August 4, 2022
The nation’s largest publisher, Penguin Random House, was in federal court this week to defend itself against the Justice Department, which filed an antitrust lawsuit to block its acquisition of Simon & Schuster. The DOJ has been increasingly focused on antitrust and is hiring more trial lawyers in preparation for an action against Alphabet’s Google for its dominance in search and digital advertising. Although ostensibly on trial for threatening to shrink the number of American mass-market publishers from five to four, the Penguin suit also involves examination of the retail power of Amazon.
Amazon is already the subject of a federal investigation for anticompetitive practices, and in March that inquiry escalated when Congress referred the matter to the DOJ on suspicion the e-tail giant had criminally withheld evidence.
“Amazon isn’t on trial in [the] big books lawsuit. But its power is,” writes The New York Times, explaining Penguin’s defense amounts to how book publishers need to join forces to achieve enough critical mass to have real bargaining power over Amazon, the largest bookseller in the U.S. Hence this case, says NYT, “is about much more than books and the earnings of big-name authors.” It is about “how to handle large companies — including the biggest digital powers — that shape our world. “
Authors and publishers typically try to support brick-and-mortar bookstores, which have traditionally had a meaningful place in the communities they serve, but now “if authors or publishers don’t want their books sold on Amazon, they may disappear into obscurity,” NYT reports. If a publisher can amass enough power through mergers, the thinking seems to be, it can achieve leverage to influence Amazon’s practices and terms.
Penguin is not explicitly arguing that it needs to bulk-up due to Amazon, “which isn’t legally relevant in the government’s lawsuit,” NYT writes, calling Amazon “the elephant in the room,” but interested stakeholders are latching on to the theory to underscore the broader argument as the government revs up to take on Big Tech.
“We know that a few technology companies — including Amazon, Google, Facebook and Apple — have enormous influence over entire industries and our lives. We’re all trying to figure out in which ways their power is good or bad for us, and what, if anything, government policy and law should do about the downsides,” NYT writes.
On Tuesday, author Stephen King testified against the $2.1 billion deal to buy Simon & Schuster, the nation’s fourth largest publisher, “supporting the government’s contention that the deal will hurt authors by limiting the market for new manuscripts,” according to Variety.
Bloomberg mentions a pending suit against Google and writes that Justice also “is ramping up its hiring of antitrust trial lawyers” as the administration “moves to deliver on its promise to take alleged competition violators to court.” In March, The Associated Press wrote of a Congressional request for a criminal investigation into Amazon by the DOJ.
Stephen King Testified Against Publishing’s Biggest Merger. What You Need to Know About the Antitrust Trial, Los Angeles Times, 8/2/22