Shortly after Amazon and Apple announced that they’d end exclusivity in audiobooks (see our later item), another shoe fell for Amazon in terms of marketplace competition.
Under antitrust investigation since July 2015 by the European Commission (EC), Amazon this week has agreed (in what are termed “voluntary commitments”) to lift most-favored-nation (MFN) clauses from its ebook contracts for publishers in Europe as part of a settlement with the EC.
A most-favored-nation clause in a contract promises a business partner terms that are at least as good as those offered to any other party. In Amazon’s case, MFN clauses in publishers’ contracts mean that publishers must give Amazon the lowest possible price for an ebook and alert Amazon if another retailer is offering the ebook at a better price. Considering the presence of such clauses, Amazon’s ebook contracts with publishers are alleged to have given it an unfair advantage in the digital book markets of the EU.
Amazon also has agreed to give up their ‘Discount Pool Provision.’ Not only did publishers have to alert Amazon if another retailer was offering an ebook at a better price, they also had to contribute to a fund that Amazon could use toward discounting ebooks. Amazon will use no such clauses in publisher agreements for five years, and will allow an outside trustee to monitor contractual compliance with these regulations.
While cooperating with the EC, Amazon has made a strong statement in its own defense. As pointed out by Lisa Campbell at the Bookseller, Amazon holds that there is no separate market for ebooks and print and that it has done no wrong. An Amazon spokesperson is quoted, saying, “We welcome the fierce competition that exists across these forms of [entertainment] media and the many benefits this competition offers customers. The provisions in question helped to deliver great selection and lower prices to customers—the notion that they had the opposite effect is simply wrong.”
Bottom line: As regular Hot Sheet readers know, the irony here is that the UK is Europe’s largest ebook market by far, with Germany as a distant second. UK publishers have the most to benefit from changes in Amazon contracts, and yet the UK is working its way toward its “Brexit” from the European Union. UK Publishers Association chief Stephen Lotinga has been quick to call on UK officials to make their own approach to Amazon about its terms there, where it counts more than in any other market in Europe: Amazon reportedly controls 90 percent of the UK ebook market.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
