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GOOD thing for e-books: Amazon MIGHT draw closer antitrust scrutiny, due to new Justice policy
May 11, 2009 | 7:50 am
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By David Rothman
The U.S. Justice Department is already studying the Google Book Settlement and a board overlap with Apple for possible antitrust actions.
But could Amazon, too, be about to show up in Justice’s crosshairs? I keep rooting for a multi-gazillion lawsuit against Jeff Beozs and friends if the facts merit that.
Now Christine Varney, head of Justice’s antitrust policy, is about to give a speech promising tougher antitrust enforcement. And if you go by today’s New York Times, Jeff Bezos might want to start treating small-fry less shabbily than he so often do these days:
The administration is hoping to encourage smaller companies in an array of industries to bring their complaints to the Justice Department about potentially improper business practices by their larger rivals. Some of the biggest antitrust cases were initiated by complaints taken to the Justice Department.
Ms. Varney is expected to say that the administration rejects the impulse to go easy on antitrust enforcement during weak economic times.
Go for it, Ms. Varney, especially in Amazon’s case if the facts call for this! Please check out the possible antitrust ramifications of Jeff Bezo’s refusal to let the Kindle read the ePub standard natively, combined with his buyout of Lexcycle, a leading supplier of ePub-capable software. Yes, e-books are just in their infancy. But Amazon’s plan, as I see it, may well be to use a mix of technology and content dominance to keep the customer within the fold in the most obnoxious of ways. Nothing like using proprietary DRM and the homebrewed Kindle format to thwart the competition, eh?
If you can also improve Amazon’s substandard treatment of small publishers, Ms. Varney, then so much the better (my novel from a small press isn’t even showing up in the catalog reliably—suggesting if nothing else that the system may be broken). Same for Amazon’s POD practices.
Threat to newspapers, too—not just e-bookdom
E-books, POD and books in general aren’t the only areas worth investigating over at Amazon. Would you believe that, as troubled as the newspaper business is, Amazons wants 70 percent of subscription revenue from dailies hoping to use the Kindle as a distribution mechanism? Plus, the right to reposition the same content on any platform it wants to? Interesting, no? A new would-be monopoly, Amazon, has reached the point where it can try to gouge old monopolies—local newspapers.
One interesting angle: What are the legal ramifications of a huge e-store like Amazon using books as a loss leader—a way to draw in customers, so they buy more washing machines?
Usual reminder/disclosure: I’m a very small Google shareholder.
Technorati Tags: U.S. Justice Department
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Comments:
David, in many ways we agree, but in this may be one where we agree to respect each others differences
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In fact, I do agree with most of your points: I wish that Amazon would embrace a DRM-free approach, I wish that they would consider a more open pub standard, I’m not happy to hear the experiences of small publishers and writers.
However, I don’t agree that it should be an anti-trust concern. In the spirit of free competition, I believe that companies should be able to do things that I don’t agree with. They can make mistakes and surprise me with their ideas.
We know that Barnes and Noble is entering the e-reading/e-book market. If Amazon was perfect, then Barnes and Noble might be doomed to failure with its late market entry. As it is, they have the opportunity to offer a compelling service that one-ups Amazon.
Furthermore, I would argue that Amazon, and to a lesser extent Sony, have really energized the market. Without them, our next best hope would be ebooks on the iPhone. Let’s say that we had placed pre-conditions on the market for Amazon: only DRM-free; only open formats; etcetera. Would they have still entered the market? I don’t know, but it would certainly have changed what they saw as their business case.
I’m happy that they are in the market; however flawed their entry has been. My hope is that competition from B&N, Sony, iPhone, and small players such as Baen, Jetbook, and Astak show them some opportunities to grow their market.
However, I’m not so much in favor of government regulation to achieve these ends. I don’t know the perfect answer and I’m more excited by the chance for open markets to muddle their way to a better answer (I know that it seems to take an excruciating long time) than I am about regulatory action to figure out the best possible option and dictate that option for everyone.
It’s not that I think that government decisions are inherently bad. I believe that markets are like living laboratories. Every player tries small experiments and the market rewards the most successful. On the other hand, government fiat only allows one view of the world. It forgoes the potential power of diversity of viewpoints and substitutes the viewpoint of one entity.
Michael
Years ago, I was reading in a microfilm collection some of the letters between Margaret Sanger, founder of Planned Parenthood, and her wealthy husband. Some of his financial transactions had triggered a IRS investigation in New York state, where she was recovering from a surgery. To avoid answering their questions, he was faking illness and pretending to be confined to their Phoenix home, even while slipping in and out of New York. Friends in high places, he mentioned in one letter, had told him that cash slipped to the right pockets high in FDR’s Treasury Department could make the investigation go away. It’s never said in their letters since they were reunited and didn’t need to write, but the investigation did go away.
You’re forgetting that Obama has brought Chicago-style politics to our capitol. He spent twenty-years in the city’s politics without ruffling the feathers of a single one of the city’s many crooks, much less cleaning up anything. He’s not going to clean up business in this country. He’s conducting the initial shakedown operations, a lot of bluster, a lot of threats at anyone with deep pockets. A bit of money in the right pockets, and all those nasty little anti-trust investigations will go away. Some more money into his 2012 campaign chest, and he will be saying nice things about a company’s executives. The ones that get pursued will be the ones who don’t give, the honest ones.
The first rule of politics: If you want to know what a candidate will do, look at his past and at his friends. You didn’t. That’s why you believed in “Hope and Change,” and that’s why you’re headed for a fall.