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Amazon has been in the firing line in recent weeks, with a call from the Association of American Publishers (AAP) for the US Federal Trade Commission (FTC) to more closely scrutinize the behaviour of dominant online platforms that “pervade every aspect of the economy”. It follows a damning article in the New York Times that claimed many counterfeit books were appearing on its site.
Commenting on the FTC’s recent hearings on Competition and Consumer Protection in the 21st Century, Maria A Pallante, president and CEO of the AAP, said: “Unfortunately, the marketplace of ideas is now at risk of serious if not irreparable damage because of the unprecedented dominance of a very small number of technology platforms. In order to mitigate this crisis and protect the public interest, the AAP urges the FTC to exercise much-needed oversight and regulation, particularly as to circumstances where technology platforms stifle competition and manipulate consumer outcomes.”
In its 12-page filing, AAP underscores the fact that dominant technology platforms exercise extraordinary market power in the markets for book distribution and Internet search: “No publisher can avoid distributing through Amazon and, for all intents and purposes, Amazon dictates the economic terms, with publishers paying more for Amazon’s services each year and receiving less in return,” it argues.
The AAP also stresses the significant role that platforms play in facilitating transactions for unauthorized books, the area on which the New York Times focused. The AAP believes Amazon’s approach to its online bookstore enables “widespread counterfeiting, defective products, and fake reviews that both degrade the consumer experience and diminish the incentives of authors and publishers to create new works and bring them to the marketplace.”
With respect to search, AAP notes that Google’s complete and untouchable dominance is highly problematic “because its business model is largely indifferent to whether consumers arrive at legitimate or pirated goods.”
In response, Amazon said: “A recent New York Times article claims that Amazon doesn’t care about counterfeits and takes a hands-off approach to what is sold in our stores. Nothing could be further from the truth. We invest substantial amounts of time and resources to protect our customers from counterfeit products, including books. We also stand behind every product sold in our stores with our A-to-z Guarantee.
“Amazon strictly prohibits the sale of counterfeit products. We invest heavily in prevention and take proactive steps to drive counterfeits in our stores to zero. In 2018 alone, we invested over $400 million in personnel and tools built on machine learning and data science to protect our customers from fraud and abuse in our stores.