Amazon, Publishers Sued For Antitrust Violations Over DRM By Angry Indie Bookstores

from the that-could-make-things-interesting dept

Dennis S. was the first of a bunch of folks to send in the news of a class action lawsuit recently filed by a bunch of independent booksellers against Amazon and the "Big Six" publishing firms arguing that Amazon's ebook DRM (and the agreements from the big publishers to use it) effectively violates antitrust law. Just about a year ago, we noted that the publisher's annoyance that Amazon was such a dominant player in the market was really their own damn fault for insisting on DRM, which really locked people into Amazon's platform and made it very hard for anyone to check out and move elsewhere. It was particularly stupid since they already had seen how the same thing helped Apple dominate in the music space.

This new lawsuit, however, could certainly shake things up quite a bit.

The logic of the bookstores' argument is this. When it launched the Kindle in 2007, Amazon convinced publishers to sell ebooks with DRM on its platform. The Kindle then became the dominant e-reader. You can't read ebooks with Amazon DRM on any e-reader but a Kindle, and you can't read any ebooks with DRM on a Kindle that doesn't come from Amazon. The plaintiffs argue these agreements and practices violate sections 1 and 2 of the Sherman Antitrust Act: anticompetitive restraint of trade (together with the publishers) and monopoly power, respectively.

But what about Nook, Apple, Google, Sony, Kobo? The booksellers claim that Amazon controls at least 60 percent of the ebook market, with Barnes & Noble at 27 percent and Apple's iBookstore at less than 10 percent. But note that none of Amazon's top competitors sell ebooks without DRM. It's suggested here that part of the publishers' nonpublic agreements with Amazon stipulate that the publishers won't sell any non-DRM copies of the same books sold for Kindle.

Where it gets potentially interesting is that one of the remedies the book stores are seeking is:

... an injunction prohibiting AMAZON and the BIG SIX from publishing and selling e-books with device and app specific DRMs and further requiring the BIG SIX to allow independent brick-and-mortar bookstores to directly sell open-source DRM e-books published by the BIG SIX

and

... an injunction prohibiting AMAZON from selling DRM specific, or non-open-source, dedicated e-readers, alternative e-reader devices, and apps.

Frankly, it would certainly be an interesting result if Amazon was barred from using DRM, but this lawsuit has almost no chance of succeeding. There are a few significant problems (and the bookstores don't seem to know what "open source" means despite using it a few times). Also, this impression that Amazon forced the publishers into DRM is, as far as I've heard, the opposite of reality. The publishers demanded DRM because they were freaked out over "piracy" of ebooks. There are a few other oddities in the lawsuit that suggest that the bookstores are (perhaps justifiably) angry, but it's not clear that they actually have a lawsuit.

Filed Under: antitrust, book stores, drm, ebooks
Companies: amazon