Home » Amazon, Apple, Big Publishing, DOJ » Authors Guild Met With DoJ to Seek Investigation Into Amazon’s Practices

Authors Guild Met With DoJ to Seek Investigation Into Amazon’s Practices

2 October 2014

From the Wall Street Journal (content may be behind a paywall):

The Authors Guild, the country’s largest advocacy group for writers, met with Justice Department officials in early August, people familiar with the matter said. The Guild, which has more than 8,500 members, raised concerns that Amazon is violating antitrust law as it puts pressure on Hachette Book Group in a dispute over revenue from e-books.

The meeting took place after the Authors Guild emailed Bill Baer, head of the antitrust division of the Justice Department, requesting that the department open an investigation into Amazon, one of the people said.

Meanwhile, Authors United, a separate group that counts more than 1,000 members, including some of the country’s most prominent writers, said it is readying a letter it intends to send to the Justice Department—also requesting an investigation into Amazon’s business practices.

The government has intervened in the e-book industry before.

In 2012, the government filed a civil antitrust lawsuit against five publishers and Apple Inc., accusing them of conspiring to raise digital-book prices. The five settled, paving the way for Amazon and other retailers to resume discounting e-books. Apple went to trial, was found liable in a civil case, and is appealing.

Sending a request to the Justice Department, however, may be a more sensitive matter to some members of Authors United. Mr. Preston, in an interview, said that a dozen or so writers have already contacted him requesting that their names not appear on a letter requesting DOJ intervention.

Read more over at the WSJ.

It’s worth noting that the WSJ pointed out that the DOJ has intervened in the ebook industry before, specifically the collusion case against Apple and the Fivetones. While the WSJ did manage to get the number of publishers correct, they failed to identify Hachette as one of the named defendants. That is surely an unfortunate oversight.

~ Dan

Amazon, Apple, Big Publishing, DOJ

162 Comments to “Authors Guild Met With DoJ to Seek Investigation Into Amazon’s Practices”

  1. Mr. Preston, in an interview, said that a dozen or so writers have already contacted him requesting that their names not appear on a letter requesting DOJ intervention.

    It’s always a sign that you’ve taken a wrong turn when you start to humiliate your own supporters.

  2. The extent to which the AG does not care if it harms authors is shown in this action which basically targets indy authors.

  3. “…that is surely unfortunate oversight.”

    Uhhmmm… no.
    I don’t think so. 🙂

  4. They don’t have evidence to prove anything or make any form of a solid case. What exactly do they think they can give the DoJ as evidence?

    • The letter will say “monopoly” at least 15 times.

      • I think you’re right. Here’s how the Sherman Act defines a monopoly (which is what the DoJ will look to):

        “Monopolization requires (1) monopoly power and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”

        And Wikipedia clarifies it a bit:

        “Section 2 of the Act forbade monopoly. In Section 2 cases, the court has, again on its own initiative, drawn a distinction between coercive and innocent monopoly. The act is not meant to punish businesses that come to dominate their market passively or on their own merit, only those that intentionally dominate the market through misconduct, which generally consists of conspiratorial conduct of the kind forbidden by Section 1 of the Sherman Act, or Section 3 of the Clayton Act.”

        I think Amazon falls into the category of dominating the market based on their own merit. I really want to read what AU pitches to the DoJ. It’ll probably be an entertaining read.

      • Is that like saying ‘Beetlejuice’ 3 times? 😉

      • The letter will say “monopoly” at least 15 times.

        Ooh! ooh! I want to be the little dog, or maybe the canon! Either way, at least I won’t be the shoe. Preston can be the old shoe.

      • The word monopoly generally refers to suppliers not retailers. But there is a word for a retailer with unusually large market power or “buyer power” as it is called: monopsony

        From investopedia.com:
        DEFINITION of ‘Monopsony’
        A market similar to a monopoly except that a large buyer not seller controls a large proportion of the market and drives the prices down. Sometimes referred to as the buyer’s monopoly.

        I found this article which suggests that Amazon does not have much to worry about:

        From the above Financial Times link (emphasis added):
        “There lies Amazon’s advantage – it need not form a cartel to squeeze its suppliers because it is already large. With a 30 per cent share of the physical book market in the US and more than 60 per cent of ebooks, it clearly has market power in the antitrust sense. But there has never been a case in US competition law of a single company being declared an illegal monopsonist.

