Texas AG Looks Into Price Fixing Antitrust Questions Surrounding Ebooks

from the had-to-happen dept

Thu, Jun 3rd 2010 4:13pm — Mike Masnick

As many of you surely know, earlier this year, there was a bit of a fight between publishers and Amazon over ebook pricing, which resulted in Amazon backing down from its "all ebooks at $9.99" policy, and publishers getting the ability to raise the price on ebooks. The whole thing seemed a bit odd, and smacked of price fixing and antitrust (potentially collusion). Apparently I wasn't the only one who thought so. Nastybutler77 points us to the news that the Attorney General in Texas is now investigating the issue. The theory is that it's an investigation into Apple's practices -- which could fit with the Justice Department's own investigation into potentially anti-competitive practices by Apple. But, I'm wondering why the focus isn't more on the book publishers. It used to be that retailers got to set their own pricing, and vendors requiring retailers to set a certain price violated price fixing laws. Recent case law has backed away from that concept, though I'm still not sure I understand why.

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Filed Under: antitrust, ebooks, price fixing, pricing, texas
Companies: amazon, apple

11 Comments

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senshikaze (profile), 3 Jun 2010 @ 4:27pm

I know why: publishers have money. and very quickly judges have money too, if the descision goes the publishers way. it is very simple.

When all else fails, screw the consumer.
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some old guy, 3 Jun 2010 @ 4:42pm

Re:
that makes sense because amazon is broke.

...wtf?
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Anonymous Coward, 3 Jun 2010 @ 4:57pm

Thank God I'm a pirate.
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Anonymous Coward, 3 Jun 2010 @ 4:57pm

I read that article, and is it just me or are they investigating the wrong company? The only thing apple is guilty of is walking in and saying, "Okay, I'll let you have your way.", to the publishers.

Here is what probably happened, and is much more realistic. Apple wanted to sell ebooks on the ipad so it went to the publishers, the publishers decided that they could get a better deal from apple who isn't in the ebook market, so they came up with the publisher set pricing scheme. Once apple capitulated and before the ink was even dry, publishers then went and threatened the other retailers into accepting similar terms to the Apple deal. If other retailers didn't follow along it was no big loss to the publishers as Apple would be coming along in a couple months to sell product once their store got up and running. Amazon and the like got screwed because if they didn't accept similar deals the publishers would cut them completely out of the Ebook market and distribute through the only retailer who would give them terms they liked.
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Anonymous Coward, 3 Jun 2010 @ 5:26pm

Not retailers
Part of the change that was forced on Amazon (and Apple and apparently all of the other ebook stores) is that they are no longer retailers, they are now agents of the publishers. So rather than buy the books from the publishers at wholesale prices and selling them for whatever they want, the publishers set the price and the store sells the book and sends a fixed amount back to the publisher. So rather than owning the books while they are in the store, Amazon gets them basically on consignment. This is how the publishers get to control the retail prices.
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Anonymous Coward, 3 Jun 2010 @ 6:14pm

Re: Re:
I would say Amazon, being a non incumbent and having less experience in terms of how to game the system, is less predisposed to gaming the system at the moment. Usually it's the long term incumbents that game the system most effectively, Amazon is still new and mostly criticized by the much wealthier and more influential incumbents that don't like them.
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Anonymous Coward, 3 Jun 2010 @ 6:16pm

Re: Not retailers
"Part of the change that was forced on Amazon (and Apple and apparently all of the other ebook stores) is that they are no longer retailers, they are now agents of the publishers."

Wouldn't that depend on the specific contract between amazon and the publishers, or are you saying that our broken legal system requires this?
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Anonymous Coward, 3 Jun 2010 @ 7:46pm

Re:
But the consumer has ultimate choice here. It's not like it's food, utilities, rent we're talking about.

One can easily get their media elsewhere.
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Anonymous Coward, 3 Jun 2010 @ 8:55pm

Re: Re:
But consumer choice over what to buy does not stop a broken legal system from unfairly punishing the wrong company for no good reason, punishment that will invariably benefit punishment deserving incumbents who do not receive such punishment because of their lobbying efforts and campaign contributions.

Politicians have made it clear that if you don't sufficiently waste money on their campaign contributions they (or the federal agencies they appoint) will unfairly pursue your detriment or destruction. This is not how the legal system ought to work.

Yes, consumers/the public have ultimate voting power and that's the whole point of this discussion, to convince the public to vote out these bogus politicians and vote in more reasonable ones.
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Christopher Weigel (profile), 4 Jun 2010 @ 6:45am

Re:
...And this is why price fixing is a) frowned on, and b) pretty easy to set up.
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lrobbo (profile), 12 Jun 2012 @ 11:40am

Too easy to set up.
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