In the past week, Amazon's dispute with Hachette has escalated from being a breakdown in negotiations between supplier and retailer over discounts on books and eBooks, into front page news on both sides of the Atlantic. The story provides the perfect starting point for a discussion of Amazon's dominance of book retailing, with the word 'monopoly' freely used to describe some of its business practice by commentators. In yesterday's Financial Times, the business columnist John Gapper was highly critical of Amazon, saying:

"[I]t appears disturbingly ruthless, with a hardly disguised ambition to force other suppliers and intermediaries – including publishers and bookstores – out of business. It is a machine for squeezing margins, including its own, to near-zero in order to cut prices."

Yet unlike many other industry onlookers, Gapper proposes a solution to publishers' problem with Amazon that doesn't resort to legal redress, which he thinks is unworkable on the grounds that no US company has ever been successfully prosecuted for being an illegal monopsonist. The only way to beat Amazon, he says, is for publishers to get bigger. Rationalisation is already very high on the major publishers' agenda. Indeed the creation of Penguin Random House last year seems to have kicked off a trend that HarperCollins followed last week with the announcement it was buying Harlequin.

It is difficult to talk too generally about the drivers behind individual mergers and acquisitions as no two deals are ever the same. Penguin Random House was created to achieve the aims of "pooling resources, pursuing joint expansion, and a greater reach."  It's easy see why HarperCollins would find Harlequin attractive, given that sales increasingly cluster around genres in the fiction publishing market. Yet the other thing that size brings - especially when it comes to retailer negotiations - is weight at the negotiating table. A publisher with a few thousand titles is much less powerful than a publisher with a few hundred thousand titles.

It's also possible that one of the key drivers behind consolidation was the outcome of the antitrust case that Amazon brought against Apple and six publishers. Here Amazon successfully persuaded a judge that these publishers coming together to set eBook prices according to the 'agency model' constituted a cartel. While 'botched' in Gapper's estimation, these publishers' decision to work together was the only way they could see at the time to achieving the economy of scale they needed for Amazon to treat them as an equal. So if they can't form a bulwark against Amazon by collaboration, publishers might as well do it by acquisition.

Consolidation is a familiar practice in other sectors which, like books, depend on the high turnover of heavily discounted products, such as supermarkets and general insurance. Both are areas where small and mid-market players have been swallowed whole by their larger competitors or operate as bijou adjuncts to behemoth-sized brands. It doesn't always follow that consolidation will rob the publishing industry of its character and individuality (after all, most big publishers run imprints as federated operations within larger corporate structures) but it is a risk.

The other downside of bulk is that while it gives you heft at the negotiating table it also slows you down. Larger organisations are typically slower to respond to changing markets, and this could also be cause for concern as publisher's chief competition are now the nimble technology companies that are eager to suck up content, and at a much lower price point.

Perhaps the most insidious danger in Gapper's proposition is one that he raises at the end of his article, where he worries it will lead to the hollowing out of book publishing. At one end will be the publishing giants, squaring off against Amazon. Their size will enable them to get better terms and thus continue making a profit. But unless they throw their weight behind a competitor to Amazon (or grow their own retail model) they will merely make better money from a monopolistic environment. At the other end will be a long tail of micro and independent publishers, whose livelihoods are even more dependent on Amazon before as the dominant actor in the market. There is certainly money to be made at the moment from hitching yourself to the Amazon bandwagon - the latest tranche of data from Hugh Howey's Author Earnings report demonstrates that. But indie publishers and micro-publishers would also do well to be wary. if Amazon finds it can't squeeze profits out of the big publishers any more, then it's only logical that it will turn the screws on the less powerful actors in the market.

Ironically, Amazon's very aggression when negotiating terms with publishers is an acknowledgement that their hold over the industry is brittle. There is no shortage of start-ups, retailers and more established businesses trying to eat away at Amazon's market share. The biggest thing holding them back from achieving it is that publishers are not supporting the competition. Amazon gets preferential terms because it demands them. So why doesn't the publishing industry call its bluff and apply one discount rate card for all retailers?

Amazon's dominance over the book market is a failure of competition, and competition can't exist without the book industry's support. Until then, profit from book selling will be a zero sum game with The Everything Store firmly in control.