Status, interrupted

Over the next few months, the Labour government has an opportunity to reshape the UK books market fundamentally. Ironically, we can thank the past prime minister Rishi Sunak for this, as well as Sunak’s successor as leader of the Tory party Kemi Badenoch. At the tail end of the Sunak government, the Digital Markets, Competition and Consumers Act 2024 was passed, enabling, among other things, the government to designate certain technology companies as having Strategic Market Status, meaning that it can impose additional regulations on them.

These new rules are not to be underestimated. I have heard them described as “extraordinary” in their reach and scope. In short, they give the government an unprecedented opportunity to level the playing field in the kind of spaces where innovation can so often lead to market dominance. Think Google, Microsoft, and, of course, Amazon.

The latter agreed. In its written evidence as the bill progressed, Amazon argued that the model the UK was proposing was “entirely new and novel”, contending that it provided the Competition and Markets Authority (CMA) with “broad powers and wide discretion on how they are used”, with “little in the way of corresponding constraints or guardrails”. Apple wrote that the law provided “unbounded discretion in setting governing requirements for businesses” that might harm innovation and limit choice. Microsoft took another angle, worrying that the bar for intervention was set too low, and could kill off new developments, particularly around AI.

For the UK book business, the new competition rules are like catnip

For the UK book business the new rules are like catnip. Just recently, I heard Amazon likened to the East India Company, that giant corporation of ill-repute that in the 18th century had grown so powerful the British government had to restrict how it could operate. There are other less emotive examples, but the important thing from our perspective is that Amazon is not given a pass simply because its market position can appear, on the surface at least, narrower.

In its submission, the UK Publishers Association pointed to Amazon’s “entrenched market power”, highlighting how it can use its leverage to de-list publishers, if they don’t agree to new terms, and drive out competitors. “Firms designated with SMS will be subject to conduct requirements, including the requirement to deal on fair and reasonable terms. This can be used to tackle Amazon’s anti-competitive practices,” the PA said.

So far, the CMA has not raised an eyebrow, and it is possible that just the threat of becoming an SMS can act as some kind of drag on potential abuse. Nevertheless, this is a moment for the government to lean into this, and begin to move support for creative businesses up its own agenda. So far it is not delivering for books, with its recent budget having loaded costs onto small businesses such as publishers and booksellers, while at the same time depressing the wider economy ahead of the key Christmas trading period. Prime minister Keir Starmer is reported to be planning a reset after this first faltering six months of his government. He could begin by finishing off the work started under his predecessor.