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DOJ Suit Against Apple-Allied Publishers: A Boon for Amazon?

Apple iBooksThe U.S. Department of Justice (DOJ) has filed a massive anti-trust lawsuit against Apple and several other e-book publishers, alleging that they conspired together in 2010 to fix e-book prices at between $12.99 and $14.99 in an effort to form a publishing block against Amazon, which, with its e-reading device the Kindle, had been setting much lower e-book prices even for new books and best-sellers, listing them at $9.99. Amazon's phenomenal success has enabled it to leverage tremendous market power in the book selling market.  Under Amazon's wholesale agreements, publishers get half the list price of books sold through Amazon, but have no pricing control at all. Apple on the other hand, with its iPad e-book system, countered by allowing publishers to set their own book prices but also gave them a lower cut, namely, 30% of each sale. With the DOJ's anti-trust lawsuit, in the words of the New York Times David Carr, "now Amazon has the Justice Department as an ally to rebuild its monopoly and wipe out other players." Carr shares some cynicism about the DOJ's claim that the case is meant to stimulate competition, noting that Borders has already collapsed, and Barnes and Nobles stock prices have plummeted by more than 10% in recent days in the wake of the government lawsuit.