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Accusing Amazon of Antitrust Violations, Authors and Booksellers Demand U.S. Inquiry

 
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Accusing Amazon of Antitrust Violations, Authors and Booksellers Demand U.S. Inquiry
by System Administrator - Monday, 13 July 2015, 4:31 PM
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Douglas Preston, at the shack he uses as his writing space in Pemaquid, Me. He has emerged as an influential Amazon detractor with his group Authors United. Credit Craig Dilger for The New York Times

Accusing Amazon of Antitrust Violations, Authors and Booksellers Demand U.S. Inquiry

By DAVID STREITFELD

Amazon views itself as an innovator that brings enlightenment and entertainment to the masses. Many of the traditional guardians of the literary community, however, think the retailer is a monopolist and a bully, and they are taking their discontent public in an unusually broad-based way.

Five years after Amazon secretly asked regulators to investigate leading publishers — a case that ended up reinforcing the e-commerce company’s power — groups representing thousands of authors, agents and independent booksellers are calling for the United States Department of Justice to examine Amazon for antitrust violations.

Perhaps stealing a page from Amazon, which often promotes policies that would benefit it by talking about what customers want, the groups said their concerns were more about freedom of expression and a healthy culture than about themselves.

The Authors Guild, the American Booksellers Association, the Association of Authors’ Representatives and Authors United said in letters and statements being sent this week to the Justice Department that “Amazon has used its dominance in ways that we believe harm the interests of America’s readers, impoverish the book industry as a whole, damage the careers of (and generate fear among) many authors, and impede the free flow of ideas in our society.”

Link to Documents: Authors and Booksellers Call for Amazon Inquiry

Two Amazon spokesmen did not respond to requests for comment on Monday. In the past, Amazon has asserted that books were where the company began and that it still cared deeply about them, but that the way to build “a healthy reading culture” was to keep prices as low as possible.

The requests for an investigation arise out of last year’s bruising battle between Amazon and the publisher Hachette. As part of an unusually bitter contract dispute, Amazon made it more difficult to buy Hachette books, which angered Hachette authors and others.

Amazon’s critics portrayed it as a predator. The retailer and its supporters said the critics were trying to preserve their privileges against a much-needed wave of digital disruption. The conflict left both sides bloodied but produced no clear winner.

What is beyond dispute is that Amazon has reshaped the way books are bought and read, a process little changed for decades. The company, based in Seattle, now sells more than a third of new print books, a level no single bookseller has ever reached before, and it closely controls the dominant e-book platform. Some publishers said Amazon was responsible for 85 percent of their nonlibrary digital sales.

The current call for government action was organized by Douglas Preston, a Hachette writer who emerged last year as an influential Amazon detractor with his group Authors United.

“Disruption is healthy, an inevitable byproduct of a world that changes,” Mr. Preston said. “But there isn’t a single example in American history where the concentration of power in one company has in the long run benefited consumers.”

Among the destructive practices cited by the critics was Amazon’s appearing last year to engage in content control, “selling some books but not others based on the author’s prominence or the book’s political leanings”; selling some books below cost as loss leaders to drive less well-capitalized retailers — like Borders — out of business; and blocking and curtailing the sale of “millions of books by thousands of authors” to pressure publishers for better deals.

The full case is made by Mr. Preston and Barry C. Lynn, a senior fellow at the New America Foundation and author of “Cornered: The New Monopoly Capitalism and the Economics of Destruction,” in a 24-page position paper.

The American Booksellers Association and the Authors Guild have rarely united in such a fashion, but they said they increasingly realized that their fates were joined. The booksellers have about 2,200 stores. The guild has 9,000 members, most of whom are published through the traditional publishers who count on the stores to display their new titles and create interest in them. Among the current officers of the guild are the novelists Judy Blume, Richard Russo and Roxana Robinson. Members of its council, which serves as a board of directors, include Sherman Alexie, Jennifer Egan, James Gleick, Nicholas Lemann, Annette Gordon-Reed and Mr. Preston.

Both groups said they had tried to interest the Justice Department in Amazon before, without success.

“Our point of view seemed to have been ignored,” said Oren Teicher, chief executive of the booksellers association. “But the climate has changed. There are efforts in the European Union — in Germany and a few other countries — to take a closer look at Amazon’s practices. That has ramifications on what happens here.”

Last month, the European Union formally announced an antitrust investigation into whether Amazon was stifling competition in e-books by using restrictive contracts with publishers.

Amazon, which celebrates its 20th anniversary this week, has come an immense distance from its dot-com origins. Revenue this year will probably eclipse $100 billion, making it one of the largest retailers in the United States. Its stock market valuation of around $207 billion has never been higher, despite or perhaps because of the decision of its founder and chief executive, Jeff Bezos, to forgo profits for expansion.

Yet even as Amazon plunges into Hollywood filmmaking and its cloud computing division outdistances competitors such as Google and Microsoft, sales of books, music and videos in North America are unimpressive. In the most recent quarter, revenue in the segment was up only 5 percent. The book business has become more dependent on Amazon, but it has become almost an afterthought to the company itself.

Looming over the current conflict is the attempt in 2010 by Apple, which was introducing the iPad, and five major publishers to wrest some control of digital books away from Amazon. The publishers feared that Amazon’s pricing policies would put them out of business. At the time, Amazon had 90 percent of the e-book market.

The gambit backfired. Federal prosecutors took Amazon’s view that this was collusion to impose higher prices — an action harmful to consumers and by definition illegal.

Apple and the publishers argued that whatever the short-term effect on consumers, the entry of another major participant would provide more competition and thus benefit consumers in the long term.

The publishers settled the case. Apple lost at trial and lost again last month on appeal.

Judge Raymond J. Lohier Jr. of the United States Court of Appeals for the Second Circuit, concurring with the majority, saw some merit to Apple’s and the publishers’ argument but said that “more corporate bullying is not an appropriate antidote to corporate bullying.”

Whether it is appropriate for the government to provide an antidote remains to be seen. But one indication of the tough road Amazon’s critics have is that the Justice Department official in charge of the antitrust division, William J. Baer, last month celebrated Amazon’s “disruptive business model” in e-books, saying it “has continued to stoke competition.”

Link: http://www.nytimes.com

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