Amazon faces class-action lawsuit over eBook pricing

[Pajamaman]

https://the-digital-reader.com/2020/...ot-audiobooks/

To further muddy the issue, the UK government already did not charge VAT on print books.

[j.p.s]

Originally Posted by Pajamaman

Thx. I recall reading the thread at the time. However, I was hoping to find some mainstream report on the news. Does anyone have anything?

The first post in that thread has a link to the government announcement, which should be more authoritative than a news site.

The thread has links to a variety of sites. One of the topics of the thread was the lack of mainstream attention at the time.

[leebase]

Originally Posted by darryl

Competition does tend to do that.


I highly recommend you actually read both the original court decision and the appeal. Here is the relevant quote from the Appeal decision:

It's exactly what I and many others have been saying, and which the dissenting opinions ALSO say.

The notion that putting all the best sellers...the most profitable books during their most profitable window....on sale below cost (or even wholesale) is not merely a "loss leader".

The court made it's decision, but it was a bad decision, and it was not a unanimous decision.

They don't think it was a barrier to entry. Really? You want to enter a market where the top 100 books to sell are sold by the competition at a loss...forever?

This isn't "Walmart is selling the latest Harry Potter book for $9.99" to get people into the store to buy other products. This is the entire NYT Best Seller's list -- always.

And it was changing the concept of "a new book costs $25-$30"....to "New books cost $9.99"

The publishers are supposed to compete against the other publishers....not have one of their distributers destroying their business model.

[Tarana]

Originally Posted by Barbara1955

LawSuit should be against the big 5! Since the Last time this happened the Doubled the cost of my Fav Authors! I havent read a Fav author in Years do to prices...

You need EreaderIq.com. Most authors have specials now and then.

[SleepyBob]

Originally Posted by leebase

It's exactly what I and many others have been saying, and which the dissenting opinions ALSO say.

The notion that putting all the best sellers...the most profitable books during their most profitable window....on sale below cost (or even wholesale) is not merely a "loss leader".

The court made it's decision, but it was a bad decision, and it was not a unanimous decision.

They don't think it was a barrier to entry. Really? You want to enter a market where the top 100 books to sell are sold by the competition at a loss...forever?

This isn't "Walmart is selling the latest Harry Potter book for $9.99" to get people into the store to buy other products. This is the entire NYT Best Seller's list -- always.

And it was changing the concept of "a new book costs $25-$30"....to "New books cost $9.99"

The publishers are supposed to compete against the other publishers....not have one of their distributers destroying their business model.

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.

[pwalker8]

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.

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.

[SleepyBob]

Ah. I missed the "not merely" part of your post.

[Pajamaman]

Originally Posted by j.p.s

The first post in that thread has a link to the government announcement, which should be more authoritative than a news site.

The thread has links to a variety of sites. One of the topics of the thread was the lack of mainstream attention at the time.

I was looking for discussion of it in the mainstream press. I don't know which I find more shocking, publishers pocketing the value of VAT (i.e. stealing from ebook consumers), or the total lack of mention of it in the mainstream news.

Scratch that, it's number 2. Why didn't mainstream sources discuss this? They should have been all over this.

[murraypaul]

Originally Posted by Pajamaman

Scratch that, it's number 2. Why didn't mainstream sources discuss this? They should have been all over this.

Really, you think this should have been front-page news?

I think you overestimate the importance of eBooks.

To put it in perspective, the cut was announced on 30th April. By that point more than 500 people a day had died of Covid in the UK every day in a row for a month. The Prime Minster had only returned to work after recovering from Covid a few days earlier.

People have more important things to worry about.

[DiapDealer]

Originally Posted by pwalker8

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.

Calls for speculation.

[darryl]

Originally Posted by pwalker8

As the judge said, Amazon was quite likely violating anti-trust law in their actions.

Presumably the dissenting Judge. Citation please.

[darryl]

PG at The Passive Voice Blog has some interesting and well informed comments on the actions of Apple and the Publishers.

