Melville House Books

April 16, 2012

Everyone now agrees: Amazon was a monopoly

by Kelly Burdick

Over and over in the Department of Justice suit against Apple and five of the six largest U.S. publishers the defendants are said to be obsessed with one thing: pricing.

Leafing through the DOJ suit, there’s no evidence that the publishers worried that Amazon, which once had a 90 percent share of the ebook market, was a monopoly. Indeed, the word “monopoly” isn’t used anywhere in the 46-page suit.

But just days after the DOJ action was filled, it’s now exceedingly obvious that Amazon’s monopoly position was a big worry to publishers. Indeed, the three non-settling parties to the agency pricing suit now have no hesitation in calling Amazon a monopoly, especially during the critical period under discussion.

Macmillan claims Amazon had a “monopoly position” before the agency model. Apple responded with a statement saying the launch of the iBookstore broke “Amazon’s monopolistic grip on the publishing industry.” And Penguin has now replied that agency pricing prevented “a monopoly in the supply of e-books.”

In a real mindfuck, attorney Steve Berman, who is representing ebook customers in a class-action lawsuit against Apple and the five defendant publishers, agrees. In an appearance on the PBS Newshour, he said that, yes, Amazon might have been a monopoly, but … it wasn’t illegal.

[T]here’s nothing wrong with being a monopolist. And if Amazon could gain a monopoly share by offering the lowest price, and consumers want that lowest price, they’re enabled and allowed under the law to do so.

If they abuse that monopoly share and they drive everyone out of the market, which is one of the threats people claim our lawsuit is overlooking, and they drive everyone out of the market by raising prices, people will enter and compete…

If they raise prices too high, they can be sued for abusing the monopoly power. So the answer is not simply to allow Apple and the publishers to fix prices. That’s just not allowed under the law. And it has hurt consumers, who are paying for books. That’s the bottom line that the other side can’t answer.