As we reported in our January 25 edition, the European Commission (EC) elicited “voluntary commitments” from Amazon to make two major changes to its contracts with publishers in Europe.
These commitments are actually capitulations. European lawmakers had objected to what are called most-favored-nation clauses and to discount pool provisions, both of which the EC deemed to be giving Amazon an unfair advantage in the markets of the European Union in which Amazon operates.
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 meant that publishers had to give Amazon the lowest possible price for an ebook and alert Amazon if another retailer was offering a given ebook at a better price.
The second key point relates to discount pool provisions. These contract clauses said that publishers also had to contribute to a fund that Amazon could use toward discounting ebooks. In European law, these were deemed anti-competitive measures and, on May 4, it was announced that the EC had formalized its acceptance of Amazon’s commitments to stop using them in its contracts.
European Commissioner Margrethe Vestager, who leads the EC’s competition policy, hailed the moment as a decision that “will open the way for publishers and competitors to develop innovative services for ebooks, increasing choice and competition to the benefit of European consumers. Amazon used certain clauses in its agreements with publishers [that] may have made it more difficult for other ebook platforms to innovate and compete effectively with Amazon. We want to ensure fair competition in Europe’s ebooks market, worth more than 1 billion euros.”
And while the news was also welcomed by other bodies, including the Publishers Association in the UK—where the ebook market is a considerable force, second only to the market in the States—some made statements that reflected the deep hostility held by many in Europe for Amazon. The UK’s Booksellers Association, for example, described the EC’s action as too little, too late, saying, “For a small commercial competitor of Amazon, the damage has already been done and is difficult if not impossible to retrospectively make right.”
Amazon has issued a careful statement: “We are pleased to have reached an agreement with the European Commission. We will continue working to help authors and publishers reach more readers, improve the digital reading experience, and bring our customers the best possible prices and selection.”
Later reporting, however, has indicated that the EC is looking further at platform-to-business practices (understood to go beyond Amazon and include Google and Apple). One area of concern is whether platforms are favoring their own goods and services over those of vendors. All of this is part of a very big package of European legislative focus called the Digital Single Market.
Bottom line: As we pointed out in January, while the EC’s agreements with Amazon are EU-wide, the UK’s market will easily see the most impact. And even as Amazon agrees to change its contractual agreements with publishers in the EU, the UK now finds itself hurtling toward Brexit—which had not been triggered in January–and toward the surprise June 8 general election that Prime Minister Theresa May has called. We predict extremely challenging negotiations for Amazon in the future with an independent and newly sovereign United Kingdom.
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.
