Why the Penguin Random House merger is all about Amazon.

Amazon is not on trial for Big Books. But that’s the power.

The US government is suing book publisher Penguin Random House to prevent it from buying rival Simon & Schuster. The government has said that the merger, which publishes mass market books from five to four, will hurt some authors’ competition for their books.

The trial of the government’s lawsuit began this week, and my colleagues have written an important explanation of the legal issues and for the companies, writers and book lovers involved.

This case, which goes far beyond the income of books and great authors, is another example of the debate over how to treat the big companies that shape our world – including the biggest digital powers.

The elephant in the room is Amazon. Book publishers want to get bigger and stronger in part to gain an advantage over Amazon, the largest bookseller in the United States. One of Penguin Random House’s strategies is similar: Our book monopoly is the best defense against Amazon’s book selling monopoly.

As the primary way Americans find and buy books, Amazon could theoretically direct people to titles that would generate more revenue for the company. If authors or publishers don’t want their books to be sold on Amazon, they may fade into obscurity or counterfeit works may abound. But if the publisher makes enough, the theory goes, then the publisher has leverage over Amazon to stock books at the prices and terms it chooses.

“Their argument is to protect the market from Amazon’s monopoly, we monopolize the market,” said Barry Lynn, executive director of the Open Market Institute, which calls for stricter antitrust laws and enforcement.

Penguin Random House isn’t saying it wants to buy a rival to beat Amazon in the power play, which is legally irrelevant in the government’s lawsuit. But Lin told me that if Amazon’s dominance is harming book publishing companies, readers, authors, or the American public — and he believes it is — it’s pointless to allow a book company to grow more muscle to threaten Amazon. The best approach, he says, is to limit Amazon through laws and regulations.

We know that a handful of tech companies — including Amazon, Google, Facebook, and Apple — have a profound impact on entire industries and our lives. We are all trying to figure out in what ways their power benefits or harms us and what government policy and legislation should do about the downsides. This controversial book publishing merger is an example of reckoning with these important issues.

It’s not uncommon for companies to justify acquisitions by saying they need more power to level the playing field. When AT&T bought a media and entertainment company called Time Warner a few years ago, one of the company’s explanations was that it wanted to be an alternative to digital advertising powerhouses like Google and Facebook. Music companies have partnered to become more effective in part over the past 15 years as digital services like Spotify changed how we listen to music.

And a decade ago, when German conglomerate Bertelsmann bought a competitor to create Penguin Random House, that merger was one answer to Amazon’s impact on book sales.

Today, Penguin Random House says the acquisition will make book publishing more competitive and help both authors and readers. With a twist, he cites Amazon’s fast-growing book publishing business as an example of fierce competition in the industry.

Lin’s criticism of both Penguin Random House and Amazon reflects an influential view among left-wing economists, public officials and lawyers that America has corrupted its approach to big companies, especially digital vendors. The criticism is that the consolidation of industries such as airlines, banking, digital advertising, news media and meatpacking harms consumers, workers and citizens.

Some Republican politicians agree with leftists in seeking more government restraint on digital superstars. Congress has been debating a bill that could require sweeping business changes for Amazon and other tech giants, though it is not expected to become law immediately. Similar laws have passed elsewhere in the world.

Chris Sagers, a law professor at Cleveland State University who has previously written a book about government antitrust lawsuits in the book industry, told me the outcome of this case probably won’t matter much. In his view, the book industry is already underpaying readers and wages. He believes Amazon and book publishers have been allowed to grow too big and powerful.

This book publishing legal issue is a window into a decades-long and long-overdue solution to deep-seated problems in the American economy.

“There is a significant consolidation in markets everywhere,” Sagers wrote in an email. “Once you let an economy get to that point, there’s very little that any antitrust law (or other regulatory intervention) can expect to do.”

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  • Crypto now sad but not worried. My partner David Yaffe-Bellani writes about people who have sounded the alarm about fraud in the cryptocurrency market, but insists that Bitcoin will change the financial system. David explains that these believers want cryptos to escape from unsustainable mania and return to some of its original ideals.

  • Failures of organ transplant technology: The system that coordinates organ transplants in America relies on outdated technology that breaks down within hours and puts patient care at risk, The Washington Post reports. A White House review draft concluded that the government should order a full overhaul of the nonprofit agency that operates the transplant system alone. (Subscription may be required.)

  • Imagine you are a cat. no more. That’s the game. New York Times opinion writer Jay Caspian writes about Kang’s love for the video game “Stray.” Orange Cat, a game in which the cat performs tasks such as jumping in boxes, is part of the debate over whether we want games to be realistic or emotional, he writes.

    Related: he said A Twitter account that posts real cats of people responding to the game.

A classic scene from the movie “Singin’ in the Rain”, but with Velociraptor instead of Gene Kelly. (Thanks to my colleague Jane Coston (to share this tweet.)


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