AfterDawn: News

Amazon, Apple accused of fixing e-book prices

Connecticut's Attorney General Richard Blumenthal seems to think that Apple and Amazon may be enjoying an unfair advantage in the e-book market and has accused the two companies of price fixing.

Blumenthal has requested meetings with the tech giants in an effort to discuss the deals they have with massive e-book publishers Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin.



The AG says both companies have deals with the publishers that promise them the best e-book prices over any competition.

Such "most favored nation" clauses blocks the publishers from offering discounts deeper than what Apple or Amazon receives. While the deals are not illegal under current antitrust laws, they certainly fall into a gray area.

"The concerns are compounded, and hence potentially more troublesome, since this arrangement appears to be something that will be agreed to by the largest e-book publishers in the United States and two competitors who combined will likely command the greatest retail e-book share," Blumenthal added, via CNNMoney.

Written by: Andre Yoskowitz @ 2 Aug 2010 23:55

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• 4 comments

• KillerBug

  I doubt there is any case; large volume price cuts are the standard already. The only difference here is that there is no physical product to build, ship, stock, and reship to the customer.

  2.8.2010 23:58 #1

• SomeBozo

  Originally posted by KillerBug: I doubt there is any case; large volume price cuts are the standard already. The only difference here is that there is no physical product to build, ship, stock, and reship to the customer. I completely agree with KillerBug, My take on the whole e-books issue is brick and mortar stores are seeing e-books and the like taking a huge bite into their market shares. Forgot where i read it but was around Mar/Apr that noted Barnes and Nobel are posting huge losses with no hope in sight to remedy their sales slump cause specifically from e-book readers... My guess this is just a sign of the times if you can't complete with a viable product sue....
  

  3.8.2010 00:53 #2

• KillerBug

  One other thing...price fixing is not related to the price that the store pays.
  
  Price fixing is when two or more companies with the same product get together and say, "Lets both sell this for an insane markup, and that way we make more money than we would with a price war". It is illegal for a reason, and it tends to cause the downfall of corporations, but it does make the monthly revenues look better (the ones that bonuses are based on).
  
  If you could get $10,000,000 for making this month's numbers look better than last month's numbers, and you also know that you will not be penalized for next month's numbers being low because of your actions, then I bet you would do it.

  3.8.2010 05:08 #3

• vurbal

  I don't know why they would be talking to Amazon and Apple. It's the publishers who insist on setting retail prices and the wholesale deals are their incentive to get retailers to do what they want. Macmillan, in particular, offered Amazon a lower price on ebooks so they would sell them at a higher price and refused to do business with them if they didn't take the deal. Amazon was willing to take a loss to set their own prices. If there's any price fixing going on, the publishers are behind it.
  

  Freedom of speech is ultra important so stupid people will make their stupid statements so we know how stupid they are.
  
  - Ted Nugent

  3.8.2010 11:39 #4