Amazon vs. Apple: The Battle Escalates

Gabe Habash -- August 10th, 2011

In the latest chapter of Amazon vs. Apple–which is increasingly starting to resemble a popularity contest between the two prettiest girls in school–two separate stories broke today: both are good for Amazon and both are very bad for Apple.

The first story is Amazon’s announcement of its Kindle Cloud Reader, an HTML5 reader that bypasses Apple’s iOS guidelines prohibiting the use of links–and their 30% cut on all sales. The Cloud Reader allows users to purchase and access Kindle titles through their browsers rather than through apps, and gives Amazon the ability to set up a Kindle storefront through an iPad’s browser without having to pay Apple a cent for purchases.

The second story, which is a loss for Apple (and thus a gain for Amazon), is the class action lawsuit filed today in California claiming that Apple colluded with Hachette, Penguin, Simon & Schuster, HarperCollins and Macmillan to fix prices on e-books. The suit alleges that this all happened back in early 2010, as Apple was readying the iPad for the digital books marketplace, and neither the publishers nor Apple were willing to accept the low margins Amazon’s $9.99 e-book pricing was forcing on them.

“Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon’s popularity and pricing structure, and that was Apple,” Steve Berman, an attorney representing consumers in the case, said in an e-mailed statement.

In one day, Apple has been thrown into the spotlight as a frightened player in the digital books market while a major hole has been punched in  their iOS’s restrictive guidelines through circumnavigation. The impending iPhone 5 and iPad 3 announcement can’t get here soon enough.

But, at least for this week, we can safely chalk up a victory for Amazon.


4 thoughts on “Amazon vs. Apple: The Battle Escalates

  1. Aaron Shepard

    The people bringing this lawsuit are standing the truth on its head. It was Amazon that was fixing an anticompetitive low price, which publishers were forced to accept and which no one else could match, since Amazon was selling at a huge loss. Apple gave the publishers the leverage to determine their own, individual pricing. It opened up the market.

  2. Theresa M. Moore

    It’s no surprise. I’m waiting for someone to file a class-action lawsuit against Amazon for heavy discounting of ebook prices when a lower price is found. It means that retailers vying for shopper dollars make the authors suffer the loss every time they lower the prices. It also breaks the contract between authors and Amazon when Amazon pays out at a lower rate. While some Amazon foreign markets are expected to pay less according to existing terms, the US market suffers every time Amazon launches a new “sale” to promote Kindle sales and the retailer discounts ebook prices. You would think it would cause shoppers to buy more ebooks, not less, but when the perceived value of a $3.99 ebook is lowered everytime Amazon discounts the price, less ebooks are sold. This kind of math leaves the authors stuck in the middle with nothing to show for their efforts to bring quality literature to market.

  3. Michael Ward

    The Lawsuit:

    I certainly found it surprising that a group of producers and a retailer, who got together secretly to raise prices on a class of products, hasn’t been sued for price-fixing. That used to be against the law.

  4. Calvin Reid

    Without a doubt there is some sort of battle going on but in the end there won’t be anyone in the penalty box. As it turns out, Apple is probably doing retailers like Amazon a favor by forcing retailers to develop alternative selling. Although Apple is supposed to be a villain for not letting retailers blatantly avoid paying anything for free access to a 100 million credit card holders, their new restrictions are forcing retailers to develop alternatives that will work even better for them.

    Frankly everyone will win. Retailers with HTML5 browsers will be able to brand, market, sell and collect valuable user information and not share it with Apple, even when it done on an Apple device. At the same time any content purchased is still readable on Apple devices, which will continue to sell like there’s no tomorrow. While everyone wins, somehow Apple seems to winnier.

    Now the lawsuit over the Agency model, thats something different. That could really upend the e-book marketplace. More to come.

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