Is Amazon a monopoly? Is government intervention needed?

This article/blog in the NY Times (and many of the comments) help inform the discussion of whether Amazon (or more accurately Amazon’s book sales and its practices relating to book sales) has become a monopoly.

The linked article (and the majority of the comments) seem to hold the opinion that Amazon has reached the point of being a monopoly (at least in terms of books). Further, the author of the article (and a lesser proportion of the comments) assert that government intervention in this regard is not just desirable but necessary.

Is what Amazon has done and is doing with respect to book sales monopolistic in a legal sense? If so, is the “literary community practically begging for government intervention” as the article avers?

I answer ‘no’ and ‘no’ (the latter by definition).

Amazon is not preventing anyone from buying anything. More to the point, Amazon does not have “exclusive” or “complete” control over the products or the markets with, to my legally-naive perspective, “exclusive” and/or “complete” control being the sine qua non of the definition of monopoly. Sure, Amazon is playing hardball with the publishers. But, if they (the publishers) don’t like it, let them band together and form their own on-line powerhouse, or let authors self-publish (a simple enough task nowadays) and eschew Amazon and its services altogether. Not only do such options put the lie to the notion that Amazon has a monopoly, either would redirect the dollars (and pounds, and marks, and pesos) of customers away from Amazon and into the pockets of the publishers and authors (just like ‘them good old days’).

You don’t have to be a monopoly, per se, to engage in unfair restraint of trade.

Yup. You don’t have to have a legal monopoly on any good or service to be in a position to stuff up the operation of the market. EU competition law has a handy concept known as “abuse of a dominant position”. Amazon has a dominant position.

On the other hand, simply being a monopoly is not a violation of US antitrust law, if memory serves.

Well, it depends on the type of monopoly. If you have a patent or a copyright, sure, that’s not a violation. If you have a public utility (or what economists refer to as a “natural monopoly”) then that’s most likely not a violation.

And if you’re able to buy off enough politicians to support your monopoly or duoply or oligopoly, then it will end up being okay, even if it should be a violation of anti-trust laws.

Getting back to the OP, though, I’m not sure this should even be termed a monopoly. It looks like this is more of a monosopony problem. But either way, there’s enough in the allegations to warrant an investigation by the FTC.

Is that like a small unicorn?

Well, I suspect that publishers want to break Amazon’s sales network. I’m not so sure that authors agree. Amazon has been a huge boon to them, but traditional publishers are offering fewer and fewer value-added services in this day and age. For the most part, they don’t market, tend to be tediously self-selective, and often don’t even seriously edit - not unless the work in question is one they really want their grubby mitts on. More and more authors are taking their stuff straight to the market - which in this case usually means Amazon to start. And the other venues that do compete are also outside the traditional publishing scene.

That said, I’m not so sure that Amazon is actually monopolizing anything to begin with. They started offering books, but they’re competing these days in just about every category imaginable, and more on convenience than price. Many traditional bookstores are being driven out because customers are demanding selections too wide for most of them. The ones that survive tend to create a captive customer base around used selections and trade-in, or service a narrower and more selective market that Amazon can’t. Amazon doesn’t carry many older titles, for example.

Finally, it’s hard to suggest what the government would do about it. Make Amazon sell books in only one geographic segment? Just forbid it outright? Make them somehow start a competing service? They took over because they basically whipped the competition so hard it wasn’t funny. There’s nor real reason to think they wouldn’t do it again, nor much reason to think they shouldn’t be pushing publisher’s to give them a better deal now. Do you think the consumer much cares about the publisher?

Tom is correct. US anti-trust law is about anti-competitive behavior, not monopolies, per se. Now, there is obviously going to be some overlap, but having a monopoly is not against the law. It’s how one got that way.

From the FTC:


Those are anti-competitive practices. But a monopoly can arise because you’re the first and only manufacturer of a product. That is not necessarily illegal.

