For months, a group of writers calling themselves Authors United have campaigned, mostly unsuccessfully, against the business practices of Amazon.com. On Thursday, they mounted their latest challenge, officially requesting that the Department of Justice investigate how Amazon exercises its “power over the book market.” (A spokesman for the Justice Department said it is reviewing the request.) The list of signatories fills twelve pages and reads like an unusually expansive long list for a prestigious writing award; the five hundred and seventy-five writers include Philip Roth, V. S. Naipaul, and Ursula K. Le Guin, along with many longtime contributors to this magazine.
These writers generally aren’t legal experts, however, and they freely acknowledge this near the beginning of their letter to the Justice Department, while asserting that their profession does afford them some degree of expertise: “We are not experts in antitrust law, and this letter is not a legal brief. But we are authors with a deep, collective experience in this field, and we agree with the authorities in economics and law who have asserted that Amazon’s dominant position makes it a monopoly as a seller of books and a monopsony as a buyer of books.” (A monopoly is a company that has extraordinary control over supply as a seller of goods to consumers; a monopsony has extraordinary control over suppliers as a buyer of their goods.)
It is perhaps the writers’ lack of legal expertise that has given them the freedom to put forth what antitrust experts described to me as a highly unorthodox argument: that, even though Amazon’s activities tend to reduce book prices, which is considered good for consumers, they ultimately hurt consumers. The authors are, in essence, trying to make the case that Amazon is bad not only for writers, but also for people who buy stuff on the site—and they’re taking this approach for good reason. As I wrote in March, in a piece considering an F.T.C. probe of Google that began in 2011, U.S. courts evaluate antitrust issues very differently, nowadays, than they did a hundred years ago, just after antitrust laws were established to keep big corporations from abusing their power. Back then, judges tended to be largely concerned with protecting suppliers from being squeezed by retailers, which meant that, if a corporation exercised monopoly power to push prices down, hurting suppliers, the company could easily lose an antitrust case. But by the nineteen-eighties, the judiciary’s focus had shifted to protecting consumers, leading courts to become more prone to ruling in favor of the corporation, on the grounds that lower prices are good for consumers.
Douglas Preston, a writer who has led the Authors United charge (and who has contributed to The New Yorker), told me that, as he considered this evolution in antitrust law, it occurred to him that if he and his colleagues were to make a convincing antitrust case against Amazon they would have to show that the company was bad for consumers despite, and perhaps even because of, its role in lowering prices. Their argument is this: Amazon has used its market power both to influence which books get attention (by featuring them more prominently on its Web site, a practice I’ve also written about) and, in some cases, to drive prices lower. These practices, the authors argue, squeeze publishers, which makes them more risk-averse in deciding which books to publish. As a result, they claim, publishers have been “dropping some midlist authors and not publishing certain riskier books, effectively silencing many voices.” And this is bad not only for the non-famous writers who go unpublished, but for their would-be readers, who are denied the ability to hear those voices. Amazon’s business practices are well-documented, and there appears to be at least anecdotal support for the authors’ claim about how they have hurt publishers. Still, they are making a case that could be hard to prove.
There is some precedent for basing an antitrust argument on the notion that consumers care about things other than prices. If a business with a lot of market power takes actions that send prices higher, that is generally seen as a potential antitrust issue, because higher prices are bad for consumers. But Daniel Crane, an antitrust expert at the University of Michigan Law School, pointed me to a 2007 Supreme Court case, Leegin Creative Leather Products Inc. v. PSKS Inc., in which a leather-goods manufacturer, Leegin, had set minimum prices for its products and required retailers to adhere to them. The practice is called resale-price maintenance. When one retailer, PSKS, discounted Leegin goods below the price set by the manufacturer, Leegin pulled its products from the retailer. In response, PSKS sued, arguing that Leegin’s behavior was a violation of the Sherman Act—a century-old antitrust law—because it led to higher prices. A lower court agreed with PSKS, but the Supreme Court overturned that ruling, reasoning:
Many decisions a manufacturer makes and carries out through concerted action can lead to higher prices. A manufacturer might, for example, contract with different suppliers to obtain better inputs that improve product quality. Or it might hire an advertising agency to promote awareness of its goods. Yet no one would think these actions violate the Sherman Act because they lead to higher prices. The antitrust laws do not require manufacturers to produce generic goods that consumers do not know about or want. The manufacturer strives to improve its product quality or to promote its brand because it believes this conduct will lead to increased demand despite higher prices. The same can hold true for resale price maintenance.
In other words, if higher prices corresponded with better products, that could be good for consumers—and not necessarily an antitrust violation.
Authors United’s specific argument—that Amazon’s actions are bad for consumers because they make our world less intellectually active and diverse—is unorthodox in its resort to cultural and artistic grounds. But it can be read as the inverse of a case like Leegin v. PSKS: that lower prices for worse products could be bad for consumers—and perhaps constitute an antitrust violation. “There is some support within the framework of antitrust law for this theory,” Crane said. “There certainly is a strand of antitrust law that says that even though what we care about is consumer welfare, lower prices are not unambiguously better for consumers.” He added, “I don’t think it’s completely novel to say, ‘Look, even though Amazon is leading to low prices, that may be bad for consumers if it leads to lower quality—which could be taken to mean less diversity of ideas.’ ”
None of this is to suggest, however, that the Department of Justice would have a strong case against Amazon if it were to sue the company and apply Authors United’s reasoning. One reason pricing has been such a popular method of measuring consumer welfare is that it’s easy to quantify: a three-dollar jar of peanut butter is objectively better for consumers than the exact same jar priced at five dollars—forty per cent better. While it may be attractive, on a philosophical level, to argue that Amazon is bad for us because it makes our culture poorer, measuring that effect would be difficult, if not impossible. How would one go about valuing an unpublished masterpiece by an unknown author? This is further complicated by the fact that Amazon makes it easy for authors to self-publish and have their work be seen, without having to go through such traditional gatekeepers as agents and publishers; Amazon might argue that this allows for more free flow of information and ideas. Furthermore, U.S. law is concerned with diversity in media, Crane said, but that tends to be regulated through the Federal Communications Commission, not the Justice Department.
I spoke with Douglas Preston about these points, mentioning that another antitrust expert I spoke with had supported them, as well. Preston acknowledged, “Not being a lawyer, maybe they’re right—maybe we’re barking up the wrong tree.” Indeed, it’s quite possible the Justice Department will read the Authors United letter and dismiss it as uninformed. But even if that happens, Preston said, it will have been worthwhile for the writers to have made their case. Last fall, Authors United appealed to Amazon’s board of directors to get the company to change its practices; the board seemed unmoved, but the authors’ request was written about in the press. That in itself served the writers’ goal, Preston told me, because it helped disseminate their message to regular people, including Amazon customers. Authors United’s larger mission, he told me, was this: “We hope to show the public that getting products faster and cheaper isn’t necessarily the greatest good. It comes at a human cost.”
* Amazon Studios is developing a New Yorker series in partnership with Condé Nast Entertainment.
