Amazon plays dirty, E.U. plays ostrich in the bozo parade

E.U. beats up on free speech and U.S. business competitiveness, while Amazon hits below the belt in negotiations with a book publisher

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Amazon plays dirty in the books business
Want to buy a copy of J.D. Salinger's "Nine Stories" on Amazon.com? I hope you're not in a hurry: Amazon won't ship it to you for two to four weeks, far longer than it usually takes, simply because it was published by Hachette. However, Amazon's website helpfully informs readers who want to buy the Salinger book that they can find "similar items at a lower price," including a collection of Ernest Hemingway's stories, published by Scribner.

What's more, Amazon has removed Pre-Order buttons from upcoming Hachette titles, a move that can devastate sales. Amazon is also radically and unilaterally raising prices (in some cases by 50 percent) on the publisher's existing titles.

The story here isn't complicated. Amazon, which owns about 60 percent of the e-book market, wants to wrest a few points of margin from Hachette. Not surprisingly, that company is resisting those demands, so Amazon retaliated by making its titles harder to get and harder to sell.

Amazon doesn't deny that this is going on. In a statement released on Tuesday, it said, "When we negotiate with suppliers, we are doing so on behalf of customers. Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term."

Seriously? Bullying a publisher, even one as large as Hachette, is hardly in the interests of consumers. It may, however, be in the interests of Amazon's shareholders, who are upset by the precipitous decline -- 20 percent this year -- in the company's shares.

With margins on e-books as high as 75 percent, Amazon figures that getting a bigger share of the pie is worth a few days of bad publicity.

The Web giant has a history of aggressive actions with publishers, most dramatically in 2010 when it removed the Buy buttons for books by Macmillan, whose authors include Jonathan Franzen, Bill O'Reilly, and Augusten Burroughs. It fought with Apple over e-book prices and lost, but Apple's victory was overturned after the U.S. Department of Justice intervened.

I'm an avid reader, and this rubs me the wrong way. Amazon has already done much to destroy its brick-and-mortar competitors. Like it or not, the seismic shifts in publishing may well be an inevitable part of a larger shift to digital technology and new consumer buying habits. But bullying, which is what this appears to be, is not inevitable and is in fact flat-out wrong.

Amazon hardly stands alone in a tech industry dominated by a handful of companies. For years, Microsoft enjoyed a near monopoly in the operating system market. Now Google holds a similar position in search, Intel in complex processor manufacturing, and four companies -- AT&T, Verizon, Sprint, and T-Mobile -- dominate the U.S. wireless market. Various governments have gone after all these companies to varying degrees when their market power seemed to be abusive. It's clearly time for the government to scrutinize and consider restrictions on Amazon.com.

Congratulations, Jeff Bezos: You join the E.U. as bozo of the month.

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at bill@billsnyder.biz. Follow me on Twitter at BSnyderSF.

This article, "Amazon plays dirty, E.U. plays ostrich in the bozo parade," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

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