Amazon has used the most-favored-nation clause in its ebook contracts with authors and publishers to guarantee it cannot be undersold. This clause may not have originally been Amazon's idea, but it has proven an effective tool at stifling competition.
And soon it could be going away. Bloomberg reports that Amazon is prepared to drop this clause as part of a settlement of a European Union probe into its ebook deals with publishers.
Amazon won’t enforce clauses that required publishers to offer it terms as good as or better than those they sign with other e-book distributors and will avoid them in future contracts, the European Commission said in a e-mailed statement that outlined details of the company’s offer to settle the investigation. The pledge would last five years and would allow publishers end contracts that link e-book discounts on Amazon to e-book prices on other online stores.
The EU is asking publishers to give feedback in the next month before it can move toward closing the case without levying fines or declaring that the company breached antitrust rules. Companies that break commitments offered to the EU can be fined as much as 10 percent of global revenue.
Amazon recently settled another investigation into its audiobook subsidiary, Audible, by abandoning the exclusive distribution deal with Apple.
That decision is expected to boost competition in the audiobook market, and the MFN settlement might have a similar impact in the ebook market.
Unfortunately, Amazon is so hyper-dominant in the ebook market that this will likely have little effect.
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