Three U.S. Senators are demanding answers from Amazon about its Delivery Service Partners program, the network of independent delivery companies that helps get packages to customers’ doors.
Senators Elizabeth Warren, Richard Blumenthal, and Sherrod Brown sent a letter to Amazon CEO Jeff Bezos this week with a series of detailed questions on the program. They’re concerned that Amazon’s third-party contractor “allows the company to run its delivery service virtually unregulated.”
Amazon’s Delivery Service Partners comprise a network of independent companies that deliver Amazon packages but are not part of the company. Some are impossible to recognize as affiliated with Amazon while others drive Amazon-branded vans that the company provides.
The Senators claim that through the program, “Amazon has created a system of deception — using a variety of underhanded tactics to skirt Department of Transportation (DOT) oversight and legal accountability.”
The letter is the latest example of growing skepticism from lawmakers and regulators about the independent contractors that power much of the tech industry. It’s also one of several letters from Senators that Amazon is fielding as Big Tech endures scrutiny on a range of issues, from competitive concerns to user data privacy.
Driving the story: BuzzFeed News published a report last month describing a delivery network rife with violations of labor laws that — under pressure from Amazon — has resulted in accidents on numerous occasions. The New York Times and ProPublica conducted an investigation on the same topic. According to the joint report, there have been more than 60 accidents since 2015 involving Amazon delivery contractors.
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Background: As Amazon grew its Prime program, the company needed a more robust delivery network to fulfill the promise of two-day shipping that made the annual membership so popular. Amazon began testing contract couriers in 2014 and launched its Flex program the following year. Flex drivers — also classified as independent contractors — deliver packages for Amazon using their own vehicles.
In 2018, Amazon launched a new initiative to encourage more entrepreneurs to start delivery businesses. DSPs, as they’re known, operate independently but get support and training from Amazon, and can take advantage of deals negotiated by Amazon for insurance, mobile devices, data plans, uniforms and vehicle leases for Prime-branded vans. Those vans can only be used to deliver Amazon packages.
What lawmakers are asking: The Senators sent Bezos a list of questions about the Delivery Service Partners program, demanding more detail on how Amazon contracts with third-party couriers, how the company ensures compliance with labor laws, and whether workers should be able to unionize. They also want Amazon to release a list of its Delivery Service Partners publicly. The letter asks for a response by Sept. 27.
What Amazon says: An Amazon spokesperson stood by the company’s safety and liability practices in a statement provided to GeekWire:
Amazon is proud of our strong safety and labor compliance record across our transportation network of employees and contractors, and we continue to drive improvements that benefit our transportation providers, our customers and the public. We have strict requirements for safety and labor wages and working conditions that meet or exceed the law. We also require comprehensive insurance, competitive wages, working hours and numerous other safeguards for our delivery service providers and regularly audit to ensure compliance. Safety is and will remain Amazon’s top priority as evidenced by the vast percentage of deliveries that arrive on time and without incident.
Don’t expect fast shipping to slow down: Despite concerns, Amazon and its competitors aren’t likely to rein in their super-fast shipping programs. One-day shipping is costly in more ways than one, but the promised return is difficult for e-commerce companies to ignore. One analyst from RBC Capital Markets predicts one-day shipping could generate up to an additional $24 billion in total annual revenue for Amazon. That’s an increase of about 10 percent, based on the company’s 2018 results.
Note this: Amazon isn’t the only Seattle tech company facing scrutiny for building a work-around in a traditionally regulated industry. Dolly — an app that connects people who need help moving with helpers who have the vehicles and muscle to get the job done — found itself in a similar position last year. Washington state regulators ordered Dolly to cease operations in early 2018, ruling that the company was a “household goods carrier,” operating without the proper license and requirements. There are safety standards in place that apply to traditional moving and delivery businesses. Dolly is working with Washington officials to resolve the dispute.
Big picture: Some of the world’s most powerful tech companies rely on a corps of independent contractors to make their businesses work. It’s a practice that once flew under the radar but that chapter in the innovation economy’s history is over. California lawmakers just passed a bill that makes it harder for gig work companies, like Uber, to classify their workers as independent contractors and other jurisdictions are considering similar laws. Officials are concerned that the social safety net is fraying as more work becomes contingent and fewer workers are protected by labor standards written for an era when they were employees of the companies they worked for.