its website. “It’s very clear that they use the enormous market power that they have to maintain dominance,” Rep. David Cicilline (D., R.I.), chairman of the subcommittee, said in an interview.

Amazon has denied exerting monopoly power. In response to the investigation, it published a blog post saying that “large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong.”

Amazon’s version
At its height about a decade ago, Pirate Trading LLC was selling more than $3.5 million a year of its Ravelli-brand camera tripods—one of its bestselling products—on Amazon, said owner Dalen Thomas.

In 2011, Amazon began launching its own versions of six of Pirate Trading’s top-selling tripods under its AmazonBasics label, he said. Mr. Thomas ordered one of the Amazon tripods and found it had the same components and shared Pirate Trading’s design. For its AmazonBasics products, Amazon used the same manufacturer that Pirate Trading had used.

Amazon priced one of its clone tripods below what Mr. Thomas paid his manufacturer to have Pirate Trading’s version made, he said. He determined it would be cheaper to buy Amazon’s versions, repackage and resell them than to buy and sell them on the terms he had been getting; he decided not to do that.

Amazon suspended Pirate Trading camera tripod models that competed with the AmazonBasics versions repeatedly, Mr. Thomas said, alleging his tripods had authenticity issues. Amazon rarely suspended the tripod models that didn’t compete with AmazonBasics versions, he said. In 2015, Amazon suspended all Ravelli products, he said, and even though the suspension ended, his company’s tripod business is now a fraction of the size it was. Mr. Thomas said he found being a seller on Amazon too risky and has largely pivoted to real-estate investing.

Several Amazon sellers said they have received notifications from Amazon, which has been battling fraud and fake goods on its platform, that say their products are used or counterfeit. Amazon suspends their selling accounts until they can prove that the products are legitimate, which can cause big sellers to lose tens of thousands of dollars each day, they said.

To turn their accounts back on, Amazon often requests that the sellers provide details on who manufactures their product along with invoices from the manufacturer so that Amazon can verify authenticity. Several sellers told the Journal they provided those details to Amazon to get their accounts reinstated, only for Amazon to introduce its own version of their products using the same manufacturer.

The Amazon spokesman said the company requests invoices when there is a counterfeit claim and doesn’t use information it requests about a seller’s manufacturer to procure private-label products.

CJ Rosenbaum, a lawyer who works on behalf of Amazon sellers, said some of them use intermediary “black box” factories to hide suppliers’ identities from Amazon: “They get the finished goods and ship them to a black-box factory who will ship their products to Amazon.”

‘Held as a prisoner’
More than half of all product searches start on Amazon’s search bar, according to some estimates, making it the de facto place for product discovery. For many sellers, Amazon represents the majority of their revenues.

“It’s literally like being held as a prisoner with Amazon,” said Billy Carmen, a Holly, Mich., seller of patio products, “and because of that there’s no place else companies like us can go to sell our products. Amazon uses that against us.”

The 62-year-old in late April sent Amazon invoices from his manufacturer because his account was under threat of suspension for counterfeit claims, even though he makes the product in question. He worries about the level of information Amazon has about his supply chain, though so far he hasn’t seen any Amazon-branded imitations on the site.

Mr. Bezos set out to make Amazon a destination where consumers can find everything they want and continues that push. “If a company is offering something that Amazon thinks they can do better, or can do less expensively, then they will try to do it,” said Patrick Winters, an Amazon Prime Video manager who left this summer to work for Albertsons Cos. after more than a decade at Amazon.

“That was Amazon’s philosophy from the start,” Mr. Winters said, “to basically have everything a customer wants even if it’s something only a few customers want.”

Quidsi, parent of Diapers.com and Soap.com, became a target a decade ago, when Amazon set up a team to focus on it, according to emails released as part of congressional hearings. Amazon wanted to know how the New Jersey e-commerce company could deliver bulky packages of diapers so quickly, said people familiar with the matter.

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Amazon in 2009 developed a 12-step plan to take on Quidsi, according to the emails released by Congress. Action items in emails included “Beat or meet Diapers.com’s delivery speed” and “Beat or meet Diapers.com’s 6PM order time cutoff.” An internal email that year from a top Amazon retail executive called Quidsi “our #1 short term competitor,” and said: “we need to match pricing on these guys no matter what the cost.”

