And it is not entirely clear how we can apply traditional anti- monopoly laws, many of which have geographic components, to online commerce.īut any careful reading of history will carry us to analogous challenges in our past, like those posed by the early railways, and thereby to other potentially useful forms of anti-monopoly law such as common carriage rules. In the case of Amazon, consolidation has often been presented as a consequence of new technologies. A century ago Supreme Court Justice Oliver Wendell Holmes spelled out the dangers in a case in which a retailer manipulated the price of a drug, "I cannot believe," he wrote, "that in the long run the public will profit by this court permitting knaves to cut reasonable prices for some ulterior purpose of their own, and thus to impair, if not to destroy, the production and sale of articles which it is assumed to be desirable that the public be able to get." Such use of power can strip away or destroy much of the cash suppliers would have invested in new products or simply to maintain systems and skills. To achieve this end, they often virtually promote concentration of power over entire market systems.Īs a result, it is now all but routine for big firms, in their efforts to grow bigger and increase profits, to dictate prices to suppliers who depend on them to get to their customers. Since then, officials have used our anti-monopoly laws instead to lower prices. Until then, the prime purpose of anti-monopoly laws was to protect citizens against concentration of political power. Second was the Reagan administration's reframing of our anti-monopoly laws in 1981 around the concept of "consumer welfare." The first was the Consumer Goods Pricing Act of 1975, which gave retailers the power to price other companies' products. The consolidation in retail since then is due largely to two revolutions in our anti-monopoly laws.
Power was so widely distributed that few retailers enjoyed any real power over suppliers. A generation ago every city boasted its own department stores, discount shops and independent bookstores. As anyone who has studied the business practices of Wal-Mart, Home Depot and Best Buy knows, rough treatment of the people who make what we buy is true in just about every industry. Indeed, such brute use of power is increasingly the norm across our economy. And Wal-Mart is a goliath that has repeatedly used its dominant position to influence the content of products by refusing to sell certain books or music. Another company that has captured a real say over the actions of our publishers is Wal-Mart. More disturbing yet, Amazon is not alone in having captured such a position. It is that Amazon's managers believe they have consolidated sufficient power - the company sells as much as 80 percent of all ebooks, for instance - to enforce their will by cutting off the public's access to a publisher's books. What should concern us foremost is not that Amazon's managers believe they - rather than the people who write and edit our books - have a right to set the price for books. For more than a week, you could still see Macmillan books on Amazon you just couldn't order one.Įven though the two companies have since struck a truce, the showdown should deeply concern anyone who cares not merely about the health of this vital industry, but about concentration of political power in America. To make sure the publisher understood it was serious, Amazon cut the links that enable people to buy Macmillan's books via Amazon's Web site. Amazon made clear it wanted to continue to set prices for Macmillan's books, as it does for most books it sells. (CNN) - Late in January, the book publisher Macmillan told Amazon it wanted to raise the prices of its books sold through the online retailer. He is a senior fellow and director of the Markets, Enterprise and Resiliency Initiative at the New America Foundation. Lynn is author of " Cornered: The New Monopoly Capitalism and the Economics of Destruction" (Wiley).
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