Publishing News

Antitrust Issues and Big Tech in Publishing

On June 11, after a 16-month investigation into antitrust issues in the digital marketplace, the U.S. House of Representatives Committee on the Judiciary introduced five bipartisan bills to the House seeking to curtail some of the business practices used by Big Tech companies. The companies in question are primarily Amazon, Apple, Facebook, and Google. Each bill has both a Republican and Democrat co-sponsor and was written by members of the Antitrust Subcommittee.

In the full press release (linked here, which I highly recommend reading in full), are further links to the official bills themselves.

One of them, the Ending Platform Monopolies Act, is a bill that would make it illegal for the online (covered) platform “to own, control, or have a beneficial interest in a line of business other than the covered platform that—(1) utilizes the covered platform for the sale or provision of products or services; (2) offers a product or service that the covered platform requires a business user to purchase or utilize as a condition for access to the covered platform, or as a condition for preferred status or placement of a business user’s product or services on the covered platform; or (3) gives rise to a conflict of interest.”

Another bill, the American Innovation and Choice Online Act, addresses “advantages [of] the covered platform operator’s own products, services, or lines of business over those of another business user.” If there is a conflict of interest, “the court shall consider requiring divestiture of the line or lines of business that gives rise to such conflict.”

What Does That Mean?

This bill could significantly impact Amazon and its publishing entities, including Amazon Publishing (including all their imprints), Kindle Direct Publishing, Audible, Brilliance Audio, and AbeBooks (a used book sales platform). If passed into law, it could mean that Amazon would have to sell those divisions to a third party and no longer be a publisher in any form.

{Notice the nondefinitive language I’m using. I’m writing “could” and “might” as this is all quite preliminary. These are suggested bills sent to the House. If passed unchanged, they have to go to the Senate and, if passed, be signed by the President. And then they must survive legal challenges in the courts.}

The Author’s Guild released a statement on Friday, June 18 that reads, in part, “The Authors Guild and several high profile authors spoke with Rep. Ciclline [D-Rhode Island] about Amazon’s anticompetitive practices, including giving preference to its own imprints on best-seller lists, charging high marketing fees for visibility, and extracting excessive discounts from publishers to undersell independent and small booksellers. We are pleased that his bill specifically addresses these kind of practices. If enacted, it could dramatically reshape the publishing industry for the better.”

So What?

Some of you may be thinking, So what? And for some of you, it means little.

Amazon’s sales and distribution dominance will be unchanged. The difference is that they would be unable to give preference to their own products in advertising placement, in sales data that influences bestseller lists, etc.

It made me wonder: What if Amazon had to sell off their Kindle Direct self-publishing division? A new owner may need to change the financial model that gives a huge share of revenue to authors. Why? Because the new company would only have the revenue generated from book sales to offset expenses. They would not be able to make a profit off the other nonbook sales that Amazon currently enjoys. In other words, Amazon currently can lose money on the sale of a book and make up the loss from other items in the shopping cart. A typical (i.e., traditional) publisher cannot.

Right now, when a KDP author sends a reader to Amazon to buy the author’s book, Amazon collects the sales data from that customer and shows them other things to buy based on their past preferences.

But when an author sends a reader to Amazon and their book is not part of the Amazon publishing ecosystem, the publisher/author only receives revenue on the sale of the book. Not the revenue from the broom, dish soap, and bag of candy the buyer tossed into their purchase cart.

Authors need to watch this carefully. It may not have any effect if the legislation does not become law or if it gets revised or it ends up changed via the court system with lawsuits.

Reminder

Publishing is a business. Never forget that. Amazon has created some great opportunities with  KDP and other services to help authors publish independently and separately from the traditional publishers. But if a new owner comes in, the profit side of the equation could take on a different flavor.

It is unlikely that such a divestiture of publishing assets by Amazon will have much impact on the traditional publishing market. The sales channel that Amazon controls probably won’t be affected.

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