In a June 2010 email chain that included Mr. Bezos, a senior executive laid out tactics, saying “We have already initiated a more aggressive ‘plan to win’ against diapers.com in the diaper/baby space,” a plan that included doubling Amazon’s discounts on diapers and baby wipes to 30% off, and a free Prime program for new moms.

When Amazon cut diaper prices by 30%, Quidsi executives were shocked and ran an analysis that determined Amazon was losing $7 for every box of diapers, former Quidsi board members said. Senior Quidsi executives were even more surprised when, the day of the price cuts, Jeff Blackburn, a top lieutenant to Mr. Bezos, approached a Quidsi board member saying the company should sell itself to Amazon, said a person familiar with the matter. At that point, Quidsi wasn’t for sale and had big growth plans.

Editor’s Note: What’s described here — selling at a loss to eliminate a competitor is illegal, but. Like most corporate crime, has been ignored by Democratic and Republican administration’s alike. (Individual prosecution decisions theoretically are made by non-partisan civil servants.) Remarkably, the website of the Federal Trade Commision claims “Instances of a large firm using low prices to drive smaller competitors out of the market in hopes of raising prices after they leave are rare.” And racism no longer exists, either.

While the reporting here is excellent overall, we should ask why the media almost never seeks statements from those whose job it is to prosecute such crimes and ask their reasons for not enforcing the law).

Quidsi started to unravel after Amazon’s price cuts, said Leonard Lodish, a Quidsi board member at the time, missing its internal monthly projections for the first time since 2005. The company felt it had no choice but to sell itself because it couldn’t compete with what Amazon was doing and survive. Amazon bought Quidsi in 2010 for about $500 million. It shut down Diapers.com in 2017, saying it was unprofitable.

“What Amazon did was against the law. They were selling diapers for below cost,” said Mr. Lodish. “But what were we going to do? Sue Amazon for antitrust? It would take years and tens of millions of dollars and we’d be bankrupt by then.”

The Amazon spokesman declined to comment on the specifics of the Quidsi acquisition, saying Diapers.com wasn’t profitable when Amazon acquired it. Mr. Blackburn declined to comment.

Wayfair Parity Team
In 2016, Wayfair was an online retailer of furniture such as coffee tables and nightstands with $3.4 billion in revenue that year, compared with Amazon’s $136 billion. Amazon had less furniture selection than Wayfair, and its so-called S-team of senior vice presidents—some directly under Mr. Bezos—made the market a priority, said the people who worked on the team.

That year, Amazon launched its Wayfair Parity Team, which analyzed Wayfair’s business with the goal of eventually selling on Amazon 90% of furniture Wayfair offered, the people said. The team grew to around 100 people. It struggled to find Wayfair’s suppliers. Wary of competitors, Wayfair was buying items from manufacturers and rebranding them to mask their identity, said the people.

The team eventually identified the manufacturers by ordering Wayfair products to check manufacturing information and by going to trade shows to find Wayfair’s suppliers, they said.

Images from court documents show the West Elm Orb chair listing, left, and the Amazon Orb

In March 2018, Amazon began selling an “Upholstered Orb Office Chair” under its Rivet brand. 

Amazon didn’t stop Wayfair’s growth. The smaller company increased its share of online furniture sales in the U.S. to 25% last year from under 18% in 2016, according to market-research company 1010data—although Wayfair’s net loss also widened during the period. Amazon’s market share stayed steady, at just over half of online furniture sales, including its direct sales and those of outside vendors on its platform.

In the most recent quarter, Wayfair’s revenue grew 66.5% and the company posted its second consecutive quarterly profit after straight quarterly losses since its 2014 market debut.

The Amazon spokesman, while declining to comment on the Wayfair Parity Team, said part of earning customer loyalty is making selection and pricing as good or better than competitors’.

Williams-Sonoma Inc. successfully fought back against Amazon, which it claimed had copied a chair sold by its West Elm brand, known for its midcentury-modern furniture style. West Elm’s distinctive-looking orb dining chair was a particular hit, with more than $2 million in sales in the first 10 months of 2018, according to a complaint Williams-Sonoma filed in a lawsuit against Amazon over the incident, alleging patent infringement. In 2017, West Elm had filed a patent for the design of the chair.

The “Amazon Orb Chair is so highly similar that the ordinary observer would be confused by the imitation,” said the complaint. Williams-Sonoma’s complaint identified other furniture items that Amazon’s private-label team launched that looked nearly identical to designs it began selling earlier, including a coffee table and a few lamps.

