Independent Bookstores Sue Amazon Over eBook
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UPDATED: Feb 27, 2013
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Three independent bookstores, Posman Books, Book House of Stuyvesant Plaza, and Fiction Addiction, are bringing suit against Amazon and the “Big Six”, which includes HarperCollins, Random House, Penguin, Hachette, Macmillan and Simon & Schuster, for their alleged monopoly over the eBook business.
The lawsuit is being filed as a class action on behalf of indie book retailers everywhere–or at least those in the United States that also sell eBooks. Amazon maintains contracts with each of the Big Six publishers and because of this, the plaintiffs say, the small guys in the book industry are at a disadvantage when trying to break into the growing eBook market.
Specifically, the lawsuit deals with the fact that eBooks cannot be moved from Amazon’s Kindle to other eReaders like the Nook by Barnes & Noble or Kobo Inc.’s device. If a consumer wanted to forgo their Kindle for another eReader, with no other option than to repurchase the book they had already paid for, they may decide it isn’t worth the switch after all and stay with Amazon. Plaintiffs say this violates anti-competition laws.
Under the laws that govern businesses in the United States, anti-competition laws (also commonly referred to as antitrust laws) are laid out in acts like the Sherman Antitrust Act. These regulations make it illegal for any one company to actively control prices within their respective market. This is not to say a company is necessarily guilty of breaking these laws if they happen to become the most popular distributor of a certain item; but that when managers knowingly engage in dishonest business practices involving price fixing or the exclusion of competitors, they may be breaking these laws.
In order to prove that Amazon is guilty of violating anti-trust laws, plaintiffs will have to show that by not allowing customers to transfer eBooks to other company’s devices, they are practicing a form of this competitor exclusion. In deciding, a court will look at how much of the market is contained by the defendant. They will also have to show that by containing this market, the defendant is in a position to control prices, leaving smaller, independent competitors struggling with only a small percentage of the market available to them due to the monopoly setting.