Wednesday, June 29, 2011
Amazon Threatens To Pull California Affiliates
Online retail giant Amazon.com is threatening to pull its California affiliates, as efforts to tax online purchases in the state gains steam. In an email to Amazon Associates who are located in California, Amazon said that it will terminate the associates program for California-based participants, as of the date of any law on the issue becomes effective. The move would not be the first for Amazon, which has been fighting a running battle with states, who have been aggressively trying to tax purchases made through the e-commerce giant.
One side effect of the aggressive tax efforts by states--which might have a big effect on Southern California--is the destruction of businesses reliant on affiliate revenues as part of their Internet revenue efforts. In one document case of a state taxation law backfiring on local industry, several online coupon sites in Illinois -- including CouponCabin.com, FatWallet.com, and BradsDeals.com -- said their business was cut by more than one third after a similar Internet taxation law was based in January. At least one of those Illinois companies, FatWallet.com, said it was actively looking to relocate out of the state due to the new tax law.
Those illinois companies all have similar models to comparison shopping and coupon sites in the Southern California area, including PriceGrabber.com, LowerMyBills.com, Savings.com, ShopZilla, and Shop.com, just to mention a few. The new law also is bound to affect Commission Junction, the Internet affiliate business owned by ValueClick. None of those companies have yet commented on the proposed California Internet tax laws.