For example, supposed I invent and patent a “pet rock”. I’m the only one who can make a pet rock, but it’s not illegal. The FTC is not going to break up my company into regional “pet rock” manufacturers to ensure competition in the pet rock market.

he acts themselves prohibit specific types of monopolies or trying to create specific types of monopolies (there are a few court cases which clarify what the term “monopoly” means under these acts, which makes the analysis a bit more complicated). Now, I’m not sure what you mean by “anti-competitive” here, since you seem to be using the term more generally, rather than in the legal sense (which is fine), but yes, monopolies can be illegal in-and-of-themselves.

I never said all monopolies are illegal (what is it with you and always asserting the extreme position of your opponent and debating that). But if you attempt to monopolize an existing market, it will probably be illegal, even if you haven’t engaged in anti-competitive practices (depending on how you are using that term). Whether or not a monopoly is illegal depends on the type of monopoly and that can include an analysis of anti-competitive behavior, and it’s easier to break up a monopoly if there’s anti-competitive behavior shown, but it’s not a necessary requirement.

I’m going to clarify something here. Under the Clayton Act, mergers and buyouts which “reduce competition” are generally (subject to numerous caveats) illegal. I would not personally label a simple reduction in competition an “anti-competitive” practice. I would reserve the term “anti-competitive” for actions that actually restrain free-trade (like block purchasing requirements, extortionary contracts, price fixing, pooling arrangements and the like). The difference is one of passivity, versus activity. If you simply merge, and the merger reduces market competition without any other action on the part of your company, that could be prohibited by the FTC.

Now, if you want to include a “reduction in competition” absent any other actions into a definition of “anti-competitive,” so be it. But, by definition, the creation of a monopoly in an existing market necessarily involves a reduction in competition. So, if you are going to label reductions in competition as anti-competitive, then you are essentially stating that certain types of monopolies are per-se illegal.

As long as Amazon allows me to offer books at the same price from other distributors, without sacrificing significant perks (from both Amazon and other distributors), I’m not concerned.

As long as Amazon allows third party and unregulated content on Kindle and other devices, I’m not concerned. For example, I can sell Kindle books on another site and cut Amazon entirely out of the deal.

I guess it’s worth noting that Amazon doesn’t get along with brokers and middlemen distributors the way Kobo, Barnes and Noble, Apple do in an API model sense.


Thanks you for your insights and comments.

I apologize for not returning to this thread (“my” OP) for so long. It had zero replies after about three days, so I figured I’d just let it die peacefully. In fact, I’m pleasantly surprised to see this late flurry of responses.

Indeed. Those people in the NYT comments section calling for government intervention seem not to have considered what government “intervention” means, and what it’s actually supposed to do.

As I understand it, Amazon is basically doing in their field what net neutrality is meant to prevent among ISPs: throttling access to specific content providers in violation of their agreements with their paying customers. Would that be correct?

I took a young relative to the Hay Festival at the weekend - she is a huge fan of " How To Train Your Dragon" (Astrid rocks) and wanted to meet Cressida Cowell. I didn’t see Amazon anywhere - just a lot of people and a vast number of books. My happy young relative has a signed copy to treasure.

Books are alive and well.

Are there any barriers to entry that would inhibit a competitor to Amazon to enter the market?

In the eBook market, latest stat I saw was that Amazon had about 60% market share. While that is large, it is not a monopoly. Amazon is also hardly profitable at what it does, and the primary reason it may have a larger share of the market, is that it is doing what it does at a loss, which is currently to the benefit of customers. There is a definite limit to how long a company can continue unprofitable activities. At some point, prices will have to go up, which will entice other players to enter the market as well.

I"m in complete agreement with Smiling Bandit here.
(Looks around for the four horsemen of the Apocalypse). has been a real boon to actual authors, especially those on the mid-list and below who have had nothing but shrinking services and lower rates from them as traditional publishers increasingly rely on “tentpole” bestseller to keep their profits going. In fact, the success of “Fifty Shades of Grey” came about because traditional publishers noticed that the book was literally eating all their lunches in the ebook publishing market.

Traditional publishers have been, and continue to be, exactly as Smiling Bandit describes them. Witness their gift of millions of dollars in an advance to “Girls” creator Lena Dunham for a book proposal that was so shoddily done that 1/3 of it was a list of foods she had eaten in a particular year.

Amazon has been a godsend for readers and writers, traditional publishers, not so much.