Three of the publishing industry’s largest groups have sent a letter to Congress warning of Amazon’s power in the industry. Representatives from the publishers told Congress that Amazon has too much power and is engaging in anti-competitive market behavior that has made it a de facto monopoly in the publishing world.
“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,” members of the Association of American Authors, the Author’s Guild, and The American Booksellers Association said in a letter to Rep. David Cicilline (D-RI), the Chairman of Congress’ Antitrust Subcommittee.
The letter was signed by Maria Pallante, President and CEO of the Association of American Publishers; Mary Rasenberger, Executive Director of the Author’s Guild; and Alison Hill, CEO of the American Booksellers Association.
“A year ago, the New York Times reported that Amazon controlled 50% 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,” it said. “Even booksellers that avoid selling on Amazon cannot avoid suffering the consequences of Amazon’s market dominance.”
Last month, Amazon CEO Jeff Bezos testified before the House’s Antitrust Committee and had trouble answering basic questions about some of its predatory practices. “This market power stems not only from Amazon’s share of the market for book distribution, but also from the astonishing level of data that it collects across its entire platform,” the letter said, echoing concerns voiced by Congress.
The letter directly referenced the recent antitrust hearing and urged Congress to continue investigating Amazon and recommended several specific courses of action.
“Prohibit Amazon from leveraging data from the operation of its online platform to compete with and disadvantage the suppliers doing business there,” it said. “The data that Amazon collects from across its platform not only gives Amazon leverage over its book suppliers, it also gives Amazon an insurmountable lead over any would-be distribution rivals—a lead so daunting that, at this point, absent government intervention, there is no possibility of meaningful competition from anyone, whether they be publishers, booksellers, or emerging platforms.”
Amazon also ties its distribution services to its advertising services and the publishers said that has to stop. “In instances where Amazon manipulates discovery tools to make a supplier’s books difficult to find without the purchase of advertising or refuses distribution unless the supplier also purchases advertising, Amazon can extract both unwanted purchases and supra-competitive prices from suppliers,” the letter said.
The publishers also suggested that Amazon’s use of merchant fulfillment networks to ship products creates an anticompetitive atmosphere and that its use of books as a loss leader has radically altered the publishing business in ways we still don’t understand. “Amazon’s use of pricing tactics in the book industry reveals that one of its core business strategies is one used by monopolies for over a century–underselling the competition to monopolize markets,” the letter said.
The bottom line is that the publishing industry is tired of racing to the bottom with Amazon and feels it’s emerging as a monopoly. “The Subcommittee’s work has shown that Amazon holds an outsized position of power and control in our country, giving it the ability to interfere with the free flow of information, ideas and literature on a large scale,” the letter said. “With great appreciation for your leadership, we note that the American book publishing industry is and always has been uniquely intertwined with our democracy.”