Amazon removed the items from its website and settled the lawsuit in October, with a favorable outcome for West Elm, according to people familiar with the matter. Amazon and Williams-Sonoma declined to comment on the lawsuit.

Powerful tool
In targeting competitors, Amazon’s private-label team has access to a powerful tool: Amazon’s database of search terms customers frequently use. The team can add those terms to their product descriptions and detail pages to gain a boost on Amazon’s search engine, some former Amazon private-label employees said.

When employees on Amazon’s private-label team in 2017 launched its Goodthreads line of apparel such as military jackets and chino pants, they sought to create an aesthetic similar to that of J.Crew, one of the former employees said. Parent company J.Crew Group for years avoided selling on Amazon. J.Crew’s then-Chairman Mickey Drexler in a 2017 conference said he wouldn’t sell on Amazon because: “No. 1, they own the customer” and would “take every bestseller and put it into their private label collection.”

So the Goodthreads managers took steps to help searches for “J.Crew” show results that included Goodthreads, according to the person. Goodthreads is now one of Amazon’s top 10 private-label brands, according to e-commerce intelligence firm Marketplace Pulse.

The Amazon spokesman said Goodthreads targets an aesthetic common among multiple brands and isn’t unique to J.Crew. J.Crew declined to comment.

Shoe seller Allbirds, too, refused persistent Amazon efforts to get it to sell on the tech giant’s site, said Mr. Zwillinger, the co-CEO. The San Francisco startup launched its first shoe, “Wool Runner,” in 2016. It was the product of three years of research and development, using fabric from an Italian mill and a sole that was “carbon neutral,” produced with a Brazilian chemical company.

The lightweight shoe became an instant success. Amazon consistently contacted Allbirds between 2017 and 2019 to sell on its site, said Mr. Zwillinger. Allbirds always declined.

Allbirds’ team in mid-2017 began noticing that, on Google’s search engine, the top results for “Wool Runner” were knockoffs from outside vendors on Amazon, Mr. Zwillinger said. Allbirds believed Amazon was buying advertisements on Google to siphon demand for the shoes to itself, he said.

Mr. Zwillinger said it isn’t possible to track the damage to his company, but that “to see a company with the deep pockets of Amazon try to siphon off demand and give it to copycats is really frustrating.”

Then came the Galen shoe. Mr. Zwillinger said he believes search data guided Amazon’s decision to clone his hit product, which he said looks “eerily similar” to his shoe.

“I’m not saying whether they did or didn’t infringe. We didn’t get a lawyer involved,” he said. Because of Amazon’s size, he said, “it seems like that’s going to be an uphill battle that’s not worth fighting.”

Amazon’s Galen shoe.
The Amazon spokesman said that the company didn’t target Allbirds on Google advertising and that it was obvious wool shoes were trending.

Now, Amazon is targeting one of the biggest pandemic beneficiaries, Shopify, a platform that helps bricks-and-mortar stores set up online shops. With the coronavirus causing store shutdowns, many smaller retailers have invested in creating online stores using Shopify’s technology.

Small retailers on Shopify had aggregate sales of $5.1 billion over Black Friday weekend, topping Amazon’s $4.8 billion from its third-party sellers. Amazon won’t disclose how much it made in sales from its first-party business where it buys inventory and resells it. The 14-year-old Shopify’s share price has roughly tripled over the past year.

Amazon had largely dismissed the Canadian company internally, said employees on and off the project, but that has changed over the past year now that it looks like a significant threat. “It’s super high on our radar,” said one of the people.

At roundtables with its sellers, the people said, Amazon has learned that many had been defecting to Shopify because of increasing fees from Amazon, which on average collects 30% of each sale on its platform from outside vendors, up from 19% five years ago, according to the Institute for Local Self-Reliance. Shopify collects 2.9% plus 30 cents a transaction.

Earlier this year, Amazon created a top-secret task force dedicated to studying the Canadian company and copying parts of it, said the employees. To lead the team, Amazon tapped Peter Larsen, a longtime executive and vice president, consumer. Mr. Larsen recruited dozens of executives, who have signed nondisclosure agreements to work on the project. Internal chat boards are filled with other Amazon employees digging for information on “Project Santos,” the employees said.

Amazon and Mr. Larsen declined to comment on Project Santos. Shopify didn’t respond to requests for comment.

In October, the team presented its work to Mr. Bezos, who was enthusiastic that the project could help stem the defection of sellers to its Canadian rival, said the employees. Amazon hasn’t launched the project yet, they said.

