Oui, Oui: How Amazon Is Pissing Off the French Government

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France — land of red wine, baguettes, and the Louvre — has found itself locked in a pissing contest with American retail giant Amazon (NASDAQ:AMZN) over delivery fees. French lawmakers, in an effort to support small, independent book sellers, passed a law banning free shipping policies, a policy that is being called the “anti-Amazon” law.

France is home to one of the world’s most robust book markets, boasting more than 3,500 traditional shops, 800 of which are independent. So it make sense that the government would be looking out for its interests, especially from large, foreign competitors like Amazon.

While a law banning free shipping is something that is incredibly difficult for Americans to wrap their heads around, the French have become accustomed to protectionist legislation. In 1981, small booksellers were the beneficiary of another law that has banned discounts of more than 5 percent of a book’s cover price for new releases. This, like the anti-free shipping law, was put into place to give smaller shops a leg up.

But Amazon isn’t sitting back, letting the French government one-up it. Instead of abiding by the new law, the company has rolled out a policy that’s ingenious in its simplicity: shipping for 1 cent. While it seems petty and trivial, it is sure to ruffle feathers in the French government, members of which are afraid Amazon will undercut smaller booksellers, even if the company has to do it at a net loss.

“Once they are in a dominant position and will have crushed our network of bookshops, they will bring prices back up,” said French Culture Minister Aurelie Filippetti, according to French news site France 24

French government numbers indicate an overall drop in book sales in 2012 to the tune of 4.5 percent from 2011. Growth of online book sales is also on the rise, comprising 17 percent of all book sales in France in 2012, up from 3.2 percent in 2003. Is the fear on behalf of French lawmakers justified? Sure. Amazon has shown that it is quickly moving to become a Wal-Mart-like behemoth in online retail, and legislators have a vested interest in protecting their small businesses. 

So what to make of Amazon’s move against a law that was constructed to single it out and take a bite out of the online retail giant’s business? Well, it’s hard to blame the company for firing back. Just imagine the backlash if American lawmakers announced a law banning free shipping of anything, simply to try and take a shot at a single business. Although there would surely be segments of the population that would cheer some sort of similar regulation against giant corporations in the States, free-market activists and conservatives would likely blow their collective tops at the mere thought of such a policy.

What will the fallout be from the passing of the French law? It’s hard to say right now, but it’s clear Amazon is not willing to take it lying down. TechCrunch has taken a look at the issue, and the publication boiled it down to a question of whether the law goes too far or not far enough. The news outlet takes the example of Apple’s (NASDAQ:AAPL) e-book price fixing in its iBookstore, which essentially allowed publishers to fix their own prices.

Publishers had to take that set price and use it in other e-book stores, as well, including Amazon’s Kindle store. The Department of Justice eventually got involved as fears of collusion between publishers grew. The matter has been settled since, with Apple being found guilty, but it provided some interesting insight into the inner workings of the book industry.

TechCrunch notes the case because it ultimately led to a monopoly, since Apple’s “agency model” was struck down by the courts. But in France, lawmakers are leaning the other way: toward protecting the little guy. Protectionist laws have had an effect in the French market, as the nation’s second-largest book chain ended up filing for bankruptcy last winter.

What will come of the spat between Amazon and the French government? Probably just some irritated politicians and many frustrated booksellers in France. Amazon took a very “American” approach to solving the free-shipping ban, and it’s sure not to go over well with French lawmakers.

One certainty is that it will be interesting to see if the French up the ante even more, and if Amazon is willing to continue fighting with them into the future.

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