        “In the US, the simple use by one company of monopsony power to extract lower prices from suppliers is not illegal. There is general intuition that buyer power means lower prices and lower prices are good,” says Jonathan Jacobson, an antitrust lawyer at Wilson, Sonsini, Goodrich & Rosati in New York.”

        • Say the DOJ does go after Amazon. Amazon can then produce the non-whale-math that shows their proposed pricing will actually earn the publishers (and, therefore, the authors) more money than if the higher prices are continued.

          Back when the cartel was price-fixing, they were earning less per book via their pricing than they were via Amazon’s discounted prices.

          It’s perplexing that the industry prefers to make less money, but that seems to be the case.

          • It confused me also until I finally got it that the publishers want to protect their paper sales (where they do have a kind of monopoly, at least with brick and mortar stores)) by pricing ebooks so high that people are less likely to purchase ebooks and more likely to keep buying paper books. That is most likely their real agenda in all of this.

            But of course it may not even be true that pricing their ebooks high is helping their paper sales. How many people see the high price of the ebook and just decide to not buy the book at all in any form? How many people go buy a lower priced indie ebook instead? It may slow down the adoption of ebooks overall, but it might not actually be increasing the sales of their paper books, or it may not be increasing the sales of paper books enough to offset the loss of ebook sales.

            But even then, it has been suggested that if they lowered the prices of the ebook versions of new releases too much, that the bookstores would get pissed off and stop working with them kind of exclusively. Maybe the bookstores would start carrying Amazon and self-published titles. God forbid! 🙂

            • How many people see the high price of the ebook and just decide to not buy the book at all in any form?

              Teacher, pick me. This is how I react. When I see a high ebook price, there better have been an archeological dig at the other side of it, or something equivalent. In that case we’re talking about a book that would otherwise have sold for triple figures or is out of print in its dead tree form.

            • I rarely read paper anymore. If the ebook price is too high, I just don’t read the story.

            • How many people see the high price of the ebook and just decide to not buy the book at all in any form? How many people go buy a lower priced indie ebook instead?

              Either indies. Or if I really want to read the book, I look if I can find a used paper-version of it. Or if the library has it. I always feel sorry for the writer in that case because I’m all for supporting writers but there is a line I’m only rarely willing to cross.

          • Part of it they need to show sales increases to make Wall Street happy. WS barely looks at profits anymore, which Amazon is happy about, which leads companies to only care about sales. It’s why ticket prices at movie theaters go up so much, to make movies look like they are bringing in more money, when in reality they are selling fewer tickets.

            Inflation has a large part to play also, as our money becomes worth less and less, they need to charge more and more. But a big reason to charge more for a product is to fake an increase in sales numbers.

        • Here is another longer exploration of monopsony and anti-trust law:

          I am not a lawyer (although I did stay at a Holiday Inn Express last night) but one thing that stood out in the above link was it suggests that while it is hard to prove harm from a monopsony consisting of one large company, that a collusive monopsony or ogliopsony (a group of buyers that control the market) is by definition illegal as a form of horizontal price fixing.

          Now the publishers have already settled the charges that they acted illegally by colluding as suppliers to fix prices. It seems to me that they might also be guilty of setting prices illegally as buyers by colluding to set the royalty rates given to authors at their current low rates. As others have noted, the AG and AU may be opening a can of worms for the publishers by inviting more DOJ examination of the publishing industry.

          Another concern which I have not seen raised is that Hachette seems to be delaying the negotiations with Amazon. William Ockham has suggested they are delaying until late 2014 or early 2015 which is the earliest that they can legally enter into a new agreement based on agency pricing without discounting according to the settlement terms. However, the judge set up this timetable of staggered windows during which each publisher is supposed to negotiate a new contract in part to reduce the likelihood that they would once again collude in their negotiations. But because Hachette is delaying their negotiations, their negotiations are already overlapping the negotiations between Amazon and Simon and Schuster which have already started. If this keeps up to the point where 3, 4 or 5 publishers are all negotiating with Amazon at the same time, it might draw the attention of the judge to the greater possibility that they are once again colluding. It is probably not a good idea to get a judge mad at you for circumventing her intentions in a settlement agreement.