Mr. Larsen’s direct reports have cryptic descriptions in their LinkedIn profiles about what they are working on. One lists “new things on the horizon,” while another writes “Good things are happening.”

Sebastian Herrera contributed to this article. Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 

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Time to Reverse Corporate “Constitutional Rights”

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By Representative Pramila Jayapal
February 5, 2020

This past fall, Amazon challenged the proudly progressive character of my home city, Seattle, pouring $1.5 million into its City Council elections.

In doing so, Amazon placed not just a thumb but also a fistful of cash on the scales of our democracy. Thanks to immediate organizing on the ground and the speaking out of elected officials, the cynical and last-minute corporate spending on elections backfired: Nearly all of the Amazon-backed candidates lost their races.

However, on this 10th anniversary of the US Supreme Court ruling in Citizens United v. Federal Election Commission that catalyzed our current era of super PACs and corporate power, the clear danger posed by money in politics is real. Citizens United vastly expanded the rights of corporate entities and the super-wealthy to spend or invest their money to influence political elections and deepened the corrupting electoral influence of big money.

In the 10 years since Citizens United, we’ve seen newly created super PACs and “dark money” political nonprofits spend staggering sums, taking in unlimited donations without having to disclose them. While they cannot coordinate their spending with specific candidate campaigns, they can spend on political attack ads and other forms of political influence. From 2010 to 2018, super PACs spent roughly $2.9 billion on federal elections while dark-money spending rose from $129 million in the period from 2000 to 2008 to $964 million from 2010 to 2018.

It is important to note that Citizens United was not the first time political money in elections has been equated with “free speech” and corporations have been equated with people with constitutionally protected rights. The claim that corporate entities are legal persons with constitutional “rights” has been around for over a century.

Political money as free speech originated in the 1976 Buckley v. Valeo decision, while corporate political free speech rights began with the 1978 First National Bank v. Bellotti ruling.

But corporate constitutional rights extend beyond First Amendment free speech rights. Corporate constitutional rights began in the 1880s when Supreme Court Justices hijacked the Bill of Rights and the 14th Amendment—intended to guarantee equal protections for black Americans—claiming the rights of people also applied to corporate entities. Courts also interpreted sections of the original Constitution to protect corporate “rights” over those of people and communities, even though corporate entities are not mentioned anywhere in our Constitution.

The collective consequences of this have been devastating.

The corporate First Amendment “right not to speak” means that consumers may end up knowing less about what’s in the food they eat. The corporate First Amendment religious “right” granted in the 2014 Hobby Lobby decision gives a for-profit corporation the right to deny reproductive health care coverage based on religious belief.

The corporate Fourth Amendment search and seizure “rights” prevents warrantless inspections of many businesses to ensure safe working and environmental protections.

The corporate Fifth Amendment takings “rights” defines certain corporate regulations that protect private land as a “taking,” with the corporation being justly compensated for lost current and/or future profits.

Therefore, any full remedy to the questions of money into elections must address not only the immediate effects of Citizens United but also the entirety of corporate constitutional rights.

That is why in 2019, I introduced House Resolution 48, the We the People Amendment calling for ending all corporate constitutional rights—as well as political money as free speech.

The flood of money into elections following Citizens United and other court decisions has eroded public trust in our elected leaders to seriously address issues like health care, climate change, wealth inequality, guns, and infrastructure. Only by ending all of these corporate constitutional rights and the corrupting influence of political money as “free speech” can we have a government that represents all of us rather than only the interests of the super-wealthy.

The We the People Amendment (HJR 48), co-sponsored by 67 of my House colleagues, enjoys widespread support with the American public. The national group Move to Amend has been educating and organizing citizens across the country, building an authentic, grassroots movement seeking a systemic solution to address the harms of Citizens United.

The American people urgently want us to return our government back to the people instead of the highest bidders. It’s up to all of us to make that happen.

Pramila Jayapal represents Washington’s 7th District in the United States House of Representatives.

Dying to Vote (And a Warning for November)

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By Jeff Milchen
April 7, 2020

Three years ago today, Mitch McConnell and the Republican Party completed the heist of the century — confirming Neil Gorsuch to occupy a U.S. Supreme Court seat held open for more than a year. Now Gorsuch’s decisive vote is forcing thousands of Wisconsin citizens to make an unconscionable choice: sacrifice your vote or risk your life to be counted.

