Amazon on Wednesday said it was ready to lower e-book prices, following a settlement between the Justice Department and three e-book publishing companies named in an antitrust lawsuit alongside Apple.
“This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books,” said an Amazon spokesperson, referring to a settlement the Justice Department reached with Hachette, HarperCollins and Simon & Schuster.
The Justice Department said it was still pursuing its lawsuit against Apple, and two of its e-book publishing partners, Macmillan and Penguin, over alleged price-fixing of e-books. Apple and its five publisher partners agreed to sell e-books under an “agency model,” or set minimum price of $12.99 for popular new releases, while Amazon previously pursued a “wholesale model,” in which it bought books at different prices from publishers then discounted them to consumers at $9.99-or-less.
Eventually, though, according to the lawsuit, Amazon was forced into adopting the higher prices in order to keep books of the five publishers available in its Kindle e-bookstore.
The settlement with Hachette, HarperCollins and Simon & Schuster, which still has to be approved in court, would have the three publishers tear up their existing agreements with Apple on e-book prices and block them from entering into new, similar agreements for the next two years.
Additionally, the Justice Department’s settlement would block the companies from sharing business information with competitors, or from offering a price-matching program to keep e-book prices lowest on one platform (currently Apple’s iBookstore), for the next five years.
Furthermore, the companies will have to participate in what the Justice Department calls “a strong antitrust compliance program,” which forces the companies to disclose to the DOJ “any e-book ventures they plan to undertake jointly with other publishers” and “any communications they have with other publishers.”
“If approved by the court, this settlement would resolve the Department’s antitrust concerns with these companies, and would require them to grant retailers - such as Amazon and Barnes & Noble - the freedom to reduce the prices of their e-book titles,” said Attorney General Eric Holder in a statement on Wednesday.
Amazon features prominently as an aggrieved partner in the Justice Department’s epic antitrust lawsuit against Apple and five publishing companies over alleged e-book price collusion.
The DOJ’s lawsuit essentially credits Amazon with launching the American e-book industry as we know it with the debut of the Kindle in 2007. It further credits Amazon’s $9.99-or-less ebook price as beneficial for all consumers, saying “As a result of that competition [from Amazon], consumers benefitted from Amazon’s $9.99-or-less e-book prices even if they purchased e-books from competing e-book retailers.”
But the lawsuit also reveals that Apple was at one point poised to offer Amazon a deal to collude to carve up the digital content space into two realms: Apple would control video and audio, while Amazon would control ebooks. Apple abandoned this idea in favor of alleged price-fixing agreements with five publishers.