In the battle of the technology business mega-monsters, Apple Inc. has lost a round to Amazon.com. On Wednesday, a federal judge in New York ruled that Apple “conspired to raise the retail price of e-books” with the aim of cutting into Amazon’s market share. The judge said Amazon may now seek damages from Apple.
The federal prosecutor in the case claimed this was a big victory for consumers. Well, maybe yes and maybe no.
Amazon has become the 800-pound gorilla in the publishing world – actually, make that 8 million. The company sells so many more books than anyone else that it has driven so-called bricks-and-mortar bookstores, both big and small, to near extinction. It may do the same to book publishers.
Because of Amazon’s enormous market clout, it can call the shots when it comes to pricing. Publishers were aghast at the $9.99 price point Amazon set for e-book bestseller. They contended that such a low price was a threat to their entire business model. Nor have they been especially happy that Amazon has aggressively entered into the publishing business itself.
It is no surprise that some of the publishers colluded with Apple to jack the price up and move their e-book business in Apple’s direction, but the Justice Department’s Antitrust Division asserted that this amounted to an unfair business practice and got the court to agree. The question is whether consumers will have actually gained anything with this decision.
Apple and the publishers may have pushed a line of legality, but just who is the likely winner of this particular game of Monopoly? When most of the bookstores are dead and the few remaining publishers are a shadow of their former selves, Amazon will be the absolute dictator of the publishing world.
The Justice Department may not agree, but that sounds a lot like a monopoly to me.