Amazon — Bookseller or Business Butcher?
On March 25, 2021, a Chicago-area bookseller filed a lawsuit directed at the “Big Five” publishing houses: Hachette, HarperCollins, Macmillan, Penguin Random House and Simon & Schuster. The plaintiff, Nina Barrett, who operates a bookstore called Bookends and Beginnings, also included Amazon in this lawsuit. The lawsuit alleges that these publishing houses are guilty of granting Amazon a designation called “Most Favored Nation” status. The lawsuit describes this status as “Anti Competitive provisions [that] ensure that no rival bookseller can differentiate itself from, or otherwise compete with, Amazon on price or product availability in the sale of print trade books.”
At this juncture, it is important to identify what exactly Barrett’s problem is with Amazon. According to the Wall Street Journal, Amazon sells about 90% of all e-books and 50% of all paperbacks and hardcovers globally. This in and of itself is not a problem. One of the features of capitalism is that it is essentially boundless, and phenomenal success is a marker of being able to utilize the economy successfully. Jeff Bezos started Amazon out of his garage in 1994 and is now the richest man on Earth and the second-largest private employer in the world. This is a great success of capitalism. Why should it matter that Amazon is getting better prices and exclusive book releases? Isn’t that just one of the benefits of economies of scale?
The problem is not that Amazon is getting good prices from these publishing houses. The problem is that these exclusive prices have taken away Amazon’s bookselling competitors’ ability to compete. In an interview with the Chicago Sun Times, Barrett mentions that, “I, along with most independent bookstore owners in America, feel incredibly frustrated because we’ve seen that the playing field is not level, we have to talk to our customers all the time about why we can’t match Amazon’s pricing.”
Additionally, the lawsuit alleges that not only are these publishing houses giving Amazon better book prices, but as a result of that, wholesale prices had to be kept artificially high in order to give Amazon those better prices. These artificially inflated prices make it even more difficult for small bookstores and booksellers to make profits on the then-even more inflated price of the books they sell.
These suits have worked out in favor of the plaintiff before. In a similar case involving the same “Big Five” book publishers and Apple’s iBook store, Apple lost and had to settle for around $450 million. So there certainly is precedent for this lawsuit to be a success.
This lawsuit is a benchmark for how much power and privilege large corporations will be able to wield in the coming years, and will serve as a testament to how strong the anti-trust laws in this country are. The ramifications of the results of this lawsuit are broad and far-ranging. Consumers can only hope books can remain inexpensive without entirely removing booksellers and bookstores from the mix.
Photo caption: Accusations of unfair business practices are leveled at Amazon in a new lawsuit
Photo Credit: Pixabay