Reuters reports that Apple and several major publishers have agreed to offer concessions in an ongoing European Union antitrust investigation over alleged e-book price fixing. The concessions would significantly unravel the Apple-backed agency model of book pricing in which publishers set the retail prices for their content with distributors such as Apple and Amazon receiving a fixed percentage of the sales price.
Apple and four major publishers have offered to allow retailers such as Amazon to sell e-books at a discount for two years in a bid to end an EU antitrust investigation and stave off possible fines, a person familiar with the matter said on Friday. [...]
The Commission was now sounding out opinions from the industry as to whether the concessions are sufficient, the person familiar with the matter said, before a formal market test which could lead to the investigation being dropped.
News of Apple's willingness to make concessions in Europe comes just two days after a group of publishers agreed to a $69 million settlement in the United States over the same issue. The U.S. Department of Justice sued Apple and five publishers back in April, and while three of the publishers elected to settle the case, Apple and the other two publishers have been fighting the charges.
Regulators have claimed that the shift to the agency model amounted to price collusion facilitated by Apple and the publishers, sparking the antitrust concerns. For its part, Apple has cited that the implementation of the agency model has had the opposite effect, weakening Amazon's previously overwhelming position at the top of the market gained by selling books at deep discounts to entice customers to visit the online store and purchase other products and content.
Top Rated Comments
With physical books (and eBooks until the Agency model was introduced), Amazon etc would buy books/eBooks in bulk at the wholesale price agreed by the publisher. Amazon could then in turn sell the books for as much or as little as it liked, but the publisher still got paid their wholesale price.
What the agency model did was stop Amazon etc selling books for whatever price they wanted and instead imposed a price on the end-customer, with Amazon/Apple receiving a fee in return for each sale.
It's blatant price-fixing, it has artificially inflated eBook prices and it should be stopped. I hope the EU hits them with everything they've got, because price fixing in every other industry is illegal because it's anti-consumer.
It's the second time he's done that this week....
Amazon did that in response to the Apple deal, to avoid adopting the agency model. You've got the arrow of time (and causality) backwards.
Sums it up beautifully.
Seems some people are OK with Apple having all the cake at the party but other companies are wrong from trying to do the same.
Yes, the Apple agreement has a 'most favored nation' clause. That doesn't give them a pricing *advantage*, though. It simply prevents them from having a pricing *disadvantage*.
Allowed:
Apple: $5
Amazon: $5
Joe's Book Shop: $5
Disallowed:
Apple: $6
Amazon: $6
Joe's Book Shop: $5
And, technically, a 'most favored nation' clause doesn't say "You can't sell it anywhere else for less". It says, "If you sell it anywhere else for less, you have to give us that lower price as well."