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For Amazon, their status as not only a retailer, but also \u201ca marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading provider of cloud server space and computing power\u201d certainly opens the door for fascinating antitrust questions.[4]<\/a> Although these questions of the rapidly expanding breadth of all big tech companies are hot topics in the public eye, it also cannot be ignored when big companies act anticompetitively in the markets that they originated in.<\/p>\n <\/p>\n Amazon began doing business in 1995 as an online book seller, with goals of becoming the largest bookstore in the world.[5]<\/a> It stuck to strictly selling books for the first three years of business, before beginning to branch out into online sales of other consumer goods.[6]<\/a><\/p>\n <\/p>\n On March 25, 2021, the Illinois and online bookstore Bookends & Beginnings LLC filed a class action complaint alleging that Amazon and the five largest book publishers restrain competition in the sale of print books through highly restrictive clauses in their distribution agreements.[7]<\/a>\u00a0 The complaint includes as members of the class all retail and online booksellers who purchased books at wholesale directly from these five publishers on or after March 25, 2017.[8]<\/a><\/p>\n <\/p>\n Amazon accounts for over 50% of all books purchased at retail in the U.S., and over 90% of all books sold online.[9]<\/a> The five largest publishing companies in the U.S. \u2013 Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster \u2013 collectively make up 80% of books sold in the U.S.[10]<\/a> Amazon and these publishers use \u2018most favored nation\u2019 clauses in their distribution agreements, which entitle the buyer to the lowest price or best deal that the supplier offers to any other buyer \u2013 effectively ensuring that booksellers cannot differentiate from, or compete with, each other on the basis of price or product availability.[11]<\/a> In other words, retail bookstores will not be able to sell books from 80% of the country\u2019s publishers at a better price than what can be found on Amazon – anything that those publishers sell in a retail bookstore can also be found on Amazon for the same price. Because Amazon has such a strong market share already, these contract provisions restrict the ability of Plaintiff, or any other booksellers, from competing with Amazon for business by offering better prices or a better product selection. In effect, these contractual provisions between the country\u2019s largest publishers and Amazon allow the price-fixing for wholesale books, create a barrier to market entry for any new competitors, and hinder the expansion of existing book retail competitors of Amazon.[12]<\/a> Due to the artificial lack of competition, the wholesale prices of books are being driven above a price that would be determined by supply and demand.[13]<\/a> The complaint alleges that this price-fixing is in violation of Section 2 of the Sherman Act, which forbids monopolies from acting anticompetitively.[14]<\/a><\/p>\n <\/p>\n This complaint raises new questions about the behavior of today\u2019s largest companies. This case does not necessarily involve the size of Amazon as an enormous, integrated, \u2018big tech\u2019 company \u2013 on the surface it seems to implicate Amazon solely as a large bookstore, all that it once aspired to be. However, it seems nearly impossible to actually view Amazon\u2019s bookselling capacity in isolation, now that we know just how far its influence truly spans.<\/p>\n <\/p>\n [1]<\/a> See generally<\/em> Bill Baer, The Tech Antitrust Hearings Are Over: What\u2019s Next for Enforcement?<\/em>, Brookings (Aug. 11, 2020), https:\/\/brookings.edu\/blog\/techtank\/2020\/08\/11\/the-tech-antitrust-hearings-are-over-whats-next-for-enforcement.<\/p>\n [2]<\/a> See<\/em> Steven Pearlstein, Beating Up on Big Tech is Fun and Easy. Restraining it Will Require Rewriting the Law<\/em>, The Washington Post (July 30, 2020), https:\/\/www.washingtonpost.com\/business\/2020\/07\/30\/antitrust-amazon-apple-facebook-google.<\/p>\n [3]<\/a> See generally<\/em>\u00a0Aishani Aatresh, What the \u201cBig Tech\u201d Trustbusting Conversation Misses<\/em>, Harv. Pol. Rev. (Oct. 28, 2020), https:\/\/harvardpolitics.com\/big-tech-trustbusting; see also<\/em> Lina M. Khan, Amazon\u2019s Antitrust Paradox<\/em>, 126 Yale L.J. 710, 723 (2017).<\/p>\n [4]<\/a> Lina M. Khan, Amazon\u2019s Antitrust Paradox<\/em>, 126 Yale L.J. 710, 713 (2017).<\/p>\n [5]<\/a> See<\/em> Amazon Opens for Business<\/em>, History, https:\/\/www.history.com\/this-day-in-history\/amazon-opens-for-business.<\/p>\n [6]<\/a> See id.<\/em><\/p>\n [7]<\/a> See<\/em> Katherin Khashimova Long, Amazon Faces New Lawsuit Alleging it Fixed Book Prices<\/em>, The Seattle Times (Mar. 24, 2021), https:\/\/www.seattletimes.com\/business\/amazon\/amazon-faces-new-lawsuit-alleging-it-fixed-book-prices.<\/p>\n [8]<\/a> See id.<\/em><\/p>\n [9]<\/a> See<\/em> Complaint at 2, Bookends & Beginnings LLC v. Amazon.com, Inc., No. 1:21-cv-02584 (S.D.N.Y. 2021).<\/p>\n [10]<\/a> See id.<\/em> at 1.<\/p>\n [11]<\/a> See id. <\/em>at 2\u20133.<\/p>\n [12]<\/a> See id.<\/em> at 5.<\/p>\n
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