          • The settlement includes a clause about retaliating against retailers. Some might consider refusing to negotiate a new contract retaliation.

            • The whole Hatchette circus is one big retaliation.

              All I want for Christmas is for the Big5 to foolishly and ineptly bumble into another blatantly obvious collusive situation, the type of which they were implicitly warned against attempting after the first DoJ case.

              • That’s what I want for Christmas, too! 😀 Hachette’s refusal to come to the negotiating table, plus their refusal to accept one of Amazon’s offers to mitigate damage to Hachette authors, plus their PR campaign to name Amazon as the origin for Hachette’s actions has riled me enough to want to see them take consequences. Gah!

              • I’m hoping for a new set of professional grade markers to extend the number of colors I can use in commissions… But this comes a close second. 😉

          • Colluding or not, it kinda makes sense that Hachette would delay as long as they could if it meant the bigger publisher would then enter the fray. They would assume S&S would get a better deal than they would if they caved in early. Better to wait and then try to get the same deal S&S gets.

            Of course, the clock is ticking on the judge’s patience, but they’re willing to risk that–while blowing smoke and misinformation through their flak puppets, AU and AG.

      • “The letter will say “monopoly” at least 15 times.”

        Do we have a betting pool on this yet?

    • Don’t the AU have to have legal “standing” to ask for anything?

      I may end up understanding more about US law than I ever wanted.

      • If they had any case, they wouldn’t be asking DOJ to do their work for them, they’d just bring suit themselves, as individual plaintiffs.

  5. Don’t they have better things to spend their time on? Like getting the (trad published, b/c indie don’t count) authors something more than 7.5% royalties or something? I mean really, REALLY?

  6. Authors Guild Met With DoJ to Seek Investigation Into Amazon’s Practices…and proceeded to waste everyone’s time.

    • It’s like Amazon is the hot chick in a movie, and AG/AU is a bunch of zombies led by a tyrannical stalker ex-boyfriend who is intent on taking revenge for her being so popular.

      Amazon should file a restraining order against both the AU and the AG. 😀

      • Um. What movies have you seen lately? 🙂 If it’s a Shaun of the Dead type of zombie movie I’m there.

  7. I guess the good news in this is that in order to consider undertaking or to actually undertake such an investigation, the DOJ should have to do due diligence and also investigate the Authors Guild and Authors United… and re-investigate Hachette, Apple and the other big pub co-conspirators… and hopefully Streitfeld and the New York Times.

    Given the repeated “Amazon’s recent and ruthless tactics of directly targeting Hachette authors” lie that these folks have repeatedly stated, I’m wondering if some of them have repeated it, or will, under oath. Which I’m naively thinking would constitute perjury. Or at least, loss of credibility in the DOJ’s eyes.

    Top this off with the big pub literary establishment having called DOJ and Judge Cote incompetent and illiterate…

    Must turn away and go live my life…. The stupid is strong in this.

  8. The AG will send a letter to the DOJ asking them to investigate Amazon. The DOJ will say “thanks, we’ll get back to you.”

    From then on, the AG will be able to say, “The DOJ is investigating Amazon’s Monopoly practices!” The DOJ will not comment.

    It’s a perfect smear setup.

    • I wonder if their manuscript (letter) will end up in the slush pile, only to be scanned briefly by a harried (commission-based) junior assistant to an editor who will never return their calls.

      Wouldn’t that be karmic?

      • I’m envisioning the rejection letter:

        Dear AG,

        Thank you for giving me the opportunity to read your letter. Unfortunately, I did not love it enough to act upon it. I wish you better luck in placing it with another Department of Justice.


        ENC: AG Letter

    • “From then on, the AG will be able to say, “The DOJ is investigating Amazon’s Monopoly practices!” The DOJ will not comment.”

      Well, I suppose the DoJs “comment” could always be a subpoena for a “Cartel Collusion II” trial. That would give the AG something new to complain about.

  9. Let’s not lose sight of the fact that Authors United is continuing its free-of-charge master class in not taking sides. We should be grateful.

  10. “The Authors Guild, the country’s largest advocacy group for writers…which has more than 8,500 members”

    So… RWA says it has 10,000 members. And that’s a national “writer’s group” (you know, if you count pinky emotional squishy popular massive-selling romance as writing).

