Douglas Preston Drags Feds Into Amazon Hachette Fight

Posted on September 25, 2014

Douglas Preston is taking his war against Amazon.com to a whole new level. He's now contacted the Department of Justice to try to get the government agency to prosecute Amazon.com for antitrust violations.

The Financial Times obtained a copy of a draft of a letter Preston drafted to the Department of Justice and gave him a call. Preston confirmed that he has been in contact with the DOJ and that they are waiting to get his letter laying out his specific accusations in the case.

After the letter has been drafted it will go out to all the authors who signed the original Authors United letter. He will ask them to sign this as well. Preston is angry that the negotiations for a new ebook contract between Amazon and Hachette are still dragging on. Upcoming Hachette books are being more slowly delivered than other publishers' books. Amazon offered to waive its profits on all those books and put the monies into a trust account to hold for authors during negotiations, but Hachette refused (it would also have had to give up its profits on those books in the interim so authors would get paid).

We don't see how a hostile business negotiation between two giant corporations amounts to an antitrust violation. Antitrust cases usually consist of parties illegally colluding to fix prices (as the publishers and Apple did in the recent case) or a situation where one company is acting as a monopoly acting to the detriment of consumers and chilling competition. Amazon does sell the majority of ebooks in the U.S. So far, its actions have lowered prices for consumers and the book publishers have "unclean hands" in the ebook arena due to the recent DOJ price fixing case. Certainly the major book publishers have a problem with Amazon, because it is driving very hard bargains on contracts and wants ebook prices as low as possible. They believe the contracts are unfair.

One thing that Preston may not have thought about is the effect this letter may have on Hachette and the other major book publishers. Hachette just settled a giant lawsuit with the DOJ in which it was proven in court to have colluded to keep ebook prices artificially high. Will Preston say Amazon is beating up poor conglomerate Hachette?

He says he is writing the letter to protect small and medium selling Hachette authors. But will their interests be helped if Hachette -- and most likely the other book publishers -- are embroiled in yet another costly and lengthy Justice Department investigation? Anyone who makes such a serious allegation will need to back it up with evidence and be willing to take the time to cooperate with the investigation and possibly testify.

Self-publishing is changing the face of traditional book publishing model. Many authors are very unhappy at the royalties paid to them by major book publishers -- including Hachette. An DOJ investigation would surely include looking into this issue. Authors who publish through Amazon.com do not agree with the stand of Authors United at all. They are paid much higher ebook royalties and are paid faster.

Everyone agrees that it is extremely unfair that Hachette authors are losing book sales during the lengthy negotiations. But there is plenty of disagreement on what needs to be done about it. Now the Feds have been invited to the party. Will the Justice Department step in and save the day? We'll see how that plays out.