Accurately describing yesterday’s malicious ruling by the Court is almost impossible to do without sounding hyperbolic. By a 5-4 vote, the Justices ruled that voters who requested an absentee ballot, but have not yet received it (at least several thousand citizens), must line up with masses of people to vote in-person. This despite a statewide order banning non-essential travel and gatherings of more than 10 people. So people not only are forced to choose between being disenfranchised and risking COVID-19, but must violate a State order to go to the polls!

The SCOTUS sided with Republican Party plaintiffs in reversing a U.S. District Court ruling that extended the deadline for absentee ballots — it gave voters one week after today to receive and return absentee ballots. That followed Wisconsin Republicans refusing to approve a plan to send ballots to all registered voters. Instead, citizens had to request ballots individually, and more than one million did, leaving the State completely unable to fulfill the requests.

The Republicans’ disenfranchisement tactics aren’t motivated by intra-party primaries, but a hotly contested State Supreme Court contest and other “non-partisan” races.

Extreme gerrymandering enabled Republicans to control the Wisconsin legislature despite being beaten by 10 percent of total votes in the 2018 elections. A State Supreme Court not dominated by Republican judges would likely strike down those gerrymanders, driving the imperative to close the circle by suppressing voters likely to vote for Democrats. 

When politicians choose their voters, entire elections are undermined. In the 2020 Wisconsin State Assembly race, Democrats received 200,000 more votes than Republicans; however, Republicans swept seats.

Governor Tony Evers convened a special session of the legislature in hope of forging a bipartisan agreement to postpone the election and enable voting by mail, but Republicans refused to consider any action.

As if being forced to vote in person during a pandemic isn’t hellish enough, Milwaukee will open no more than five out of a normal 180 polling places today. It seems most poll workers weren’t eager to risk their lives for some extra pocket money. With projected turnout, 10,000 or more voters could jam the locations, making safe “distancing” impossible.  

Image by The Onion

In Milwaukee County, more than 1300 residents have COVID-19 cases and 45 have died. As of Friday, 81 percent of the dead were black, while black and Hispanic residents vastly outnumber whites in the City.

In a separate legal fight that could have eliminated the need for the SCOTUS ruling, Wisconsin Governor Evers issued an executive order yesterday suspending in-person voting until June 9 due to the severe public health threat. But Republican legislators immediately challenged the order with the Wisconsin Supreme Court. In a 4-2 ruling, the Court blocked Evers’ decree and opened the door for the SCOTUS to strike down the absentee voting extension.

No Justice signed their name to the SCOTUS’ majority opinion, which is no surprise to anyone who reads the wafer-thin reasoning. The majority declared extending the date by which absentee ballots could be received and counted violates the Constitution because it “fundamentally alters the nature of the election” too close to Election Day. Apparently, voters failing to receive a ballot does not rise to the level of election-altering.

The majority opinion by Justices Roberts, Alito, Gorsuch, Kavanaugh and Thomas mentions the COVID-19 pandemic only in closing and slinks away from the fundamental issue by saying, “the Court should not be viewed as expressing an opinion on the broader question of whether to hold the election, or whether other reforms or modifications in election procedures in light of COVID–19 are appropriate. That point cannot be stressed enough.” Don’t forget: these Justices cancelled hearings as of April to ensure their own safety.

The denial of responsibility directly echoes Bush v Gore, but this time, some voters may catch a virus and die.

Of course, the Republican tactics not only are an assault on democracy in Wisconsin, but a warning for our national elections this fall. Donald Trump repeatedly has attempted to undermine confidence in elections, raised baseless claims that mail-in voting would invite voter fraud, and endorsed numerous schemes to disenfranchise poor people and minorities. 

Map of states with mail-in voting
Graphic by Daily Kos

And five Supreme Court Justices have proven they’re willing to ignore clear evidence of discriminatory impacts to poor and minority citizens — at least without video of the perpetrators confessing racist intentions. 

While most Americans already are challenged by the daily grind of staying afloat financially while surviving a pandemic, planning to thwart corruption like Wisconsin’s in the November election is essential. One place to start is checking to see if your state has (at least) no-excuse voting by mail and, if not, loudly demanding it (or universal vote-by-mail). Publicizing potential pitfalls with mail-in-voting is also essential to plan ahead.

And while it won’t be achieved this year, those of us who value democracy need to stop solely playing defense against the endless array of vote suppression tactics devised by Republicans. We should shift significant energy toward driving an affirmative right to vote into the U.S. Constitution via Amendment. Working to place it in each state’s Democratic, Green and other party platforms this year is a fine first step in that process. 

