Amazon Sued Over Its Dominance of the eBook Market (Finally)

News broke this week that Amazon is being sued for colluding with five major publishers to inflate prices. The case was filed by the same law firm that lead the lawsuit against the Price Fix Six back in 2011.

The law firm of Hagens Berman is accusing the world’s largest retailer of colluding to artificially inflate the retail price of e-books through anticompetitive agreements with the nation’s five largest book publishers.

This is a fancy way of saying that the Agency 2.0 contracts, which gave publishers control over their ebook prices, were negotiated conspiratorially, and that the MFN clauses in those contracts illegally helped keep Amazon in a dominant position in the US ebook market.

This case has been well-covered elsewhere, so I will merely link to various sources before getting into a discussion.

Here’s the biggest problem with this lawsuit:

Five independently negotiated contracts does not a conspiracy make.

That, folks, is the Achilles heel of this lawsuit. I agree that consumers were harmed by these contracts, yes, but this lawsuit makes a big deal about a conspiracy without presenting any evidence that Amazon conspired.

Sure, that information could come out later, but it probably does not exist. Amazon is well-known for keeping its negotiations so secret that parties are not even allowed to talk about the process, much less the terms agreed to or the information exchanged.

And these lawyers think Amazon conspired with publishers?

Pull the other one, it has bells on.

Furthermore, while I want this lawsuit to be decided in favor of consumers, it probably won’t result in the contracts getting tossed. That is my desired goal, but I don’t see it happening. (Unless of course Amazon also wants the contracts thrown out, so it settles the suit and switches sides in the lawsuit.)

In any case, we are in for a very entertaining 6 to 8 months.

image by luckypines via Flickr

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader. He has been blogging about indie authors since 2010 while learning new tech skills weekly. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

11 Comments

  1. Disgusting Dude15 January, 2021

    Summarily dismissed with prejudice in a lot less than that.

    All it takes is a copy of Judge Cote’s Antitrust ruling, documenting the declining market share of the “Big Four”, and a blank page listing what the other big tetailers have done to compete with Amazon. That’s without pointing out Amazon was the last retailer to willingly adopt agency, which isn’t consistent with conspiracy but is consistent with Amazon going all “b’rer rabbit” on the big publishers to get them to provide a pricing umbrella for APub and Indies. As if, “If you want Agency in the worst way…”

    Reply
    1. Disgusting Dude15 January, 2021

      BTW, there *is* an anti-consumer case to be made against a unit of Amazon.com but it’s not KDP. It’s Audible.

      And AWS just crossed a line that is, if not necessarilly legally actionable, is ethically problematic and is already raising hackles in Europe. That one is going to haunt the entire tech industry.

      Reply
      1. Xavier Basora16 January, 2021

        Disgusting dude,

        What exactly did Audible do?

        xavier

        Reply
        1. Disgusting Dude16 January, 2021

          What haven’t they.
          Nate has documented a lot of what they’ve done.
          Try a search here. (upper right)
          The most recent is charging $8.95 for free podcasts unless the customer signs up for a “subscription”.
          https://www.theverge.com/2021/1/6/22216803/amazon-audible-subscription-podcast-advertisement

          It’s not necessarily illegal but it is sleazy.

          Imagine if KDP charged for permafree titles…

          Reply
          1. Xavier Basora16 January, 2021

            Disgusting Dude

            Thanks.

            xavier

            Reply
  2. […] I reported last Thursday that a class-action suit had been filed against Amazon, accusing them of conspiring with publishers, I apparently had missed that the state of Conn. is […]

    Reply
  3. Allen F17 January, 2021

    How quickly they forget …

    Amazon never wanted agency pricing, that was the game Apple and the big5 thought would hurt Amazon and make them more money.

    Before agency Amazon discounted ebooks – the publisher got their full share as any discount came out of Amazon’s profits.

    Apple was making noises that it wanted to sell ebooks too – but they didn’t want to have to eat any discounts to compete with Amazon. So Apple and the qig5 got together and came up with the agency pricing. It was a full on conspiracy – the DoJ even stepped in, seems this would cost the consumers more money than the old system. The qig5 quietly paid their fines with Apple being the only one stupid enough to try to fight it in court.

    The next time contracts came up the first of the qig5 (started with a ‘M’ as I recall) tried to play games with Amazon – only to discover Amazon wasn’t interested enough to play games in return. No agreed to and signed contract meant Amazon couldn’t legally sell their books – oops! The other four watched the action and the second was quick to sign a new contract before their old one died and that was the end of that. And they got the agency pricing they had been demanding, so now only ‘they’ could discount their ebooks – and unlike before they were the ones that would eat that discount. Which they don’t do. So their ebooks are overpriced because they set too high a price and only they can discount them.

    I do remember laughing when the qig5 tried to blame Amazon for agency pricing and the poor sales of their overpriced ebooks. And Apple? Not pushing/selling a lot of ebooks because they wanted an advantage over Amazon – not a level playing field.

    While I’ve heard bad things about the games Amazon’s Audible plays (easy returns so the author gets zip), I haven’t been following it that closely because I’m not playing in that sandbox.

    (For those wondering about the ‘qig5’, in a couple posts I’d called the big5 the ‘pig5’, lowering the bar. A few people commented that I was insulting pigs everywhere, so I just turned the p around into a q – no qigs have protested so far … 😉 )

    Reply
    1. Disgusting Dude17 January, 2021

      People forget what they don’t want to remember.
      As for the 2014 catfight, Hachette was refusing to negotiate, waiting for the next contract to expire so they could gang up on Amazon like in 2011. A letter from the DOJ warning them publishers they had agreed to negotiate independently and any further coordination would be an instant antitrust violation ended thd catfight. The publishers got agency but it came with escalators. The higherthe price, the lower tbe publisher cut.

      Since then, they have been pretending Amazon forced *them* to stay with agency once their pricing shrunk their sales and grew everybody else’s. Can’t admit they did it to themselves…

      Reply
  4. Andrew22 January, 2021

    Amazon makes the best affordable ereader, has a huge selection of cheap books, and has the best customer service online. That is why they lead. It must stink to compete against them, but as a consumer, they earned my business.

    I started ereading with others, but they were a nuisance by comparison.

    Reply
  5. Giving Up27 January, 2021

    […] Interesting sidebar item? Kindle being sued just like Apple was, for price fixing and monopoly, […]

    Reply
  6. […] It took 3 weeks longer than I expected, but the Big Five Publishers have been named as co-defendants in the Amazon ebook price-fixing lawsuit. […]

    Reply

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