From Seeking Alpha:
Since it was filed in April, the Department of Justice’s price-fixing lawsuit against Apple and five major publishing companies, and the proposed settlement the Department entered with three of those publishers, has certainly seen no shortage of opinions.
A Tunney Act public comment period on the settlement resulted in 868 public comments, 90 percent of which opposed the settlement.
. . . .
But conspicuous by their absence from this gabfest is one key player:Amazon.
. . . .
Amazon has cultivated a public belief that they are in favor of the settlement. At the time the settlement was announced, Amazon gave a statement to the press saying the case was a “big win for Kindle owners” and claiming they were looking forward to lowering prices as soon as they could. But this statement was not an official court filing -it was not even an official press release.
. . . .
Yet Amazon has held their tongue. They did not file a public comment during the Tunney Act process and they have not filed an amicus brief. While this does not automatically ruin the Department of Justice’s case, it certainly can’t be helping.
I can only think of two possible explanations for this:
1. They believe the DoJ case is a lost cause and the settlement will be thrown out
I’m not an attorney or an antitrust expert, so I’m not fully qualified to comment on the soundness of the case or the likelihood of the settlement recieving court approval.
But given the number of issues raised by the various opposition filings, it certainly seems plausible that the settlement will be rejected for some reason.
2. Amazon’s statement is a bluff to sell Kindles in the short term; they have no intention of lowering prices even if the agency model is banned.
This I can explain. When Amazon first began selling ebooks in 2007, there were no apps or PC programs available to read them. You had to buy a $399 Kindle to read them, and Amazon was probably making a pretty penny at that price. It made sense to take a bit of a hit on the books to encourage hardware sales.
. . . .
disclosure: I am short AMZN
Link to the rest at Seeking Alpha
Passive Guy usually leaves posts with which he doesn’t agree without comment. In this case, he will opine a bit.
PG believes that, from Amazon’s viewpoint, the antitrust case is going swimmingly. The public comments opposing the settlement that PG read were, in PG’s unfailingly humble opinion, insufficient to raise a legal eyebrow. Hiring a skywriter to fly over New York spelling out “I hate Amazon” would have had the same effect.
The DOJ’s formal response gave no impression that it thought much of any of the arguments. The issue here is whether the publishers who want to settle will be allowed to settle. Judges seldom overturn settlements. That’s the most common way that civil litigation ends, after all.
Why is Amazon going to spout off about/in the antitrust case when it’s proceeding along a lovely path? Better to stay above the fray and allow impartial justice to proceed. The DOJ is writing the same sorts of memoranda that Amazon would.
As far as the conspiracy theory that Amazon only lowered book prices to gain market share, but will raise them at some time in the future, Amazon’s commitment to lower prices is a fundamental business strategy, part of its DNA. When PG price-compares on all sorts of things other than books, Amazon has the lowest price more than 90% of the time. Free two-day shipping with Prime plus Amazon’s excellent customer services takes care of most of the remaining 10%.
The conspiracy theories about Amazon destroying competition, then raising prices to the sky remind PG of similar theories about Wal-Mart. Wal-Mart’s secret plan was supposedly to move into small communities, destroy local retailers through price competition, then raise prices when it was the only game in town. The destruction of local retailers was real, but the prices never went up. Wal-Mart wanted to sell a lot of stuff and you do that by keeping prices low.
In Wal-Mart’s case, the conspiracy theory had a bit of credibility because of geographic considerations. People in a small community might not want to drive 20 miles to find lower prices if Wal-Mart raised its prices.
This theory has no credibility in Amazon’s world because, the last time he checked, PG noted that you can’t drive 20 miles on the Internet. You can leave your car in the garage because everybody is right there on your screen. Price competition for Amazon is a click away.
Bezos started a bookstore on a shoestring and creamed Barnes & Noble with lower prices. He doesn’t want some other shoestring operation to do the same thing to Amazon.
Besides, Amazon isn’t as big as Wal-Mart yet and Bezos knows he can’t beat Wal-Mart if he raises his prices.