Jeff Milchen founded Reclaim Democracy! He is an organizer, speaker ,and writer helping to advance entrepreneurship, grassroots democracy, and self-reliant communities. Engage him on Twitter at JMilchen

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The Arbitration Gambit: The Corporate Takeover of Our Justice System

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It used to be anybody who forged a banking transaction would end up in deep legal trouble. Not anymore – at least if you’re a banker. You might get fired as four senior Wells Fargo managers were recently. But the police won’t be looking for you.

What’s worse, if you are a victim of the fraud, there maybe little you can do about it, because the corporations have come up with a new legal “get out jail free card”  they can use to insulate themselves from responsibility for a wide variety of crimes in almost any line of business.

The fired Wells Fargo executives were implicated in a scheme in which the bank created up to two million phony accounts in the names of its customers without their knowledge. The company then charged the legitimate accounts of those customers for fees created by the fake ones. This went on for about a decade until it was exposed last year.

Although the bank paid a federal fine, no one at Wells is being prosecuted. The CEO, John Stumpf, retired with  $124 million in stock and other benefits — on top of his generous salary.

The bank did fire 5300 workers who created fake accounts under intense pressure to meet sales goals not achievable through ethical sales practices. Yet the supervising executive in charge of the branches, Carrie Tolstedt, retired at the end of last year after being paid $27 million dollars over the last three years (not including stok bonuses). 

So what about the customers who were defrauded? Although the amount each of them lost was relatively small, usually about $25, many of them are understandably outraged and have sued the bank. Ordinarily, no one could afford to take on a large corporation for a $25 fraud claim. Instead the lawyers for the bank’s victims used a “class action lawsuit” in which they can represent large numbers of clients in a single case.

But buried in the agreement customers signed when they opened their accounts was a phrase stipulating all disputes with the bank would be settled through binding arbitration, in which the parties argue before a supposedly independent arbitrator who makes the decision. The arbitrator’s ruling typically cannot be appealed to a public court.

© Mike Luckovich, Atlanta Journal-Constitution

In practice, arbitration favors the corporation contracting the arbitration firms, since those companies depend on repeat business from their corporate clients. However, the arbitration rules don’t offer any protection from these potential conflict of interests.

The problem for the victims of Wells Fargo’s fraud isn’t just that they are unlikely to get a fair shake in arbitration. They won’t get a hearing at all because almost all of these agreements prohibit any kind of class action. Instead each individual has to bring his or her case on their own. This would mean spending thousands of dollars and huge amounts of time to seek restitution for a $25 theft. And if the arbitrator rules against them, they may be liable for a big bill from their lawyer and the arbitrator.

These binding arbitration agreements have spread like a plague since a pair of Supreme Court decisions in 2011 and 2013. They affect just about any business one does with a large corporation including Amazon, Netflix, Travelocity, eBay and DirecTV, AT&T and countless others.

According to a multipart series on arbitration in the New York Times, the legalization of the binding arbitration gambit was the goal of a “Wall Street-led coalition of credit card companies and retailers.” In 2011 the Court handed down the first of the two crucial decisions, AT&T LLC v. Concepcion, that made get out of jail free a reality. By that time one of the lawyers who worked with the coalition, John G. Roberts Jr. was the Court’s Chief Justice.

The Roberts Court overturned a California state court decision declaring AT&T’s arbitration agreement an “unconscionable contract” because it exempted  the “party with superior bargaining power” from “responsibility for [its] own fraud.” In doing so, the California court’s decision was in keeping with a centuries-old legal tradition concerning unfair contracts.

But the Supreme Court twisted the meaning of a 1925 federal law that simply established the legal standing of arbitration agreements except as long as they don’t violate the legal standards applicable to contracts in general. Instead, the Court decided the law placed the goal of “efficient, streamlined procedures” to solve disputes ahead of any concerns about fraud.

The lower courts responded by throwing out hundreds of class action suits and the number of cases brought by consumers and small businesses dropped precipitously. Then in a 2013 decision, American Express Company v. Italian Colors Restaurant, the court denied a claim by a restaurant owner that an arbitration clause the company inserted into its credit card contract violated antitrust laws. The dissenters on the court made it clear what this decision  meant: “The monopolists gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse.”

