Amazon Wins the European Union e-book Pricing Battle with Apple
A European Union antitrust probe that was looking into Apple and major publishers has officially ended after regulators accepted a deal from those being investigated. Apple and four major publishers have ended up agreeing to ease pricing restrictions on retailers such as online e-book seller Amazon for two years.
Out of everyone involved, Amazon is the biggest winner as it will be able to set prices for e-books as it sees fit. Previously, publishers decided to join with Apple and utilize the “agency model,” which allowed the publishers to set their own prices on the iBookstore while Apple took a 30% cut of sales. Publishers then chose to block Amazon and other retailers from selling e-books unless they also choose to adopt the agency model, rather than being able to set their own prices. Here, the publishers felt Amazon’s low-margin business model was forcing them to lower e-book prices, but regulators in the EU felt the moves violated European antitrust laws.
It was previously reported that the EU was expected to accept the e-book settlement proposed by Apple and the publishers. The deal allows Apple and others to avoid fines that could have reached as high as 10% of the global sales, which in Apple’s case would have been $15.6 billion for its 2012 fiscal year. Apple was joined by Simon & Schuster, HarperCollins, Hachette, and Macmillan in the settlement with the European Commission. Penguin was the one publishing house that was not included in the agreement and as of right now it remains under investigations but has offered its own concessions.
The settlement is similar to the counterpart price-fixing case in the U.S. leveled by the Department of Justice in which HarperCollins, Simon & Schuster and Hachette recently settled for $69 million. As far as Apple, Penguin group, and Macmillan, they each are continuing the fight to allegations with the companies asking for a court trial to decide the matter.