    How is 8500 bigger than 10,000?

    I’m just a girl, mind you. Please explain to me how numbers work, WSJ!

    • It’s Whale Math(TM), m’dear.

      **Whale Math is a registered trademark of Libbie Hawker and Running Rabbit Press, and is used without permission.

    • You need a degree in… wait for it ….


    • Just use Whale Math, it works if you use Whale Math.

      • Three comments at exactly the same time. It’ll take whale math to calculate the odds on that.

        • whale math (hwāl math) n. [Colloq.] short for whale mathematics 1. The numerical calculation a whale makes when trying to determine how much whale shit lies at the bottom of the ocean. 2. Any similarly dubious calculation made by the traditional publishing industry in attempting to justify its existence.

      • Whale Math — a perfect major for a diploma-mill degree.

        Gotta look into getting one for myself. 🙂

    • You just answered your own question! lol Pinky emotional squishy popular massive-selling romance writing undertaken primarily by women does not count as writing 😉

    • You’re forgetting that in WHALE MATH, 8500 > 10,000

      (Oh, crap. I posted and then saw that a bunch of other people beat me to that one!)

      • I want to start drafting the basic laws of whale math. Rule number one: The largest number is 8500.

        • The thing to remember with Whale Math is that some numbers are more equal than others.

        • And 8500 is the only real number. All other numbers are unreal.

        • Whale Math 101: All numbers, statistics, and equations of any kind confirm the beliefs that you currently hold. They can be dropped into any argument, in any order, to support your point of view. The relationship between any set of two or more statistics is what you WANT it to be. You don’t HAVE to explain yourself, but if you do, make sure that your argument lacks logical coherence.

          Critics of Whale Math say that 99% of people in the world DON’T do their math this way. But there are upwards of 900 members in Authors United, and 900 is a larger number than 99. Think about it.

    • Whale Math, of course.

    • They are an advocacy group, not just a bunch of girls scribbling between changing diapers! Okay, I’m exaggerating the AG’s snobbishness a bit. But! They are special and non-commercial authors!

      • Right!

        The AG is made up of special and non-commercial authors. Whereas those awful creatures who write trashy romance are beneath contempt because they are not commercial enough. I mean, Lee Child has sold more books than any of them!

    • “…RWA says it has 10,000 members. And that’s a national “writer’s group” (you know, if you count pinky emotional squishy popular massive-selling romance as writing).”

      I think you answered your own question there. No, the RWA do not seem to be considered “real writer’s” by the AG.

      Somehow though, I think that RWA members will find the strength and courage to go on.

  11. And can I just say? WHALE MATH is one of the most useful phrases I’ve ever learned, when it comes to discussing sooooo many things in the publishing world. (Probably works well in politics, too.)

  12. “The Authors Guild, the country’s largest advocacy group for writers, met with Justice Department officials in early August, people familiar with the matter said. The Guild, which has more than 8,500 members, raised concerns that Amazon is violating antitrust law as it puts pressure on Hachette Book Group in a dispute over revenue from e-books.”
    This is clear proof that Authors Guild sides with the Big Publishers and considers the Legacy Authors as being part of the Big Publishing Establishment.
    Let’s see how many Legacy Authors will voice a contrary opinion to what their guild is doing.
    And as an Indie Author I know that I’m not part of them.

  13. I see Publishers Weekly has the story…

    “The Guild has been working closely with the grassroots group Authors United…”


    (“You keep using that word. I do not think it means what you think it means.”)

    These people need to slow down on the Koolaid. It’s astonishing that anyone could delude themselves into thinking a group headed by millionaires that’s most likely a front organization for at least one multi-national corporation is even remotely “grassroots.” Orwellian.

  14. People have been tossing the “monopoly” word around regarding Walmart for years. If the DoJ was going to slap a company for monopolistic behavior, it certainly would have done so to Walmart by now. I googled and found a case in 2002 or so regarding predatory pricing on dairy products in Wisconsin, but that’s the only legal action I found in the US that even got that far.

    Amazon is not a monopoly in the online retail business, or even in the online book business. Will these groups with “Author” in their names ever sit down with a dictionary and look up the meaning of a word?

    • Amazon has a filthy monopoly on selling books on this website called “amazon.com”: it’s true! Monopoly, monopoly!