Forced arbitration is also a threat to individual victims of corporate crimes who are not part of class action suits. According to the Times, arbitration has impeded legal redress for people dealing with private schools and colleges, doctors, home construction firms, cemeteries and nursing homes.

Binding arbitration is also becoming common in employment contracts. The Times described the experience of a doctor who sued the medical group that employed her for workplace discrimination. When she showed the company had destroyed evidence, the arbitrator fined the company $1,000 and then billed the doctor $2,000 for the time he spent looking into it. When the arbitrator decided in favor of the employer, the doctor was stuck with a $200,000 legal bill, including $58,000 she owed the arbitrator.

Wells Fargo recently agreed to a $110 million settlement with customers victimized by the phony account scheme. It did so despite having successfully played its get out of jail card in court because its management decided to counter the bad publicity. As the bank’s new CEO Tim Sloan explained, the settlement is “another step in our journey to make things right with customers and rebuild trust.”

With forced arbitration, individual citizens as well as small and medium-sized business are being rendered legally powerless against the hostile corporate takeover of a large part of our civil justice system. But there is a silver lining in all of this. The Supreme Court’s rulings rest on the slender reed of a single law. The federal government could nullify those rulings by enacting a new law making it clear the Federal Arbitration Act does not support “unconscionable” contracts.

Getting such changes passed will not be an easy task in the current political environment. On the other hand, the arbitration gambit also creates an opening for a counter move. This issue affects almost everybody who is not extremely wealthy regardless of their race, religion, class or political belief. They can demand that their representatives fix this law. Regardless of whether or not the fix is enacted,  a broad cross section of citizens will find out who in Washington is working on their behalf and who isn’t.

Jeffrey Kaplan writes from the San Francisco Bay Area

Snuffing Runaway Corporate Power at the Source: Our Money

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“If you don’t like the growth of giant corporations, stop giving them your money,” said Jeff Milchen (Reclaim Democracy’s Executive Director at the time) in 1997. While this does not suggest exercising our power as consumers is sufficient by itself to solve the problem of runaway corporate power, we too often find the importance of our spending choices overlooked or diminished in the work to revitalize democracy. Since most of the world’s largest corporations sell directly to consumers, we certainly do have much to gain by finding opportunities to decentralize power with our own purchases.

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Milchen later went on to found the American Independent Business Alliance (AMIBA), a non-profit organization helping communities build vibrant local economies based on independent community-based businesses rather than absentee-owned companies. It also builds a genuine pro-small business / pro-community voice to counter the corporate advocacy of entities like the U.S. Chamber of Commerce, which often pretend to speak for small business. While AMIBA focuses heavily on providing direct support to the community organizations that comprise its membership, it also coordinates two national campaigns each year.

Independents Week is a campaign that occurs the first week of July each year. While AMIBA provides a wide array of templates and support material, the campaign is executed through community organizations and individuals around the country. Independents Week engages citizens in celebrating entrepreneurial spirit and the freedom to control one’s own livelihood, rather than being dependent corporations. It also emphasizes the importance of local ownership and control for communities and affirms citizens’ role in shaping their community’s future.

We encourage readers to recognize both the value of integrating a pro-local business perspective with work to revoke illegitimate corporate power, and make clear that one can be an active advocate for community-based businesses while working to stop corporations from wielding illegitimate power.

Taking advantage of the ready-made tools for Independents Week is one simple step that just might spark interest in more ambitious initiatives, such as starting an Independent Business Alliance to differentiate between the interests of Wall St. and Main St., and help your hometown businesses prevent corporatization of your community.

Exxon CEO Now Concerned About Local Fracking Impacts…In His Community

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By Dr. Walter Brasch

Rex W. Tillerson, a resident of Bartonville, Texas, like many of his neighbors was upset with his city council. That’s not unusual. Many residents get upset at their local governing boards. And so they went to a city council meeting to express their concerns that the council was about to award a construction permit.

The residents were upset that the Cross Timbers Water Supply Corp. planned to build a 160-foot tall water tower. That tower would be adjacent to an 83-acre horse farm Tillerson and his wife owned, and not far from their residence. The residents protested, and then filed suit to stop construction. The tower would store water to be sold to companies that needed it for high-volume horizontal fracturing of oil and gas wells, the process known as fracking.

Each well requires three to nine million gallons of water, up to 10,000 tons of silica sand, and 100,000 gallons of toxic, often carcinogen, chemicals. The process of horizontal fracking, about a decade old, to extract oil and gas from the earth presents severe health and environmental problems.

