Authors take their turn trying to tame the retailing beast
This three part series will discuss the newest antitrust challenges aimed at Amazon. In Part One, we’ll introduce you to the most recent issues facing the online retailer (and publisher), while in Part Two we will provide a little history on the Amazon/Apple scuffle that cost Apple and various publishers hundreds of millions of dollars. Finally, in Part Three, we’ll provide a bit more detail on the latest challenges and discuss whether the antitrust laws can affect the publishing elephant in the room.
Amazon.com® (or just plain ole Amazon) is turning twenty years old and recently celebrated the occasion with its widely publicized “Prime Day.” Perhaps more exciting for shareholders, it also saw its stock hitting a record high. Yet, at the same time, Amazon finds itself at the center of a controversy that is serving as a proxy for a cultural war over the free flow of ideas and dissemination of information. Put more mundanely, various groups representing thousands of authors, agents, and independent booksellers recently wrote letters and position statements urging the U.S. Department of Justice to examine Amazon for antitrust violations. Of course, the antitrust laws are there to protect the freedom to compete, not the freedom to publish. Nevertheless, ensuring the proper functioning of the marketplace for goods and services isn’t mutually exclusive with protecting the marketplaces for ideas.
Today, Amazon—known to many as the “everything” store, an online marketplace where consumers can buy anything they wish at low prices and potentially have their goods delivered to their homes within hours of hitting “purchase”—controls nearly half the market for the sale of books in the United States, an unprecedented level for a single retailer. In terms of online sales, Amazon controls more than 75% of the sales of physical books and over 65% of the increasingly dominant e-book market, primarily due to the ongoing popularity of its Kindle platform, which it manufactures and distributes. Despite being barely profitable, Amazon has become a major retail player by using its electronic platform to aggressively compete on margin with brick and mortar retailers.
And as its market share has grown, argue the offended authors and publishers, Amazon’s tactics with its suppliers have become increasingly anticompetitive. By squeezing the pocketbooks of authors and publishers, they say, Amazon is also restricting the free flow of ideas by controlling what information reaches the book-reading public. The authors’ grievances beg the question: can Amazon control the flow of available information without running afoul of U.S. antitrust laws and, if so, do the writers’ groups have any other recourse against the (pun intended) market amazon?