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March 4, 2021

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Amazon and major publishers colluded to keep e-book prices high, lawsuit says

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The same Seattle law firm that once sued Apple for propping up e-book prices to the detriment of consumers filed a nearly identical complaint against Amazon on Friday.

The lawsuit is the latest development in growing antitrust scrutiny surrounding Amazon, which has recently expanded to include the commerce behemoth’s e-book division. Authorities in Connecticut confirmed Thursday they had launched a probe into whether Amazon’s deals to acquire e-books from publishers are anticompetitive and violate antitrust laws.

The class-action lawsuit has much the same focus. The complaint, filed in federal court in New York City by Hagens Berman, a Seattle firm specializing in class-action lawsuits, contends Amazon and major publishers had colluded to keep e-book prices artificially high.

Publishers Hachette, HarperCollins, Macmillan, Penguin Random House and Simon & Schuster — together known as the “Big Five” — agreed not to allow retailers to sell e-books at lower prices than could be found on Amazon.com, the complaint alleges. More than 80% of all e-book sales occur on Amazon.

“Through its conspiracy with the Big Five, Amazon has willfully acquired and

maintained its monopoly power in the [e-book] market by unlawful and improper means,” the complaint says.

Amazon did not immediately respond to questions about the allegations in the lawsuit.

Federal and state regulators last year stepped up inquiries into anticompetitive practices by software giants Amazon, Apple, Google and Facebook. Last year, the House Judiciary Committee issued a report criticizing Amazon for holding outsize influence over online retail. Amazon faces investigations in California and Washington state into whether it abused its power over third-party sellers on its Marketplace platform. And the Federal Trade Commission is investigating the company’s online retail practices.

Amazon, which reported record sales and profits in its most recent quarterly earnings filings, has lately sought to deflect attention from its growing online retail business. For the first time last holiday season, Amazon reported sales figures for third-party Marketplace sellers but not its own core business. And the company has begun to balk at characterizations of it as the world’s largest online retailer, arguing that it commands a relatively small market share among all retailers.

Ironically, today’s relatively high prices for e-books — on Amazon, some e-books cost more than hardcover editions — are, in part, the result of the incredibly low prices Amazon formerly charged, multiple media outlets have reported.

When Amazon’s Kindle e-reading device launched in 2007, Amazon charged just $9.99 for many popular e-books — far less than hardcover editions. Worried that the move would undercut the value of their products, publishers made a deal with Apple to fix e-book prices against Amazon, inflating prices for e-books across all platforms, according to a 2012 antitrust suit filed by the Department of Justice against Apple and publishers. (Hagens Berman had sued Apple and the publishers the previous year.)

The government won its case against Apple, temporarily lowering e-book prices. But within a few years, publishers were once again making agreements with e-book sellers barring them from charging less than a certain price for digital books, according to Friday’s class-action complaint.

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