Thursday, February 07, 2013

Amazon: a warning in the UK parliament

And it's a serious one. From Lord Lucas, cited in the UK's parliamentiary records Hansard (hat tip: Richard Allen / Ravas):
"My Lords, I am a publisher but take a very bleak view of the future of publishing if Amazon goes unchecked-not that it will harm me, but it will kill most of the rest of the industry. Amazon is an amoral monopsony in its growth phase. It is using extremely low margins to drive market share. It is using aggressive tax avoidance to afford those low margins. It is not just us that it does not pay tax to; it does not pay tax to anybody. It is being allowed by Governments to do this because it is seen as a nice, friendly company to consumers. Indeed, in the days when I shopped with Amazon, I found it a comfortable place to shop but it is coming to dominate the book industry. It is clear that it will soon have over half of all the book trade, physical and virtual. It is causing taxpaying businesses to die."
It is somewhat reminiscent of the story of the Vestey Brothers a century ago, recounted in Treasure Islands: they were pioneers not just of international tax avoidance techniques, but also of aggressive monopoly / monopsony practices that killed competitors in markets, ending up with higher costs for consumers, lower revenues for producers, and all those profits squeezed into the low-tax middle.

And there is plenty more in this testimony worth reading. This is going to get worse and worse. (Here is one, though not the only, solution.)


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