TECHNOLOGY SPECTATOR: Amazon's online monopoly game

Amazon's move to offer customers discounts in return for scanning prices at its offline competitor's stores has sparked outrage in the US, but the bigger issue is the company's ambition for the eBook sector.

Technology Spectator

Whoever thought up Amazon’s latest idea for squeezing other retailers - offering money off to people who scanned prices in US stores with its smartphone app and then bought the goods on Amazon - deserves an award for bad timing.

Amazon’s $US5 offer is a textbook example of why the Supreme Court changed US antitrust laws four years ago to discourage free-riding by discounters. It has caused outrage among retailers and politicians at a time when Amazon needs all the political support it can get.

While Amazon is blithely using its rivals’ property as a storefront, it wants antitrust authorities in Europe and the US to help it control the eBook market. The European Commission and the Department of Justice have launched twin probes, provoked by deals under which publishers set prices for their eBooks rather than letting Amazon, Apple and Barnes & Noble do so.

The chances of the European Union abolishing such "agency” deals as an illegal form of price-fixing are significant but it should hold back. As the US accepts - and the eReader case shows - it can be good for consumers if suppliers price their products as they wish rather than giving a distributor free rein.


Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles