European Union Rules In Favor Of Amazon Over eBook Price Tussle

by Gaurav Kheterpal on November 7, 2012

Amazon and Apple aren’t exactly the best of friends. In fact, the two tech giants are crossing each other’s path in several segments – tablets, smartphones and eBooks as well. With a rumored smartphone in the works and a juiced up Kindle Fire portfolio, Amazon has so far defied the theory that you just can’t compete with Apple.

While Apple’s iPhone 5 will once again take the smartphone by storm, while Google will continue to successfully play the role of Android puppet master, the company to watch in the mobile space is, surprisingly enough, Amazon. There’s no doubt that Amazon currently rules the roost in the low-cost tablet segment and despite iPad Mini smashing all previous sales records, several analysts believe that it’s highly unlikely that Apple will in any way revolutionize the 7-inch tablet space, given that such innovation costs time and money, and its doubtful that Apple will want to invest much of either in its iPad Mini, unless Apple was sure it would be able to dominate the market.

The two giants were locked in a voracious legal battle after an anti-trust lawsuit was launched by the European Union earlier this year to check whether or not Apple’s e-book pricing is anti-competitive. Reports from Reuters suggest that European Union regulators have accepted a deal from Apple and four publishers that would lessen the price restrictions on Amazon, thereby allowing it to sell their eBooks at a lower price than others.

As part of this landmark settlement, retailers can set their own prices or discounts for a period of two years and suspend “most-favoured nation” contracts for five years.

Apart from Apple, the settlement includes Simon & Schuster, HarperCollins, Hachette and Macmillan’s parent company, Holtzbrinck. The Penguin Group is also under investigation, but it’s decided not to be a part of the proposed settlement. The European Union launched this investigation after criticism mounted over Apple’s ‘agency pricing’ policy which lets publishers set the price and give the reseller 30% of the cut. Till Apple entered the eBook segment, most publishers adopted a uniform pricing – selling their books to retailers and wholesalers at the same price. These resellers such as Amazon could then sell the book at whatever price they wanted using discounts or wholesale pricing.

Once the settlement is made official, a sharp drop is expected in eBook pricing, thereby boosting sales for Amazon and other retailers. Even as Reuters cites confirmed ‘exclusive’ sources on the settlement, both Apple and Amazon have declined to comment.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.

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