Today in Connected Consumer

There are a lot of odd things about the Justice Department’s antitrust investigation of Apple over e-book pricing, starting with the fact that Apple is not the dominant player in the e-book market, Amazon is. Yet according to Bloomberg and Reuters this morning, DOJ is preparing to sue Apple, along with one or two publishers, perhaps as early as today, after talks to resolve the dispute reached an impasse. You don’t have to be the dominant player in a market to engage in price-fixing, of course. But anything the government does to undermine Apple’s position in e-books will only reinforce Amazon’s dominance. Any doubts as to how Amazon leverages its print and e-book market share, moreover, should be erased by today’s paidContent report that at least two of the Big Six publishers are balking at renewing their annual contracts with the e-retailer over Amazon’s “stupifyingly draconian” demands for co-op promotional fees. Disputes over such fees are nothing new in retailing but the fees often amount to hidden discounts to dominant retailers that are not made available to competitors, skirting the line of anti-competitive behavior. As for why Apple would go to the mat with the government on this one, Fortune’s Philip Elmer-DeWitt gets it about right.

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Paul Sweeting

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