Digital Commerce Subcommittee Weighs E-Commerce Competition, Privacy Issues

While convenient for consumers and cost-effective for certain businesses, the rise of e-commerce creates data security and privacy concerns, and it threatens small businesses without an online footprint, the House Digital Commerce Subcommittee heard Wednesday, as expected (see 1803060041). Hel’s Kitchen Catering founder David Borris called Amazon “an existential threat” to millions of small businesses. Small firms lack resources to establish quality online platforms, he said, and sometimes spend the equivalent of 8 to 10 percent of profit to compete. Amazon responded by citing to us that more than 50 percent of Amazon unit sales come from third-party sellers; more than 2 million offer hundreds of millions of unique products through Amazon’s Marketplace; and more than 100,000 have more than $100,000 in sales through Amazon.

Ranking member Jan Schakowsky, D-Ill., said the U.S. needs to be aware of e-commerce's impact on small business. Citing the need for net neutrality regulations, she said equal access is vital. She said even minor data throttling can cut into company sales. Her office has worked with Borris on small-business issues.

Borris said businesses can't function without immediate access to fast internet because it enables them to find vendors and interface with clients. He said the vast majority of Americans support net neutrality because there's an “intuitive” concern about the market share of online platforms. A concentration of power subverting equal access is a “frightening prospect,” he said.

Commerce Committee ranking member Frank Pallone, D-N.J., said the ease of shopping and unlimited selection has led to counterfeit goods. Pallone cited a recent “troubling” GAO report on prevalence of counterfeit goods sold through e-commerce (see 1803060042). The report also came up at another hearing on Customs and Border Protection Tuesday (see 1803070009). Wednesday, Pallone wrote Amazon, eBay, Newegg, Sears Marketplace and Walmart, asking how they are addressing this issue.

Convey Logistics CEO Rob Taylor told lawmakers IoT has flooded the market with devices, making it easier to connect customers with retailers and carriers, but causing security and privacy issues. Consumer desires for ever-more convenience and control is resulting in more companies and carriers accessing data. From a logistical standpoint, he said, more access to personal data means better service.

Commerce Committee Chairman Greg Walden, R-Ore., said in his opening remarks the committee is exploring ways to protect consumer privacy and personal information against hackers and harmful algorithms. “As we continue to examine these issues we will seek to ensure that Americans continue to benefit from the blessings of technology, while keeping a watchful eye out on how we might protect them from harm,” he said.

Subcommittee Chairman Bob Latta, R-Ohio, cited statistics showing that online and catalog sales represented 16 percent of all goods sold during the 2017 holiday season. Eighty percent of shoppers made at least four online purchases in a three-month span, he said. One challenge is consumer data security, which is at risk in a business model that favors efficiency and convenience, he added. “Continuing to improve security at all points of the supply chain is a critical goal that companies large and small need to be focused on.”

U.S. Chamber of Commerce Technology Engagement Center Senior Vice President Tim Day before the hearing wrote to the subcommittee in support of autonomous vehicles "to ensure fulfillment of e-commerce purchases," calling AVs a potential solution for “a shortage in the number of truck drivers.” Day called on Congress to establish a national standard for autonomous commercial vehicles to replace a patchwork of state regulations.