Amazon Accused of Working With Book Publishers In Price-Fixing Scheme

Amazon Accused of Working With Book Publishers In Price-Fixing Scheme
Photo: Damien Meyer, Getty Images
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A small indie bookseller in Chicago is taking on Amazon with a new class action alleging that the e-commerce giant conspired with major publishers to keep prices high and competition low.

The actual suit, which was filed last week, alleges that Amazon colluded with the Big Five in book publishing — Hachette, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster — in order to fix the prices of wholesale books. The suit goes on to say that Amazon has a series of contracts with these publishers to prevent, say, Hachette from giving independent bookstores better wholesale prices than what they give Amazon.

“I, along with most independent bookstore owners in America, feel incredibly frustrated because we’ve seen that the playing field is not level,” Nina Barrett, the bookstore owner spearheading the case, told The Chicago Sun-Times.

“We have to talk to our customers all the time about why we can’t match Amazon’s pricing,” she went on. “It’s been very frustrating to watch the growth of Amazon and think, ‘Me, just little old me by myself, I can’t stop this, but I can see that it’s unfair.’”

As the suit points out, Amazon has spent the past few decades growing its bookselling business from a small online storefront into a massive market power. Today, many estimate that the company sells about 90% of all e-books and 50% of paperbacks and hardcovers globally. Barrett’s suit particularly calls out Amazon’s practices in the “trade book” space, which is what publishers call the sorts of fiction and nonfiction books that don’t fall into the textbook or reference category.

As Ars Technica points out, this is hardly the first time that Amazon’s bookselling business has been on the hook. The five publishing mammoths that are the defendants in the current trial are members of major publishing trade groups that wrote directly to Rep. David Cicilline — chair of the House of Representatives’ Antitrust Subcommittee — about this topic in particular. At the time, the groups argued that Amazon’s predatory pricing structures and opaque market algorithms are engineered to “steer consumers toward Amazon’s own product” every time. The result? Amazon’s market share keeps on growing, and smaller publishers find themselves struggling to keep up.

Both the letter to Cicilline and the current Amazon Case take issue with what is known as “most-favoured-nation clauses,” or MFNs, in its contracts with publishers. In the letter from August, the group’s gripe (which you can read here) claims that these MFNs were built to guarantee that Amazon get book pricing that was as good if not better than the other retailers on its platform.

In the new suit, the claim is that these same MFN’s don’t only benefit Amazon, but force the five major publishing houses to keep their wholesale prices artificially high in order to create these Amazon-only prices. In all, the alleged scheme doesn’t only give Amazon a leg up on rival booksellers but means more money in the pocket of the Big Publisher.

It’s worth noting that one of the firms repping Barrett in the new suit sued Apple and the same five publishers about a decade ago on similar grounds, that time over Apple’s iBook store. Apple lost and was left to settle for about $US450 ($592) million back in 2015.

We’ve reached out to Amazon about the new suit and will update here when we hear back.