From Kristine Kathryn Rusch:
I’m putting up this post in the middle of the fear sequence as it appears on my website, not because the post fits in the fear cycle, but because I don’t want to monitor the news for weeks to see what, if anything, has changed.
On June 9, here in the States, Democrats in the House of Representatives introduced a package of five bills which theoretically have bipartisan support. In a nutshell, the bills are aimed at stopping anti-competitive practices among the tech giants. Some of the provisions could even force companies like Amazon to break apart into smaller units.
Now, realize, that here in the U.S., just because a bill gets introduced doesn’t mean it will pass. It needs to pass both houses of Congress, and then the President must sign the bill into law. If the President refuses, Congress can override his veto…with enough votes.
In other words, there’s many a slip twixt cup and lip.
. . . .
For a decade now, I’ve been railing against writers who go exclusively to Amazon. I’ve been say, as clearly as I can, that as a business person, you should never, ever, ever put all your eggs in one basket.
Back in the early days of the new world of publishing, indies from the Kindle Boards would screech over to my website (usually on a Saturday) to call me stupid and ignorant, especially when I “attacked” Amazon.
Amazon is too big to fail, they said. Amazon will be around forever, they said.
And it didn’t matter how many examples I gave them of too-big-to-fail companies that did, indeed, disappear, they didn’t listen.
Those indies are mostly gone now, not because Amazon failed, but because they burned out or didn’t understand what kind of success they actually had and therefore gave up.
But for every screamer who left, another took their place. Usually quieter, and often just as dismissive. They’ve now moved to other places to share information because they know I’m inhospitable to exclusivity and Kindle-only. They’re stuck in Amazon’s algorithms, believing their writing careers are safe.
When these writers “go wide” as they call it, selling their books on sites other than Amazon, and lose Amazon’s exclusivity and “page reads” and deals, their income goes way down. Because these writers don’t understand that they need to build a new audience on each platform.
Building audiences takes time, but it protects against the eggs-in-one-basket problem.
. . . .
When a company gets hit with antitrust violations, there are a lot of remedies. Breaking up the company is one. Forcing the company to divest itself of parts of its business that help it create a monopoly is another. And there are so many more.
. . . .
“For Amazon,” [Michael Cader at Publisher’s Marketplace] writes, “that would likely mean divesting most arms of their publishing octopus, including much if not all of Audible, plus Brilliance, Amazon Publishing, Kindle Direct Publishing, and probably CreateSpace. It might apply to divesting AbeBooks as well.”
Sit with that for a moment. Amazon might have to get rid of everything that makes their indie publishing arm possible. Amazon could do a few things with it. They might sell the pieces. If those arms aren’t making a lot of money (in corporate terms), they might simply shut them down.
That’s not a big deal for people who are wide. They’ll still be able to publish.
But indies whose entire career is based on Amazon’s ecosystem? Those indies will go through a year or more of turmoil—if Amazon sells those pieces. If Amazon shuts those pieces down, the indies will lose their careers overnight.
. . . .
I’m just going to use Cader’s pull quotes here, since he really does very little editorializing, except at the end. (Although the choice of quotes is instructive.)
Here’s how he describes that Act:
The Act “prohibits discriminatory conduct by dominant platforms, including a ban on self-preferencing and picking winners and losers online.” In particular, it prohibits conduct that “advantages the covered platform operator’s own products, services, or lines of business over those of another business user.”
Significantly, covered companies may not “interfere or restrict a business user’s pricing of its goods or services.”
It blocks the use of “non-public data obtained from or generated on the platform by the activities of a business user or its customers that is generated through an interaction with the business user’s products or services to offer or support the offering of the covered platform operator’s own products or services.”
And it would keep Amazon from putting its thumb on the scale of their various promotional levers, blocking, “in connection with any user interfaces, including search or ranking functionality offered by the covered platform, treat the covered platform operator’s own products, services, or lines of business more favorably than another business user.”
There’s so much to unpack here. Note that this act covers pricing and promotion and, once again, competition. Instead of the Amazon ecosystem favoring Amazon, it would have to level the playing field in all areas.
That would mean, indies, there’s no competitive advantage to being Amazon-only.
. . . .
Amazon itself would survive. If the American Innovation and Choice Online Act is the only one that passes, then all those publishing services would remain intact, but the promotional deals that favor only Amazon products—and yes, your exclusive book is an Amazon product—would disappear.
All the advantages you have at Amazon would disappear if either of these two Acts pass in the current form.
They won’t. They’ll be different, if they ever make it out of committee. They’ll be significantly different after random House members get to put their imprint on the bills. They’ll be even more different after the Senate messes with it.
. . . .
Eventually, the U.S. government will take apart Amazon and the other tech giants. In the 1920s, the U.S. government took apart the tech giants of the late 19th century. When the tech giants’ power rivals the U.S. government and/or trumps the government (pun intended), the U.S. government—in a bipartisan way—will defang a tech giant. It sometimes takes years. But it will happen.
What do I recommend for those of you who are Amazon exclusive? I recommend that you watch this legislation for one thing. For another, I would start—slowly—divesting yourself of the exclusivity at Amazon.
I’d take my lowest performing works and pull them out of the exclusive ecosystem, going wide with them. I’d focus on promotions outside of Amazon for those particular products. I’d learn how to be a business person without Amazon, so when the Amazon ecosystem changes—and it will—you will be prepared.
. . . .
