Is Amazon Evil?

When companies achieve a certain level of market dominance, similarly-themed complaints tend to emerge. The headline in the tech industry goes: Is Company X Evil? The evil charge usually has three components: 1) the complaints are about corporate strategy more than tactics, 2) the company is only able to execute said strategy thanks to its near-monopoly in a niche, 3) the strategy feels good to consumers in the short-term but is harmful long-term.

Apple and Google have faced the "evil" charge for a few years now. With Apple, people have raised philosophical objections about everything from its policy of approving each iPhone app to its iTunes DRM to its general closed-OS mentality that has been with the company since the beginning. With Google — and now Facebook — the rankle is over how it manages private information.

The one company that has so far been immune to the evil charge is Amazon. Probably because their customer experience is so damn flawless. But the time has come: Is Evil?

Last week, Amazon stopped selling all Macmillan books. Macmillan is one of the big publishers and it was impossible to buy any Macmillan book in print or electronic form from Amazon directly. Amazon did this in response to Macmillan's intent to price e-books above the $9.99 ceiling that Amazon maintains. Over the weekend Amazon reversed its position but the episode provides key insight into how Amazon is trying to consolidate its dominance in the industry.

Here are two outstanding posts which are long but provide essential background. Start with Charlie Stross's introductory overview of the economics of the publishing industry and how Amazon's dominance has changed things. Then read Tobias Buckell's long dispatch on the Macmillan case. Both posts were written before Amazon reversed its decision, but they are worth reading nonetheless.

This update on Amazon changing its mind contains rhetoric from Amazon that is quite misleading. Amazon is positioning itself as fighting for the customer in trying to maintain low prices for e-books, but the truth is that Amazon is loss-leading e-books for the next five years to solidify its supply chain dominance allowing it continued ability to set prices however it wishes, which screws authors and publishers and ultimately readers as well.

For all you iPad haters, see the goodness Steve Jobs has brought? Apple represents a threat to Amazon both in the device / e-reader space and in its potential to launch an iTunes-like e-books store. Competitive dynamics in a market force companies to capitulate to a more enlightened position than monopoly self-interest would advise alone.

And that is reason enough to support the iPad launch. Even if the iPad itself is not that much better than Stone 40,000 BC.

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