The national media has been consumed all week by the spectacle of erstwhile political enemies combining to fight an overweening American interloper. Could the book trade be about to experience a similar tipping point?
The news that the IPG and the PA are combining to call for an enquiry into Amazon’s takeover of The Book Depository marks a significant first, but, add in the BA’s opposition, and an unparalleled trade-wide triple alliance has emerged.
There is a widespread feeling in the book trade that Amazon is over-dominant in internet retail, and uses that market power to squeeze publishers unfairly, and then to undercut other retailers such that they are unable to match Amazon’s prices without incurring losses. There is a sense, too, that Amazon is building an enormous online department store, selling pretty much everything to everyone, and that it is using its books as a loss-leading customer acquisition tool—not as a viable business in its own right.
We believe that now is the right time for Amazon’s takeover of TBD—which we oppose—to be investigated, and are writing to the OFT this week to that end. When internet retail was a small slice of the market, Amazon’s extraordinary 70%-plus dominance slipped under the radar. But now that the online physical book market is worth perhaps £500m—a quarter of the market—and e-books another £200m, Amazon’s digital dominance has become too big to ignore. Questions need to be asked. Why, for example, is the company domiciled for legal purposes in Luxembourg? Are books being sold below cost? Is the British books operation in fact profitable, or merely cross-subsidised by the parent company? Is Amazon’s monopolistic dominance reducing competition and diversity, and thereby harming consumers?
Amazon has done great things in Britain, establishing a new channel and monetising the long tail. But those triumphs do not place it above fair scrutiny.