Kindle eBooks, FDI eCommerce Policy and Amazon Marketplace – Non-compliance Continues Contd.
Amazon Seller Services Private Limited (“Amazon”) runs the eCommerce marketplace at www.amazon.in, and among other products, Amazon facilitates sale of eBooks and/or eBook subscription licenses on the platform at its Kindle eBook Store at https://www.amazon.in/Kindle-eBooks/b?ie=UTF8&node=1634753031. In my opinion, Amazon’s business and approach with respect to eBooks does not comply with the recent FDI eCommerce guidelines by virtue of the following:
- By exclusively permitting only its group company Amazon Asia Pacific (“Amazon APAC”) to sell eBooks on its marketplace;
- By giving preferential treatment to Amazon APAC’s eBook products on the Marketplace;
- By requiring authors to publish exclusively on its marketplace through Amazon APAC; and
- By bundling free eBook offers with other products and services such as Amazon Prime.
As I had mentioned in my earlier post on the subject, the objective of the FDI eCommerce guidelines is to create a level playing field not only among marketplaces, but also among vendors selling on the marketplaces. The guidelines require fair and non-discriminatory treatment, and all vendors must be facilitated and treated equally. The policy prohibits marketplaces from having exclusive product arrangements, and requires them to permit willing vendors to sell products without discrimination. For their intermediary and merely enabling role, the law offers several safe harbours, which do not make sense if marketplaces are not operating merely as facilitators and are pushing products of interest.
eBook Exclusivity of Amazon APAC
As it stands today, only Amazon APAC can sell eBooks on Amazon’s Kindle store and no other vendor can sell eBooks on the marketplace. The eBook publishing page and the vendor product page do not have any option for a seller to sell eBooks on the marketplace except through Amazon APAC. Furthermore, the eBooks on the platform are only made available in kindle (AZW and AZW3) format, which is the format required to read on kindle reading devices and applications. Amazon marketplace does not comply with the prohibition against exclusivity at the seller level by exclusively facilitating only Amazon APAC to sell eBooks and at the format level by exclusively permitting sale of only kindle format books.
Preference to Amazon APAC
Amazon APAC’s eBook products are given preferential treatment on the Amazon marketplace. Amazon APAC is given a specific store on the marketplace to sell its products, and its products are synchronized to all book listing pages. Every book listing page shows paper back format and also, kindle format along with price information. For books enrolled in Amazon APAC’s exclusive program for authors, the page shows that the book may be read for free on Kindle Unlimited, clicking on which leads one to a page that solicits enrollment in the Amazon APAC’s eBook subscription program. Assigning a specific store and pushing Amazon APAC’s business is not surprising as it is one among the Amazon group of companies, but such preferential treatment by marketplaces is prohibited under the eCommerce policy.
Exclusive Publishing on Amazon Marketplace
Amazon marketplace facilitates sale of only eBooks of Amazon APAC, which encourages authors and publishers to publish and sell eBooks exclusively on Amazon marketplace and no other place through its KDP Select program. Just one layer below the Amazon marketplace is the KDP Select program of Amazon APAC, which provides access to subscription program, marketing facilities, and price benefits in order to encourage authors/publishers to make their eBooks available only on the Amazon marketplace. At present, over one (1) million books are enrolled in the KDP Select program and are exclusively sold only on the Amazon marketplace. These books get preferential treatment over other kindle eBooks in listings on book pages. Amazon enforces this exclusivity aggressively, and goes to the extent of threatening authors of account deletion for non-compliance.
Earlier, Amazon was bundling Kindle eBook deals with other products and services. Free eBook subscription for buyers of Kindle reading devices and discounts for buyers purchasing specific products was a regular affair on the Amazon marketplace. Some of such bundling exists even today in the form of Amazon Prime services and otherwise. EBook and other electronic content is given to Amazon Prime members, who get primacy in product delivery on the Amazon marketplace. The access to Amazon Prime content and facilities is provided at a premium and is not facilitated to all vendors on an equal basis. Also, bundling content with products on the marketplaces disturbs free competition in the market.
A marketplace is supposed to merely facilitate and enable transactions between parties. The more involved they are in transactions, the less intermediaries they become. The spectrum of permissible involvement for intermediaries was always small, and it has been further narrowed for marketplaces with foreign direct investment. Unless strict compliance by marketplaces like Amazon is enforced with respect to all products including eBooks, the objectives of the eCommerce policy may not be achieved. Unfortunately, Amazon is not complying with the policy with respect to eBooks, and that non-compliance moves Amazon outside the spectrum of intermediaries, excluding it from safe harbours and exceptions afforded to marketplaces.
The views expressed in this article are personal and not those of BananaIP.