My Lords, I address my amendment in this group, Amendment 24ZCA. I am not sure that we really know how to deal with monopsonies, it has been so long since we had one that was truly powerful. I am not sure that the Bill gives us the ability to deal with them properly. My amendment will make sure that we can, because we can now observe one of these monopsonies in action and in the process of growing, and that is Amazon.
Amazon now has some 90% of the e-book market in the UK; it has something like 50% of the entire book market, e-books and physical books, in the US and close to that in the UK. However, when I have asked the OFT if it will look at some of the practices that Amazon employs in getting to where it is, it says, “No, because none of the major publishers has brought us any evidence”. The publishers will not even come into this House to have tea with me to discuss what is going on. They will not talk to the Guardian. They will not talk to anyone because Amazon is rough, hits hard, has its teeth into publishers’ necks and is sucking their lifeblood. There is no answer. If we are to do something as a nation, we need to equip ourselves with a system that is capable of going to the publishers and saying, “We think there might be something going on here. Please give us some evidence”. At the moment, the OFT is hamstrung and cannot do that. It has to wait until someone brings evidence to it. I would like to see a situation whereby this new body had the power to go out and look on its own account and not wait for evidence to be brought to it, because it is in the nature of monopsonies, particularly the powerful ones, to tie up the people who are involved in them and make it extremely difficult for any of those people to bring a complaint or evidence to the OFT, as it is, on their own accord.
Amazon is no friend to the UK. We may all think that it is a great place to buy—indeed it is, and I am having an interesting Christmas not buying from it. It treats us just as a distribution depot. It is not building a business here. It has no interest in the great history of British intellectual content. It is not like our publishers, who have a care for the nation and the part that the UK played in the world of books. We are just a source of a commodity to Amazon. It pays no tax, as is well known. It abuses VAT whenever it gets the opportunity. It has had a scam going on in Luxembourg for ages, which, thank goodness, the European Union is putting an end to, whereby it paid only 3% tax, rather than 20%. The company has been allowing sellers to hide their identities, so that they can operate VAT scams. It was an active participant in the abuse of low-value consignment relief. It is not a company with morality and it is not a nice organisation. As was said by the publisher who spoke anonymously to the Guardian, you dare not go against it because it would kill you.
Amazon’s terms on e-books are fascinating. As a publisher, you can get 35% of the price that it sells for, if you set the price. If you want more than that,
Amazon gets to choose the price and you end up with less. If you are a big publisher, you may end up with only 10% of the price that Amazon is charging for an e-book. If you are selling through Amazon Marketplace, Amazon gets to know your customers, suppliers, prices and volumes; and if something is selling well, Amazon then does it itself. It goes straight to the manufacturer and undercuts you. That is all based on Amazon’s knowledge of your business. If you are selling on Amazon Marketplace, you are forbidden to sell anywhere else at a lower price or you are chucked off. Amazon is a very difficult company to live with.
What we are seeing is a monopsony in its growth phase. It is running on very low net margins in order to destroy the competition and increase its market power. If we act now, there are viable alternatives that will spring up to compete with it. If we leave it, we risk a situation where there is no competition, where there are no publishers any more because Amazon is the only place to publish direct, and where there is no ability to sell e-books other than through Kindles because Amazon controls them, and you cannot put outside software on them. We must give ourselves an opportunity to act, and act sensibly, and we cannot hamstring ourselves by sitting here and waiting for one of this company’s victims to complain before we act.
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