      [Which is my way of saying that everything either is or is not a “monopoly”, depending on how narrow or broad you define what you are looking for. Major League baseball has a “monopoly” on, well, “major league baseball”, but they do not have a monopoly on professional baseball, or sports, or entertainment, etc, etc. You can always turn a monopoly into a non-monopoly by broadening a bit and realizing that there is always competition for the dollars going to any business, at *some* level.]

      • You may think you’re joking but that is exactly how Microsoft was declared a monopoly: by excluding workstations, servers, embedded systems, mobile systems, and all other forms of computers except desktop PCs running on x86 CPUs.

        Right now the european booksellers are demanding the Brusselcrats investigate Amazon’s “monopoly on online book selling”. Well, if they define the market as “online ebook and pbook retailer”…

        • But Microsoft was a supplier or producer in the software market, and not a buyer as Amazon is in their relationship with authors and publishers within the book market. See my post above about monopsony or “buyer’s monopoly”.

          As for the European bureaucrats, the anti-trust laws in Europe (and Canada) are different than in the US, and have different objectives or intended outcomes. I don’t know if Amazon has anything to worry about over there, but hopefully they have some good lawyers working for them 🙂

          • The Microsoft case was non-traditional: they weren’t arguing over anti-consumer behavior but at a remove, working off network effects theory. But to allow that the judge had to define the relevant market transparently thin. And even then he had to rule thst no harm was done to Netscape…and still fit MS with a ball and chain. Just because he could.

            (And Beltway politics.)

            In Europe Amazon is, like most big American tech companies, under attack because their mere presence is forcing the entrenched players to get off their butts or become irrelevant. Google and Apple are also under constant attack.

            Basically the old guard on both sides of the pond seems to want Amazon gone so they can bring back the nineteenth century to bookselling.

        • Whale Math has also spread to Germany where 40% of the whole book-selling market is now considered a monopoly.

  15. I did a search on TPV to find “Whale Math”–not found. So then I Googled it with Libbie’s name, which brought me back to the TPV post where that comment first came up, and saw the suggestion in the comments that PG include a separate category on his site for Whale Math–

    YES. Some of us are very, very busy and feel left out and need to have all inside jokes explained or at least searchable right away because we were offline on the particular day in question. I know you’re offline right now, PG, but come on, public service and all…

    And now that I understand the reference you all are making, BWAH HA HA!! Love it.

    • There are a few good ‘in jokes’ here. Whale Math is one of them, where you just spout numbers and then make a point unrelated. Sort of like the Chewbacca Defense in law.

      Then there’s my favorite, Drive By Deb. There’s a lady here named deb or debra who comes by and drops a tirade and then disappears never to be seen again. She’s hilarious. Shouts and leaves basically.

      Then, of course, there are the crude Shatz/Shatzkin jokes. More rare and a bit too easy but fun nevertheless.

      Also there’s one I don’t quite get about Preston’s “Summer Shack” which is really a huge mansion, it’s a comment on how out of touch the best sellers are.

      I’d like to start a running joke about “Best Seller Bravado” which pokes fun at Preston and Lee Child for tossing around their best seller status in order to sound authoritative. We’ll see if that one takes off.

      • Preston really does have a “shack” — in addition to the house. The shack is where he writes letters to the DOJ and Amazon BOD.

      • Mr. Preston has a shack on his 300 acre estate in Maine. This shack is in addition to his regular house (where he can’t get any writing done on account of the activity of all those servants!)

        He has to walk down a dirt road to get to the shack. The shack is where he writes. The shack has a picture of the Dali Lama in it and also Thoreau and other things that are supposed to make you think that Mr. Preston is a regular guy who is fighting a big battle, as Dr. Seuss would say, in a bottle where the tweetle beetles battle with their paddles in a puddle on a noodle-eating poodle, when in actuality, he is simply protecting his own interests, and the interests of his best writing buds, all of whom currently make millions by selling their books at airports.

        There was an article posted in the NY Times about it. The article kept repeating that the letter (Mr. Preston’s original letter) was written in “the shack.”

        This link will take you to the article about the shack.


        In short, the shot in front of the shack intends to make Mr. Preston, at the same time, just an ordinary guy AND an author of some intent, skill, and power. But it just makes him look pretentious to me. Hence the references and the ribbing.

        Here is where I made fun of the shack.


        Hope this helps! Now you can mock the shack, too!

  16. The Authors Guild only represents a very small percentage of authors out there. Aren’t they the one percenters that make TONS of money from their work through traditional publishers? As far as I understand indie authors can’t even get into the club, therefore they don’t represent the vast majority of authors. And even some of their own authors are asking for their name to not be included.

    The Authors Guild needs to wake up.

  17. Any tax lawyers here? I’m wondering if the AU members who contributed to the purchase of the full page ad in the NYT can deduct that as a business expense.

    I’d love to know how many authors chipped in.

    • i think Patricia, one can only deduct contributions to 501.c.3 orgs that are nonpofit and then only for the non-material part of whatever is given… say at a charity raffle/auction, giving away free books; the part of the donation over and above the actual price value set on the book, would be tax deductible, the part that is attributed to the actual assessed value of the book, not.

      Do you know if AU is a non-profit incorporated with an IRS ok for 501.c.3?

      I suppose it could be argued that contribution to AU — IF they are 501.c.3 could be tax deductible, regardless of the use the money was put to. 501.c.3s are often listed as educational or as service orgs. So…

      • I don’t know if they bothered registering … but I was thinking along the lines of a business expense, not a non-profit contribution.

        • I think Patricia, if they are a for profit, business… say an S corp, or a sole proprietorship [which can be made of more than one person I believe, but not sure of the limit on numbers] or an LLC… depending on their stated mission [such as to educate the cosmos] it could be that such an expenditure would be allowed as advert or cost of fulfilling mission and potentially be tax deductible to the business, not to individuals who donate. Hope that helps.

  18. Aw. I was hoping for a hilarious response from the DoJ.

    I’ll be waiting.

    • I’m praying for an epic, lawyer-snark laden reply. Don’t know if that’s something that would be public in this case,if it even happens, but maybe we can get lucky.

  19. I’m still hoping they accidentally shine light on some of their own shady doings, but I’ll just settle on them further embarrassing themselves.

  20. Roxana makes use of Whale Math in this interview:

    She says Amazon wants to lower the price on ebooks so they’ll make more money, but authors (and I think she might have included publishers) wouldn’t make more money (according to her). Um, what?

    She made fun of Amazon’s stance that selling ebooks for less money would move more books because even if books were free, Amazon wouldn’t be able to give away all there are. Really. That’s what she said.

    • Her previous interview was so embarrassing, I can’t bear to watch another.

    • Boy she got hammered in the comments.

      I wonder what the folks at PBS thought when they saw those comments – oh never mind:


      • Back when I watched the interview, I didn’t think to scroll down to see if there were any comments. Now, thanks to your post, I’ve done so. Imagine being Roxana and scrolling down to read glowing remarks about her brilliance and finding THAT.

  21. I swear to God, I’m going to put Whale Math in one of my YA fantasy novels. Or maybe in the dystopia trilogy that’s on the burner.

    But it’s going SOMEwhere.

  22. My day job is in a bureaucray. (A nice once, but still.) And if there is an outside group clamoring for attention, there is a meeting. With a department head to demonstrate that the group is taken seriously.

    They might even agree on some steps. There is always a project. Most definitely a project. There might even be some memos. A press release, if pushed. And another meeting or two.

    And then the whole thing will die a quiet, long-drawn out death. How long it takes depends on how long that group is managing to keep a leader willing to push the agenda when nothing really ever happens.

    I’m giving AG a year or two, until enough authors get tired of this.

  23. Does this remind anyone of the Microsoft anti-trust suit? The DoJ opened proceedings in 1993 at the behest of competitors such as Oracle, Netscape and Novell in an attempt to prevent Microsoft from including a web browser with Windows. The case concluded in 2002, and Microsoft ended up shelling out some $5 billion over the following few years to various companies in compensation.

    However by then the company’s annual revenue was in excess of $40 billion, and profits had more than doubled to $12.6 billion. More telling, Windows now had a 95% share of the operating system market, and Internet Explorer 94% of the browser market. And a bunch of lawyers got very rich.

    • And the price of Windows went up $10.
      And MS went from having one part-time Congressional Affairs lawyer as a lobbyist to having the single biggest lobbying group in the tech world feeding PCs, software, and tech support to “friendly” pols.

