FORTUNE — Authors and journalists might not be the wealthiest or most powerful cross-section of society, but when you anger them, you tend to get a lot of bad press.
Amazon (AMZN) is finding this out the hard way, as outlets across the country have published articles lambasting the company for playing hardball with book publisher Hachette, making it difficult for customers to buy titles from popular authors like James Patterson and Malcolm Gladwell. While the precise details of the dispute are unclear (Both Amazon and Hachette’s public comments in recent days haven’t described the exact nature of the disagreement and both companies declined to offer specific comments to Coins2Day on the matter), it’s not a stretch to assume that it’s about pricing, specifically how much money Hatchette will sell its titles to Amazon for and how much Amazon can charge customers.
This was the basis of the Justice Department’s actions in 2012 against the major book publishers and Apple (AAPL), who hated the fact that Amazon sold new ebook titles for less than $10, believing that Amazon was getting customers used to a price that could not sustain publishers’ business models. The publishers colluded with Apple to force a model on ebook sellers where the publisher set prices for books and retailers simply took a commission. The latest tussle with Hachette is likely an extension of this battle, in which Amazon is fighting to regain its ability to dictate prices.
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If this is, in fact, the case, then it’s highly unlikely that Amazon is up to anything illegal. Antitrust courts since the 1970s have consistently held that it’s not illegal for a company to hold huge market share like Amazon does or even to use that market share as a tool in negotiations with suppliers, as long as they aren’t using that power to raise prices for the end consumer. Absent this doctrine, it’s easy to see how uncompetitive companies could turn to the government for shelter against competition from highly successful firms like Amazon. Instead of innovating, these companies could rely on the Justice Department to prevent their competitors from becoming too powerful.
Some writers, like my colleague at Coins2Day Adam Lashinsky, have argued that while it might not be illegal for Amazon to make it difficult for customers to buy books from Hachette, it’s a dumb business move because it’s an example of not putting the customer first. It’s certainly plausible that Amazon — after 20 years of ruthlessly putting customer experience and low prices above all else — has now taken its eye off the ball and become obsessed with wielding power over a supplier at the expense of the customer. But is it likely? What in Amazon’s past practices should make us believe that this is anything more than Amazon pressuring its suppliers to offer a product at a lower price? This has been Amazon’s secret to success for two decades, and something Walmart (WMT) (another common media target) has been doing for much longer.
Consumers who really want to buy a book published by Hachette have many avenues to buy those books, and for the rest of us who are just looking for a good book to read, Amazon is going to offer you a massive selection at very low prices. Few book buyers will likely notice that this battle is going on, and Amazon is likely willing to pay the PR cost to ensure it gets the best prices for itself and its customers.
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Some worry that Amazon’s low-price strategy is merely a Trojan horse to gain market share until it can turn the screws on the public and raise prices big time, but this scenario doesn’t really pass the smell test. While competitors can’t compete with Amazon on shipping time, selling commodity goods over the Internet is a highly competitive business, and consumers won’t stick with a high-priced version of Amazon just because it’s convenient.
It is reasonable to worry what effect these market dynamics will have on the book industry and literary culture in general. It’s clear that Amazon sees legacy publishers as increasingly irrelevant middlemen who are keeping book production costs unreasonably high. Others argue that book publishers are necessary incubators of literary talent. It’s far too early to say who is right, but the battle over who will dictate the future of the book industry will be fought in the market place, not the press. And Amazon is winning that battle because customers have decided they like what it has to offer.
