Amazon Possibly Behind Justice Department e-Book LawsuitBy: Mike Fossum - April 16, 2012
When the Justice Department filed an antitrust lawsuit against Apple and other major publishers for allegedly banding together to drive up book prices, Amazon was named several times in the 36-page complaint. The company was named so repeatedly, roughly 90 times, that some speculate that Jeff Bezos and Co. might’ve prompted the suit in the first place, and the retailer likewise looks to be the sole beneficiary of the Justice Department’s decision to proceed.
While the U.S. federal government is suing Apple and book publishers Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster, on the assumption that they’d worked together to raise the prices of e-books, three of the merchants so far have settled and restored discounting options to Amazon – but Apple, along with other publishers, filed their own federal complaint against Amazon on behalf of consumers, stating that the online retail giant is threatening their “traditional position as gatekeepers of the publishing world.” Amazon CEO Bezos’ response to the matter was “even well-meaning gatekeepers slow innovation,” as quoted in his annual letter to shareholders Friday.
Apple and the publishers named in the suit were trying to stop Amazon from selling digital editions of new releases for $9.99, which cuts into profits for new hardcovers. Apple has been important to publishers, as before the launch of the iPad, Amazon controlled 90% of the e-book market – but as the iPad became popular, publishing executives were able to negotiate with Apple in order to set new release prices to whatever they’d like. This drove new book prices up to $14.99, with Apple taking 30% of the profits. The federal complaint states that this cost consumers tens of millions of dollars that they otherwise wouldn’t have had to pay. As of now, Amazon controls 55 to 60% of the e-book market, against Apple’s 10 to 15%.
Suffice it to say, publishers aren’t happy with Amazon, who is benefitting from the lawsuit. The aforementioned three publishers who are settling, Hachette, HarperCollins and Simon & Schuster, were given a deal to where Amazon would be able to sell their books at discounted prices for at least 2 years. Digital media consultant Bill Rosenblatt states, “publishers are really, really angry over this, and not just because they’ve been sued. They’re also angry because this gives a lot of power back to Amazon.”