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Amazon to Give Up MFN Clause to Settle EU Probe Over eBooks Contracts?

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.

image by puuikibeach



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KS "Kaz" Augustin January 25, 2017 um 11:58 pm

Hmmmm, I don’t know Nate. With this clause being kicked out the door, it means that authors can selectively set discount campaigns on other sites without Amazon price-matching. It could actually be a good strategy to boost, say, Kobo sales in order to appeal to those readers in non-Amazon countries. (There are a few of us around.)

I know authors have been dismayed by KDP Select actions in the recent past. With the obvious head-hunting over that Amazon competition you mentioned a couple of days ago, and now the booting of the MFN clause, this may end up being the year of the perfect storm for Amazon.

What next? A move to EPUB for Kindle? (You remember when they stated that then walked it back.) If they do that, you’ll know they’ve become desperate.

KS "Kaz" Augustin January 27, 2017 um 4:04 am

Just to put relevant info in one place, Amazon is also losing its patent on "1-Click" this year. So from May(?)-ish, other retailers will also be able to offer "1-Click buying" at their websites.

I know that each factor by itself may not mean much to Amazon, but all of them together?

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