      Before the suit, MS execs were big political donors on a personal basis but the company was scrupulously apolitical. Now they are one of the bigger contributors to both parties. Which was the acknowledged goal of the trial in political circles from day one. A company that big couldn’t be allowed to operate without paying the vig to the parties. It set a bad example.

      (The Netscape CEO was *the* top fundraiser inCaliforn i a for the Clinton campaign. So when he called in the IOU Reno got her marching orders.)

      So yes, Amazon is at risk.

      Make no mistake, that is why Bezos bought the WP and keeps his hands off. To maintain its credibility whrn he might need to go hands on.

      • Just as I remembered it:



        “For many years before the lawsuit, Microsoft had virtually no Washington “presence.” It had a large office in the suburbs, mainly concerned with selling software to the government. Bill Gates resisted the notion that a software company needed to hire a lot of lobbyists and lawyers. He didn’t want anything special from the government, except the freedom to build and sell software. If the government would leave him alone, he would leave the government alone.

        At first, this was regarded (at least in Washington, D.C.) as naive. Grown-up companies hire lobbyists. What’s this guy’s problem? Then it was regarded as foolish. This was not a game. There were big issues at stake. Next it came to be seen as arrogant: Who the hell does Microsoft think it is? Does it think it’s too good to do what every other company of its size in the world is doing?

        Ultimately, there even was a feeling that, in refusing to play the Washington game, Microsoft was being downright unpatriotic. Look, buddy, there is an American way of doing things, and that American way includes hiring lobbyists, paying lawyers vast sums by the hour, throwing lavish parties for politicians, aides, journalists and so on. So get with the program.”

        • And on top of that, viewed in hindsight, the lawsuit now appears ridiculous. The charge was that Microsoft was illegally bundling a web browser with their operating system. But now EVERYBODY does that. You buy an iPhone, it’s got Safari. Buy an Android phone, and it’s got…whatever browser they use. You buy a Mac, it’s got Safari. You buy a Windows PC, it’s got Internet Explorer.

          And here I am typing away in my Firefox browser, glad that my computer came preloaded with IE, because if it didn’t have a browser preloaded, how would I have navigated to Firefox’s site to install the browser I wanted?

          I was working as a software developer when the lawsuit hit, and we were frankly horrified by the suit. Reason being, the product we worked on displayed text, and we were using a home-grown text display engine that required 4-5 full-time developers to maintain. When Microsoft began bundling IE with Windows, it was installed in such a way that third-party developers could use pieces of it as a text display engine.

          That meant we could use IE’s engine instead of our home-grown one and assign those 4-5 developers to work on other features customers wanted. WIN! Furthermore, we could standardize our text format as HTML, the format IE’s engine wanted (we had previously used something homegrown), and that would help us transition our product to the internet later on.

          So when the lawsuit hit and the government threatened to make Microsoft unbundle IE from Windows, we were horrified because that meant going back to our homegrown engine, a huge inefficiency for us. Fortunately, while the suit was enormously expensive for Microsoft, it was unsuccessful, and the browser is still bundled.

          • William Dyer, the lawyer who writes Beldar Blog, has a similar feeling. He’s not thrilled with a lot of the antitrust cases (like this one) that have argued over the case 30+ years because A to B to C to D can get a bit murky in cases where the alleged antitrust violations occurred over several years, sometimes decades. To him, U.S. vs. Apple was totally different:

            “Jobs was bragging in public about the price-fixing conspiracy that his company had organized and executed to fix ebook prices. The reason the publishers were threatening to withhold their books from Amazon altogether was because that was the key term in the conspiracy that Apple was proposing. Unless Amazon agreed to knuckle under to the “agency pricing” model that Apple wanted (because it would eliminate retail price competition in ebooks, to Apple’s benefit, and let Apple compete with Amazon on the basis of hardware, never price) — Amazon wouldn’t be able to sell ebooks at any price.

            This whole fact pattern would never make a good exam question in an antitrust course in law school. It’s way too easy. There’s an arsenal of smoking guns. It’s like no one at Apple ever heard of the Sherman Act.”


          • Worse yet, IBM, Apple, and the linux gangs were all bundling browsers in their OS at the time.

            Just as ridiculous: the European insistence they stop bundling a media player even though every version of Windows ever sold had one and every other OS bundled one.

