In June, a bipartisan group of US lawmakers introduced a package of antitrust reform bills targeted at curbing anticompetitive practices in online markets. The bills followed a series of House Judiciary Committee hearings on anticompetition that began in 2019. While Congress’s investigation into digital markets and antitrust laws has focused on the five dominant online platforms collectively referred to as big tech, this is an issue that affects all parts of the economy. The renewed attention on competition in digital markets may present an opportunity to revisit the problem of anticompetitive practices in the scholarly publishing industry.
Academic and research libraries obtain the databases and journals that scholars need to study global issues like climate change and public health. In certain fields, this involves negotiating with a shrinking number of scholarly publishers who control access to an increasing portion of critical research materials. Globally, commercial academic publishing is one of the most profitable industries, with revenues of almost $10 billion in 2017. Most of this wealth is concentrated in just a few firms due to a history of mergers and acquisitions beginning in the mid-1990s; while federal antitrust enforcement agencies reviewed these transactions in due course, they did not challenge the transactions vigorously. The largest of these firms, Elsevier, had profit margins above 30 percent in 2018, rivaling Apple, Google, or Amazon—the very companies that have earned the ire of US lawmakers and inspired the recent push for antitrust legislation. Mergers and acquisitions in the scholarly communications market mean fewer companies are offering a broader range of scholarly communications products and services—such as researcher workflow, data analytics, and academic publishing—under the same umbrella.
More Consolidation: Clarivate’s Acquisition of ProQuest
Let’s consider the recently announced merger of Clarivate and ProQuest—valued at an eye-popping $5.3 billion—in the context of the current environment of antitrust laws and enforcement. The Federal Trade Commission (FTC) declared in early August that it is adjusting its review process due to the recent increase in merger filings. Under the new process, if the FTC cannot complete a review in a timely manner, it will send a letter alerting companies that the investigation is still open and that proceeding with the transaction would be at their own risk. In August, Clarivate announced that its acquisition of ProQuest was delayed due to the in-depth FTC review process. It is unclear whether the FTC will complete its review of the merger in the required timeline.
What Is at Stake When Knowledge Is Constrained by a Handful of Global Firms?
We should all be concerned about a type of gatekeeping that occurs when a handful of global corporations control access to scholarly content and drive up prices, crowding out other information sources. As large publishers expand their market dominance through mergers and acquisitions, they raise journal prices each year. For instance, analysis of ARL statistics revealed that from July 1986 through June 2015, ongoing resource expenditures—a category of spending that includes subscriptions and annual license fees for electronic and print resources—increased by 528% among public US ARL university libraries. At the same time, the consumer price index increased by just 118% from July 1986 to June 2015, illustrating that the journal price increases are substantially outpacing inflation.
Publishers use business models similar to cable companies, bundling individual journal titles into mega-subscriptions known as big deals. Just like cable bundles, some journal titles in big deals are not needed by the campus community. As publishers acquire more titles, libraries pay more for big deals, limiting the amount of funding available in the library budget for titles from smaller, independent publishers. In academic publishing each journal or database represents a unique value that cannot be replaced, but under the current model, libraries and researchers are effectively locked into working with that bundled content, limiting the horizons of our collective knowledge.
To best inform research, libraries try to acquire a rich, diverse, and interdisciplinary knowledge base—but the present situation threatens our ability to do that. This lack of diversity in research libraries’ collections is not an esoteric problem that affects researchers in obscure fields. Just as competition among online retailers leads to more choices and lower prices for consumers, competition among scholarly publishers would open up the opportunity for a variety of innovative, sustainable business models, and more options for libraries to acquire the research materials that are most needed on their campus.
Some libraries involve faculty in their negotiations, which can be a smart strategy to inform publishers of scholars’ needs, and to help others on campus understand the complexity of these deals and contracts. But at the end of the day, libraries must make difficult decisions about the best way to support research and education within the constraints of their institution’s budget and spending priorities, and the ever-increasing prices that publishers dictate. SPARC (the Scholarly Publishing and Academic Resources Coalition) tracks cancellations and renegotiations of these big deals to help libraries conduct their own negotiations with as much information and transparency as possible.
US Federal Government Ramps Up Antitrust Activity
The structural challenges presented by consolidation in the scholarly communication market are mirrored in other industries, and the US federal government seems poised to act: the Senate already passed the Merger Filing Fee Modernization Act as part of the US Innovation and Competition Act. This bill would increase resources for the two lead US antitrust enforcement agencies, the Department of Justice (DOJ) and the Federal Trade Commission (FTC), by increasing filing fees on large mergers; the bill would not solely affect big tech. Additionally, President Biden’s July 2021 “Executive Order on Promoting Competition in the American Economy” reflected an understanding that anticompetitive practices are not unique to big tech. The order covers a variety of sectors and US federal agencies, and addresses another type of gatekeeping that occurs when manufacturers restrict repair of goods that are powered by software (read more on the right-to-repair movement). The Open App Markets Act also takes aim at gatekeeping practices by Apple and Google, which traditionally give preference to their own apps; this bipartisan bill would require the companies to allow access to alternative app stores, and would prohibit unreasonable privileging of particular apps.
ARL will continue to monitor the US federal government for opportunities to elevate this issue of anticompetitive practices that limit the sharing and ongoing creation of knowledge.