The residents, all of whom are in the visual distance to the water tower, said that construction of the water tower would impact their views. They argued that during construction and after the tower was built, there would be excessive traffic and noise.

Michael Whitten, who represents Tillerson, told the Wall Street Journal his client was primarily concerned about the impact the tower would have upon property values. The plaintiffs bought their homes so they could live in an “upscale community free of industrial properties, tall buildings and other structures that might devalue their properties and adversely impact the rural lifestyle they sought to enjoy,” according to the suit.

Rex W. Tillerson isn’t your typical resident. He’s the CEO and the chairman of the board of ExxonMobil, the third largest corporation in the world, and the company that leads all others in exploring, drilling, extracting, and selling oil and gas. It’s also a company that has had more than its share of political, social, and environmental problems. Tillerson was an engineer when the Exxon Valdez fouled the western shore of the United States in 1989. By 2004, he was the company’s president.

In 2012, Tillerson was given $40.3 million in compensation, including salary, bonus, and stock options, according to Bloomberg News. His company had $453 billion in revenue for the year, and a net income of $45 billion.

When you have that much money, every million or so dollars matters, especially if a large ugly tower impacts not just your view but your quality of life and the value of your property.

Large ugly rigs, the kind that go up when ExxonMobil and other companies begin fracking the earth, also affect the people. The well pads average about eight acres, mostly cut from forests and agricultural areas. Access roads, some of which upset or destroy the ecological balance of nature, need to be built. Other roads receive heavier-than-normal damage because of the number of trucks, often more than 200 a day, that travel to each well site.

As early as 2010, a PennDOT official told the Pennsylvania state legislature that the cost, at that time, to fix the roads was over $260 million. Increased diesel emissions, concentrated in agricultural areas, also affect the health and safety of the people.

The noise from the traffic and from around-the-clock drilling affect the people, causing stress and numerous health issues, according to psychologists Diane Siegmund and Kathryn Vennie, both of whom live in the Marcellus Shale part of Pennsylvania.

When the rigs go up, property values decrease. Banks and mortgage companies are refusing to lend money to families who wish to take out second mortgages or who wish to buy property that has wells on it or is even near a well pad. Insurance companies are not writing policies, even if the homeowner opposes drilling but whose home is near those well pads.

In 2012, Rex W. Tillerson said that opponents of fracking are manufacturing fear, and then laid out a corporate truth when he said that his company has in place “risk mitigation and risk management practices . . . to ensure [oil and gas development] can be developed in a way that mitigates risk—it doesn’t eliminate it, but when you put it into the risk versus benefit balance, it comes back into a balance that most reasonable people in society would say, ‘I can live with that.’”

Thus, the energy industry is telling the people there will be accidents. There will be deaths. There will be health and environmental consequences. But, they are acceptable because “mitigation” allows a corporation to accept errors, injuries, illnesses, environmental destruction, and even death if they believe there is a “greater [financial] good” that outweighs those risks.

It is the same argument that Ford used in the 1970s when it decided not to recall and repair the Pinto because it estimated the cost to pay compensation for injuries and deaths from faulty construction would be significantly less than the cost of a recall.

There is something more about Rex W. Tillerson. He’s proud of his association with the Boy Scouts. He’s a former Eagle Scout and was president of the national Boy Scouts of America. (Both the Boy Scouts and ExxonMobil have their headquarters in Irving, Texas.)

Part of the Scout Oath is to “do your duty to God and your country.” A partial interpretation of that is “by working for your country’s good and obeying its laws, you do your duty to your country.” Within the past six months, ExxonMobil has paid more than $5 million in fines and penalties for not obeying the country’s laws.

The 12th part of the Scout Law is to be reverent. A widely-accepted interpretation of that law, according to Scouting Trail, is: “As a Scout experiences the wonders of the outdoors, stormy weather and calm blue skies, pounding surf and trickling streams, bitter cold and stifling heat, towering trees and barren desert, he experiences the work of God. . . . We need to play the role of steward rather than king—tending and caring for our world instead of taking all we can for our own comfort.”

Protesting the construction of a water tower because it might lower property values, even for selfish purposes, is Tillerson’s right as a citizen. But, destroying God’s world to maximize your profits is not his right.

Guest commentator Dr. Brasch, an Eagle Scout and an award-winning journalist, is the author of 20 books. His latest book is Fracking Pennsylvania, an in-depth investigation of the economic, political, environmental, and health effects of fracking.