By Porter Anderson, Editor-in-Chief | @Porter_Anderson
‘Extraordinary Leverage’In a letter provided to Publishing Perspectives this morning (August 17), three leading American publishing industry professional organizations tell the House of Representatives’ Antitrust Subcommittee that “a few tech platforms in the digital marketplace” wield “extraordinary leverage over their competitors, suppliers, customers, the government, and the public.
“Regrettably,” they write, “as the subcommittee’s hearings have laid bare, the competitive framework of the publishing industry has been fundamentally altered in recent years—and remains at serious risk of further diminishment—because of the concentrated power and influence of one company in particular: Amazon.”
The letter is written to Rep. David Cicilline, Democrat of Rhode Island, who chairs the subcommittee, which is housed under the House Judiciary Committee.
The hearings referenced in the letter brought Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg, and Google’s Sundar Pichai into the line of fire. And as Joe Nocera wrote in his commentary for Bloomberg on the hearings, “Preventing abusive monopoly practices by today’s dominant technology companies has proved to be difficult in part because antitrust law never anticipated the business models that have made Google, Facebook and others so powerful.” And Amazon, which of course famously based some of its retail development originally in book sales, has been a target for years of many in publishing.
“Together,” the letter dated today reads, “our organizations—the Association of American Publishers, the Authors Guild, and the American Booksellers Association—represent thousands of authors, publishers, and booksellers in the United States who serve the democratic exchange of ideas by creating, publishing, and selling books. Our members rely upon a level playing field in the marketplace of ideas to reach, inform, and transact with customers for the delivery of books, whether in physical or digital form.”
Signed by the publishers’ president and CEO Maria Pallante, by the authors’ executive director Mary E. Rasenberger, and by the booksellers’ Allison K. Hill, the letter, in four pages, brings into coherent focus the position of Amazon in the book business.
The Seattle-based giant sells more books than any other single retail outlet in history. In December, analyst Benedict Evans saw Amazon controlling some 35 percent of US e-commerce. But in adding in the fact that the company competes with physical retailers, not just with online rivals, he wrote, “Amazon’s real market share of its real target market is closer to 6 percent.”
In print books, Amazon has a generally recognized 50 percent or more of the American market “and at least three quarters of publishers’ ebook sales,” Evans wrote.
In ebooks, it sells “at least three-quarters of publishers’ ebooks” and “also has its own ebook publishing business, for which it has never disclosed any data.”
Originally largely welcomed to the marketplace by many in publishing, the company has become, predictably, the target of many objections because its market prominence is unquestionable and because of business tactics which, the three organizations today allege, amount to “engaging in systematic below-cost pricing of books to squash competition in the book selling industry as a whole.”
Indeed, the Association of American Publishers last summer, in June 2019, filed a statement with the Federal Trade Commission, urging examination of the platforms’ activities, with Amazon as the main target of complaint.
This is how the new letter lays this out:
“Amazon’s scale of operation and share of the market for book distribution has reached the point that no publisher can afford to be absent from its online store.
“A year ago, The New York Times reported that Amazon controlled 50 percent of all book distribution, but for some industry suppliers, the actual figure may be much higher, with Amazon accounting for more than 70 or 80 percent of sales. Whether it is the negative impact on booksellers of Amazon forcing publishers to predominantly use its platform, the hostile environment for booksellers on Amazon who see no choice but to sell there, or Amazon’s predatory pricing, the point is that Amazon’s concomitant market dominance allows it to engage in systematic below-cost pricing of books to squash competition in the book selling industry as a whole.
“Remarkably, what this means is that even booksellers that avoid selling on Amazon cannot avoid suffering the consequences of Amazon’s market dominance.
“The ongoing COVID-19 crisis is exacerbating the problem: it continues to threaten the financial well-being of authors, publishers, and booksellers, some of whom will not survive the year.
“Amazon, by contrast, with its ever-extensive operation and data network, has grown only more dominant, enjoying its largest-ever quarterly profits during April, May and June.”
The organizations go on to criticize “the astonishing level of data that it collects across its entire platform,” writing, “The result is that Amazon no longer competes on a level playing field when it comes to book distribution, but, rather, owns and manipulates the playing field, leveraging practices from across its platform that appear to be well outside of fair and transparent competition.”
And in setting up a series of four recommendations to the subcommittee, the groups write, “We believe that Amazon acts anti-competitively in multiple ways, dictating the economic terms of its relationships with suppliers so that publishers, their authors, and the booksellers who sell on Amazon pay more each year for Amazon’s distribution and advertising services but receive less each year in return.
“Amazon employs non-transparent data algorithms and recommendation engines to steer consumers toward Amazon’s own products, or even toward infringing products without disclosing to consumers that it is doing so. It has required suppliers to agree to most-favored-nation provisions (MFNs) that stifle the emergence and growth of competitive alternatives in the book distribution marketplace. And it manipulates suppliers and rivals by tying the purchase of distribution services to the purchase of its advertising services.”
Four ‘Concerns and Recommendations’ for the Subcommittee
In some ways echoing the sorts of constraints that the European Union and its member-states have worked to place on Amazon and other tech-platform corporations, the three organizations today list these four recommendations. None of them is new. But the coordination of them into this statement meant to access a rational legislative investigatory program—rather than the sort of street-barricade inflammatory clamor sometimes heard in the past from various sectors of the publishing industry—arrives with welcome clarity and logic.
- Prohibit Amazon from leveraging data from the operation of its online platform to compete with and disadvantage the suppliers doing business there
- Prohibit Amazon from tying distribution services to the purchase of advertising services
- Prohibit Amazon from imposing Most Favored Nation and other parity provisions
- Prohibit Amazon from using loss-leader pricing to harm competition
Elaboration of these points is available in the full copy of the four-page letter, which has, within the hour of this publication, been posted by the Association of American Publishers here. We expect it soon to be available on the sites of the Authors Guild and American Booksellers Association, as well.
In the letter’s concluding lines, the organizations write, “We note that the American book publishing industry is and always has been uniquely intertwined with our democracy. Many authors, publishers, and booksellers along the way have contributed to the marketplace of ideas, and we hope that many more will emerge and thrive to the benefit of the public.
“This will not happen, however, unless government officials step in decisively to exercise appropriate governance of Amazon.”
More from Publishing Perspectives on Amazon is here, more on the Association of American Publishers is here, more on the Authors Guild is here, and more on bookselling and the American Booksellers Association is here. More from us on the coronavirus COVID-19 pandemic and its impact on international book publishing is here and at the CORONAVIRUS tab at the top of each page of our site.