            In both cases it was clear they were shakedowns, not real legal violations. But since antitrust is whatever the government wants it to be, not just what it says it is…

    • This reminds me of the great “Peanut Butter Case.”

      Many years ago, the FDA proposed a regulation that increased the minimum required % of peanuts in any peanut butter sold in the US. (Believe it or not, MOST of peanut butter is not peanuts – or wasn’t at the time.)

      The peanut butter manufacturers sued, thereby delaying the implementation of the regulation. And they kept the suit going for a decade. Then they lost.

      But in the interim, they saved themselves tens of millions on peanuts.

  24. The other thing that Amazon could be accused of by the AG and AU and has been accused of by the publishers is predatory pricing. Predatory pricing is not really about unfair business practices in their relationship with publishers, but rather unfair business practices in their competition with other ebook retailers, intending to drive other retailers out of business.

    However, Nate Hofelder explained a while back why the judge in the price fixing case found that Amazon was not guilty of predatory pricing back then:

    And since the settlement with the publishers actually included a clause that prohibits Amazon from discounting to the extent that they are losing money on any single publishers ebooks as a whole, it seems even more unlikely that Amazon could be found guilty of predatory pricing now.

    I think it was William Ockham who pointed out on Joe’s blog that the publishers kind of put themselves in a bad spot by asking for this provision to prevent Amazon from discounting any particular publishers’ ebooks to the point where they are losing money on their overall sales of that paticular publishers ebooks. The problem is the provision is only in effect for a while. Once it expires, that same provision could be interpreted to now give Amazon permission to use a publishers entire catalog of ebooks as a “loss leader” to increase sales. This would not be a way of pressuring the publisher in question, but could be used to pressure another publisher or publishers. If Amazon started only deeply discounting Random/Penguin titles and not discounting any other publishers ebooks, that would get the attention of the other publishers.

    Another related question I have asked many times is why Amazon is still discounting Hachette ebooks at all. I was surprised to discover Amazon is still discounting some Hachette ebooks enough to be selling them at a loss (The Goldfinch ebook list price is $14.99 and the ebook is for sale on Amazon for $6.99)

    Why doesn’t Amazon just let Hachette have a taste of their own medicine and stop discounting their ebooks altogether? If Amazon’s sales figure are correct, that would reduce Hachette’s sales and overall revenue considerably and perhaps wake them up to the folly of overpricing ebooks. At the very least it would be leverage, because if Amazon is discounting from the retail list price, then it seems it is enabling Hachette to make even more money while these negotiations continue (lower price = more sales on top of Hachette still earning their share based on the high list price as the discount comes totally out of Amazon’s share).

    I know Amazon wants to encourage ebook adoption, but why not just focus all of their efforts on other publishers ebooks for now? There is no provision in the settlement requiring them to discount a particular publisher’s ebooks equally to how they discount other publishers’ ebooks.

    This is all way too strange sometimes 🙂

    • At this point it looks like Amazon doesn’t delist their books because they aren’t negotiating because they are preparing their own ebookstore. Once they go live, if they pull the titles, they are in clear violation of their court settlement. If Amazon drops them, they aren’t.

      It’s become a game of chicken with a lot of squawking by the hens while the roosters stare down.

    • To answer one of your questions, Amazon has a price matching program for ebooks. So if iBooks is offering Goldfinch for 2.99, Amazon will have it for the same price. I’m sure one of the points under negotiation is who bears the loss here, Amazon would want Hachette to take on more of it.

      • You are probably correct as The Goldfinch is on Kobo for $6.99. I did not know Kobo would discount that aggressively, or maybe they are getting a deal from Hachette.

        But my overall question still remains: why doesn’t Amazon turn off price matching for Hachette titles and give them a taste of their own medicine?

        And by the way, Barnes and Noble is selling the Nook version for the full list $14.99. Way to compete, B&N!

  25. You all do know what’s next . . . right?

    A whitehouse.gov petition!

    To the barricades!


    Devil’s Deal is live!

  26. LOL. This reminds me of Tom Wolfe’s Mau-Mauing the Flack Catchers. I’m sure the DOJ has its own pool of designated flack catchers, too.

  27. Can we use Whale Math to calculate the velocity of a thousand egos having a tantrum?

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