ABA White Paper Urges Breakup of Amazon
The American Booksellers Association yesterday released a white paper outlining Amazon's anticompetitive behavior and urging the breakup of the company. The letter was sent to the attorneys general in all 50 states and Washington, D.C., as well as the National Association of Attorneys General, Bookselling This Week reported.
Called "American Monopoly: Amazon’s Anti-Competitive Behavior Is in Violation of Antitrust Laws," the white paper was written by the ABA's advocacy team and follows the release last October of the Congressional report on Big Tech and antitrust by the House Justice antitrust subcommittee, chaired by Rep. David Cicilline (D.-R.I.), and the introduction last week of related legislation by Senator Amy Klobuchar (D.-Minn.), chair of the Senate Justice antitrust subcommittee.
"Piles of Amazon boxes sitting on porches and in lobbies is becoming the norm, but there are costs and consequences to our communities," ABA CEO Allison Hill commented. "Amazon's overreaching dominance over multiple markets has squelched competition and new businesses. If Amazon were broken up today, we firmly believe the many markets in which they dominate would quickly diversify and grow and our communities would be the beneficiaries."
In the 21-page white paper, the ABA called the company's bookselling record "a case study as to how Amazon dominates entire categories of retail and poses a threat to the competitive process. Amazon controls 42% of all sales of physical books, and an estimated 75% of online sales of physical books. Further, Amazon controls 83% of e-book sales, more than 40% of new book sales, and about 85% of sales by self-published e-book authors. For comparison, Amazon's share of the online bookselling submarket is as large as Standard Oil's market share before it was dismantled into 34 companies in 1911.
"Nowhere is Amazon's conduct more of a threat to the competitive process than in the online bookselling submarket. Amazon has engaged exclusionary tactics, including predatory pricing, to gain market power and has leveraged its substantial market power against publishers unfairly."
The paper continues, "Amazon's anti-competitive conduct extends to the pricing of its proprietary e-book reader and tablet, the Kindle and Fire, which are 'loss leaders,' meaning products priced at or below cost to stimulate the sale of more profitable goods or services. Amazon's intent is to leave consumers with no alternative but to purchase e-books and other products from Amazon, rather than its competitors, regardless of price."
The paper goes into detail, too, about Amazon's practices in other markets and in other ways. The paper concludes that "when Amazon's behavior is taken as a whole, it is clear that Amazon is unlawfully restraining trade, is engaging in exclusionary, anti-competitive pricing schemes, and is using both its horizontal and vertical integration to create barriers to entry, increase Amazon's market power, and unfairly manipulate marketplaces. Amazon has used exclusionary, anti-competitive pricing schemes to gain market power and illegally monopolize the e-commerce retail market, specifically, the first-party online retail market, the third-party e-commerce marketplace market, the web services market, and the third-party logistics services market."
It also notes the company's "power to assert dominance over creators, workers, and local communities," which includes poor working conditions for warehouse employees and brutal effects on bricks-and-mortar retailers around the country.
The ABA recommends that Amazon "be broken up into at least four autonomous companies: retail, e-commerce marketplace platform, web services, and logistics. Additionally, given how Amazon uses systemic below-cost pricing on books in particular, we urge consideration that Amazon's retail operations be divided into book retail and other retail."