This paper examines the controversy surrounding Amazon.com and Apple's involvement in ebook price-fixing, a practice found to violate U.S. antitrust law. It explores Amazon's dominant position in the ebook market, its use of bargaining power to influence pricing, and the collusion between major publishers and distributors that contravened the Sherman Act. The paper also discusses the parallel Apple case, the role of the Department of Justice, and the resulting settlement requiring partial refunds to consumers who purchased Kindle books between April 2010 and May 2012.
The paper demonstrates effective use of current news and legal sources to support a business ethics argument. By citing both trade publications and mainstream technology outlets, the author shows how to triangulate evidence from multiple source types when covering an evolving legal case.
The paper opens by establishing the legal and competitive context of price-fixing, then zooms in on Amazon's market position and conduct. A third section widens the lens to include Apple's parallel antitrust violation and the Sherman Act. The paper closes with the practical outcome — the DOJ settlement and pending consumer refunds — giving the argument a concrete resolution.
Amazon.com has become embroiled in a controversy regarding pricing on Kindle books. The issue arose when several book publishers faced a class action lawsuit from the Attorney General concerning price-fixing on ebooks. Price-fixing is considered to be anti-competitive activity that undermines the power of free markets. As such, it has been illegal for nearly 100 years under the U.S. government's mandate to promote free competition. The publishers, however, have essentially placed the blame on Amazon. The company is now working with the publishers to deliver refunds to consumers who were judged to have overpaid for their Kindle books.
Lynn (2012) notes that Amazon holds a dominant position in the ebook market, in part because of the success of its Kindle e-reader, but also because it has become the dominant bookseller in the United States generally. Amazon is using its bargaining power as the dominant retailer in the industry to set prices in the market — something that contravenes the spirit, if not the letter, of the antitrust legislation enforced by the Department of Justice.
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