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Originally Posted by SleepyBob
I don't get your argument. The fact that they may have been planning to do this "forever" doesn't make it not a loss leader. Nor does the amount of profit per sale that they decide to forgo in the process.
A loss leader is "a product sold at a loss to attract customers". This seems to fit the definition perfectly. They sold a subset of best sellers at a loss in order to attract customers. If I know that Amazon will always have the best price on the new book I want, then I'm more likely to go there to buy it, in the process becoming more comfortable with their website and process, all of which guides me to go to them for other purchases.
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Amazon was doing it for a couple of reasons.
First, they were following their own business model of locking customers into the company store. Getting customers to buy kindles meant that customers would buy from the kindle store. Nothing illegal or particularly wrong with that.
Second, they were trying to establish the price of eBooks in the customer's mind. They were setting the bar at $10 for a NY Times best seller, with the intent that once they had that price set, they would go back to the publishers and pressure them into lowering the price for all eBooks. This would destroy the publishing industry, but they were following the Walmart business model of forcing prices down and making the suppliers eat the losses. The issue was that they already had most of the market and actions that are normally legal can be illegal if you are in that position. As the judge said, Amazon was quite likely violating anti-trust law in their actions.