Amazon Price Collusion Action

This is a relevant extract:

Such collusive price-fixing was and is, of course, wildly illegal under US antitrust law. In PG’s transcendently-humble opinion, only rank stupidity on the part of publishers and complete arrogance on the part of Apple’s highest execs can be concluded from such a stupid move.

PG is acquainted with some attorneys who work or have worked for Apple and is confident that if Apple execs had consulted inside or outside counsel, they would have been informed that it was a dumb thing to try and had a high probability of being slipping out into the light in one way or another.

Shortly after the suit was filed, each of the publishers caved, paying a fine and agreeing never to fix ebook prices again. Apple fought the matter and lost in the trial court, the US Court of Appeals and the US Supreme Court.

Some here seem to purport to know the motives of Amazon without troubling themselves about little things such as evidence. I set out the findings by the Appeal Court on the evidence in an earlier post in this thread. Basically, Amazon adopted a classic "loss leader" strategy.

The theory advanced here by at least one poster seems to be that the incumbents controlling a market, in this case the large publishers, were entitled to engage in a price fixing conspiracy to protect their prevailing business model. Innovators in a market routinely challenge and destroy existing business models. The result should this type of vigilantism be allowed would seem to be to stifle innovation and damage consumers.

[Pajamaman]

Originally Posted by murraypaul

Really, you think this should have been front-page news?

I think you overestimate the importance of eBooks.

To put it in perspective, the cut was announced on 30th April. By that point more than 500 people a day had died of Covid in the UK every day in a row for a month. The Prime Minster had only returned to work after recovering from Covid a few days earlier.

People have more important things to worry about.

You exaggerated what I said. I never said front-page news. I said not even discussed. Never mind not even discussed. It was not even mentioned. I find this startling, and I'm surprised that you don't. Consider all the Amazon attack pieces that get published in the mainstream press. Yet when the print corporations quietly "pocket" a whopping 20% saving without passing on a penny to consumers, not one media outlet says a word. That is shocking.

[pwalker8]

Originally Posted by darryl

Presumably the dissenting Judge. Citation please.

I though you said that you had read it.

https://www.leagle.com/decision/infco20150630133

"Amazon's 90 percent market share constituted a monopoly under antitrust law. See, e.g., Am. Tobacco Co. v. United States, 328 U.S. 781, 797, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946) (characterizing as "a substantial monopoly" a market share of "over 80% of the field"); 3B Areeda & Hovenkamp, Antitrust Law ¶ 801 (3d ed.2008). Amazon's below-cost pricing was a barrier to entry by Apple in 2009, when it contemplated entry into the e-book retail market via the iPad.2 Apple I, 952 "
...
" The majority asserts that Amazon's below-cost pricing was limited to only a small loss on only a small percentage of its sales. Id. at 327 (for the Court). These observations are apparently drawn from a submission by Amazon, downplaying the anti-competitive effects of its monopoly-protective pricing. The district court did not rely on these statistics, presumably because they are misleading and self-serving: they ignore that the minority of titles comprising new releases and bestsellers naturally have an outsize impact on the industry. Accordingly, the district court found that the below-cost pricing had consequences on the market, namely that a new entrant would run the risk of losing money if it tried or was forced to match Amazon's pricing to remain competitive. Apple I, 952 F.Supp.2d at 658."
...
"Apple took steps to compete with a monopolist and open the market to more entrants, generating only minor competitive restraints in the process. Its conduct was eminently reasonable; no one has suggested a viable alternative."


Judge Jacobs, the dissenting judge does acknowledge that Amazon has not had a chance to dispute the facts in the case and that the fact that Amazon had a monopoly does not by itself imply illegal activity.

"I acknowledge that, in adducing facts found by the district court, this opinion unavoidably casts imputations on Amazon. Fairness requires acknowledgment that Amazon has not appeared in this litigation and has not had a full opportunity to dispute the district court's findings or characterizations. Moreover, the fact of Amazon's monopoly alone would not support an inference that Amazon's behavior was in any way unlawful."

However, that disclaimer itself points out that Jacobs is implying that Amazon was engaging in questionable activity.

[DiapDealer]

And was in the minority in that opinion.