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Amazon’s performance in 20122012 2011 2010Absolute($bn)Growthyr-on-yrMedia($bn)GrowthMediaAbsolute($bn)Growthyr-on-yrMedia($bn)GrowthMediaAbsolute($bn)Growthyr-on-yrNorth America $34.8 30% $9.2 15% $26.7 43% $8 16% $18.7 46% $6.9 15%International $26.3 23% $10.7 9% $21.4 38% $9.8 23% $15.5 33% $8 18%Consolidated $61.1 27% $19.9 12% $48.1 41% $17.8 19% $34.2 40% $14.9 17%DE $8.7 21% $3.4* $7.2 36% $5.3JP $7.8 18% $6.6 32% $5UK $6.5 20% $5.4 38% $3.9DE+JP+UK $23 20% $19.2 35% $14.2Rest Int $3.3 50% $2.2 69% $1.3Source: SEC filings. *€2.6 billion. Estimate buchreport.Media($bn)GrowthMediaprinted books benefit from a reduced VAT, while ebookstend to be subject to the full tax (which makes a differencebetween zero for print, and 20 percent in the UK, for instance,or 7 percent versus 19 percent in Germany). In fact,Amazon charges its British customers a VAT of the full 20percent. Yet by having set up European headquarters inLuxembourg, which collects a VAT of only 3 percent for anebook, Amazon can up its margin by the difference, as itforwards only those 3 percent to tax authorities in Luxembourg.Competitors obviously consider this as a huge challenge,given Amazon’s dominance on ebooks. (Amazonmakes UK publishers pay 20 percent VAT on ebook sales,The Guardian, October 21, 2012).In Germany, the debate on tax has echoed at first lessstrongly than its expansion in both market share and scopeof services. But the perspectives have largely changed inthe first half of 2013, in the light of successful “Buy local”marketing campaigns launched by independent localbooksellers, a rising critical debate in the media on Amazon’svery modest tax paying (German overall turnover of$8.7 billion contrasted with a mere 118 million of profitsfor all its European holding in Luxembourg), together witha stand off with unions, and several strikes at its Germanwarehouses. (Frankfurter Allgemeine Zeitung, 12 July2013)Earlier developments: 2012 and beforeToday’s ebook environment can reasonably be describedas having been triggered, directly or indirectly, by thelaunch of Amazon’s Kindle reading device in 2007. The devicewas the part visible to consumers, in a much morecomplex and proprietary, highly integrated system thatconsisted of Amazon’s leading online platform for selling(printed) books in the US and most major European markets,plus China; a phone hookup allowed the direct orderingand downloading of digital books, and the agreementwith publishers—at first the Big Six in the US—tomake available a wide catalog of attractive titles under thissystem.By mid 2012, the Kindle and its successor devices, notablythe color Kindle Fire, were seen as the most popular readingplatforms for ebooks internationally, and Amazon setup localized Kindle shops via its website for not just the USbut also the UK, France, Germany, Italy, and Spain.In Japan, Amazon entered into an agreement with 40 publishers,including Gakken and Kadokawa, on the distributionof their ebooks for the Kindle in Japanese (Asahi Shinbun,May 7, 2012).In August 2012, the Kindle was also launched in India witha catalog of over 1 million titles priced in rupees, makingit the biggest ebookstore on the subcontinent.Amazon, the Kindle, and the related offers—from authorservices to lending books as a prime customer (availableso far only in the US)—form an increasingly integratedsphere, of which significant parts are not available via otherplatforms. This connection is demonstrated by Amazon’sclaim that 180,000 Kindle-exclusive titles are nowavailable on that lending library, and altogether Kindleexclusivetitles have seen over 100 million downloads bylate August 2012 (press release, August 28, 2012).The Global eBook Report 83