I have watched countless writers go under when the book publisher goes bankrupt. I have watched non-publishing businesses go down because they have, essentially, one client and either that client stops paying or that client goes out of business.
See this as the shot across the bow that it is. The changes might not happen in 2021 (most certainly they won’t). They might not happen in 2022. But by mid-decade? Maybe.
. . . .
The system Amazon built that has—as a sideline—benefitted some exclusive indie writers will change in the next five years. I can guarantee that.
It might change sooner.
The indies who act now to slowly go wide will survive.
Those who cling to the old ways of doing things—exclusive, through Amazon—will lose their entire business, maybe sooner rather than later.
Link to the rest at Kristine Kathryn Rusch
Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.
PG shares some of Kris’s concerns but doesn’t think some of her concerns, while legitimate, are as serious as she does.
PG also thinks other factors Kris doesn’t mention may impact Amazon’s future.
When a strong personality steers a large company, there are upsides and downsides.
Even though the company becomes very large, the strong personality can make the ship turn more rapidly than a similar company under more conventional corporate governance could. Bezos and Amazon have demonstrated the benefits of this agility and willingness to take risks on more than one occasion. Steve Jobs and Apple are another example.
Sometimes, when there’s a strong personality at the top of an organization, the organization develops responsively to their leadership style. A new leader with a different style can lead to organizational stumbles. Organizations governed by several strong leaders acting in various roles may transition to new leadership more easily than single-leader organizations.
Another potential drawback of strong personality leadership is that subordinates with similar talents and personalities will go elsewhere instead of remaining in the organization. Would a clone of Jeff Bezos go to work at Amazon today? Suppose a clone of Jeff Bezos was an Amazon vice-president. Would they stick around to see how the CEO-successor game played out or jump to a leadership role in a different company when a head-hunter called with a good opportunity elsewhere?
The problem of a Big Tree CEO stunting the growth of smaller trees in the lower ranks is a real possibility. Some CEOs deal with that problem better than other CEOs do.
Amazon today is two large businesses – The Everything Store, where zillions of people go to buy stuff, and Amazon Web Services.
Of the two, Amazon Web Services earns the most money and is the most valuable. At root, The Everything Store is a retailer, and retailers, large and small, almost always operate on tight margins. AWS is a money machine.
Perhaps he has missed it, but he hasn’t seen anything that suggests that AWS is the focus of any serious antitrust scrutiny. Most of the public heat is focused on The Everything Store because it competes effectively with all sorts of retailers and touches on the distribution and sales operations of a whole bunch of manufacturers and suppliers of goods.
The Everything Store also competes with lots and lots of other retailers. Its enormous success in this sphere has gained the company a lot of enemies, including dedicated Amazon-haters. Most of traditional publishing falls into this segment. So do the many culturally influential individuals who are hopelessly in love with the idea of the little bookshop on the corner.
PG opines that most middle-class people in the US have no beef with Amazon and are happy to continue buying all sorts of things from the company.
For politicians, all the potential glory lies in attacking The Everything Store.
That’s the background as PG sees it.
What’s the future of legal attacks on Amazon?
PG thinks the timeline of any antitrust litigation against Amazon is very long.
He’ll summarize the timeline of the Microsoft antitrust of the last century:
- Serious investigations began in the early 1990’s
- Suit was filed by the Justice Department in 1998 after Netscape lost the browser wars to Internet Explorer
- In mid-2000, the trial judge handed down his verdict. Microsoft appealed.
- In mid-2001, The Court of Appeals acted rather quickly, reversed the trial court’s decision, and sent the case back down for a brand-new trial with a different judge.
- At this point, the US Department of Justice got serious about settling the case instead of going through the trial-and-appeal process again. Microsoft exited the antitrust litigation in November, 2001, almost unscathed.
So, Microsoft’s antitrust litigation problems lasted over ten years from the beginning of serious investigations until the case was resolved. Today, Microsoft is the second most valuable company in the US by market capitalization.
In 1969, following a comprehensive investigation, the Justice Department filed an antitrust suit against IBM for monopolizing the personal computer market. That case lasted 13 years and IBM survived, remaining in the top ten of the Fortune 500 until 2006.
So, PG’s bottom line on Amazon is that, unless the company does something truly stupid, antitrust problems are, at most, a distant cloud on the horizon.
As far as harmful new legislation impacting Amazon, there is less predictability, but Amazon is #2 on Fortune Magazines list of the World’s Most Admired Companies.
Amazon is a very popular company with a great many American voters. Amazon has an estimated 147 Prime members in the United States. PG speculates that a letter to its customers asking them to contact their congressional representatives to head off anti-Amazon legislation might be quite effective.
PG is not aware of any law that would prevent Amazon from sending an email to each of its Prime members (or each of its customers) in the United States (or anywhere else) asking them to send a letter or email to their Congressional Representative and each of their two Senators.
Typically, Amazon’s customers provide a physical address to which purchases of non-digital goods should be sent, so the company has a very good idea of which state and congressional district in which a customer lives and/or does business. With that information, Amazon could provide relevant names, offices and email addresses, etc., for the relevant representative/senator.
Amazon’s letter or email to its customers could encourage customers to contact their representatives to tell them not to do anything that would harm Zon, including voting for any legislation that would force Amazon to change its business or stop selling popular products to individuals.
There would be a huge uproar by the anti-Zon press and other of the usual suspects, but PG thinks congressional representatives would get the message that their constituents like Amazon just the way it is and don’t want anybody voting for laws that would prevent them from buying whatever they want from Amazon.