Amazon is not on trial in a major book case. But your power is.
The US government has filed a lawsuit to prevent book publisher Penguin Random House from buying a competitor, Simon & Schuster. The government claims that the merger, which would reduce the number of major American mass-market book publishers from five to four, would hurt some authors by reducing competition for their books.
This week began a trial in the government’s lawsuit. The case, which involves much more than books and earnings from great authors, is yet another example of the discussion on how to treat the great companies that shape our world, including the biggest digital powers.
The elephant in the room is Amazon. Book publishers want to get bigger and stronger, in part to gain more leverage over Amazon, by far the biggest seller of books in the United States. One version of the Penguin Random House strategy boils down to this: our monopoly on book publishing is the best defense against Amazon’s monopoly on book sales.
As the dominant way for Americans to choose and buy books, Amazon can, in theory, direct people to titles that generate more income for the company. If authors or publishers don’t want to sell their books on Amazon, they could fade into obscurity or be the target of counterfeits. But if the publisher is big enough, the theory goes, it has leverage over Amazon to offer books at the prices and terms the publisher prefers.
“Their argument is, to protect the market from monopolization by Amazon, let’s monopolize the market,” said Barry Lynn, executive director of the Open Markets Institute, an organization that wants tougher antitrust laws and enforcement.
Penguin Random House is not saying it wants to buy a rival publisher to beat Amazon in the power game, which is not legally relevant to the government’s action. But Lynn says that if Amazon’s dominance is hurting book publishers, readers, authors or the American public — and he believes it is — allowing a publisher to get stronger to intimidate Amazon is counterproductive. The best approach, he says, is to constrain Amazon with laws and regulations.
We know that some technology companies – including Amazon, Google, Facebook and Apple – have enormous influence over entire industries and our lives. We are all trying to figure out which way their power is good or bad and what, if possible, government policy and law should do about the downsides. This controversial merger of book companies is an example of the difficult assessment of these essential issues.
It’s not uncommon for companies to justify acquisitions by saying they need more power to even the game. When AT&T bought the media and entertainment company then called Time Warner a few years ago, one of the company’s explanations was that it wanted to become an alternative to digital advertising powerhouses like Google and Facebook. Music companies have consolidated over the past 15 years in part to gain weight as digital services like Spotify are transforming the way we listen to music.
And a decade ago, when the German conglomerate Bertelsmann bought a competitor to create the Penguin Random House, that merger was a response to Amazon’s influence on the marketing of books.
Today, Penguin Random House says one more acquisition would make book publishing more competitive and help authors and readers. On the other hand, she cites Amazon’s fast-growing business in book publishing as an example of stiff competition in her industry.
Chris Sagers, a law professor at Cleveland State University who has written a book about a previous government antitrust lawsuit in the book industry, said the outcome of this case probably won’t matter much. In his opinion, the book industry is already charging too much from readers and paying too little to authors. He believes that both Amazon and the publishers were allowed to become very big and powerful.
This legal case over book publishing is a window into deep-rooted problems in the US economy that took decades to create and will take a long time to change.
“There is indeed substantial consolidation of markets everywhere,” Sagers wrote in an e-mail.
“Once you let an economy get to that point, there’s very little an antitrust law (or any other regulatory intervention) can purport to do.”
Translated by Luiz Roberto M. Gonçalves
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
