Paul Krugman comes out swinging in his latest column, slamming the retail giant Amazon for exerting undue market power and essentially being the Standard Oil of the online books business.
He notes that Amazon is not playing the role of monopoly (being the sole seller and raising prices) but rather the role of monopsony (being the sole buyer and squeezing booksellers). He specifically keys off of Amazon’s hardball tactics against the publisher Hachette.
Here’s the key part:
It’s not just about the money, although that’s important: By putting the squeeze on publishers, Amazon is ultimately hurting authors and readers. But there’s also the question of undue influence.
Specifically, the penalty Amazon is imposing on Hachette books is bad in itself, but there’s also a curious selectivity in the way that penalty has been applied. Last month the Times’s Bits blog documented the case of two Hachette books receiving very different treatment. One is Daniel Schulman’s “Sons of Wichita,” a profile of the Koch brothers; the other is “The Way Forward,” by Paul Ryan, who was Mitt Romney’s running mate and is chairman of the House Budget Committee. Both are listed as eligible for Amazon Prime, and for Mr. Ryan’s book Amazon offers the usual free two-day delivery. What about “Sons of Wichita”? As of Sunday, it “usually ships in 2 to 3 weeks.” Uh-huh.
Which brings us back to the key question. Don’t tell me that Amazon is giving consumers what they want, or that it has earned its position. What matters is whether it has too much power, and is abusing that power. Well, it does, and it is.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.