Newspaper article International New York Times

Regulators in Europe Investigate Amazon ; Antitrust Officials Focus on Digital Retail Giant's E-Book Pricing Contracts

Newspaper article International New York Times

Regulators in Europe Investigate Amazon ; Antitrust Officials Focus on Digital Retail Giant's E-Book Pricing Contracts

Article excerpt

The investigation is the latest hurdle for Amazon and other American tech giants as European policy makers pursue antitrust, tax and other inquiries.

European regulators on Thursday announced an antitrust investigation into whether Amazon used its dominant position in the region's e-book market to favor its own products over those of rivals.

The European Commission said it was evaluating the legality of contracts that Amazon had used with European publishers, which required them to inform the e-commerce giant if they offered other digital retailers more favorable terms for books than the publishers give Amazon.

The announcement is the latest in a series of official investigations of American technology companies in Europe. European policy makers in recent years have pursued a series of tax, antitrust and other inquiries into the businesses of Apple, Google and Facebook.

Amazon, the region's largest e-commerce company, is on the list of American tech titans whose products and services European consumers readily buy or use -- but that have drawn scrutiny because competitors and regulators fear that the companies abuse their market power.

Amazon's complex tax practices in Luxembourg, home to its European headquarters, are the subject of a separate investigation by the European authorities. The European Union is also pursuing an antitrust investigation into whether large tech companies have impeded competition in the region's online shopping industry.

In the case of e-books, officials said Thursday that the contracts under investigation might have hampered competition in that market by making it more difficult for Amazon's rivals to offer lower prices.

Antitrust officials added, however, that the opening of the investigation did not indicate that Amazon had broken the region's competition laws.

"Amazon has developed a successful business that offers consumers a comprehensive service," Europe's antitrust chief, Margrethe Vestager, said on Thursday in a statement. "It is my duty to make sure that Amazon's arrangements with publishers are not harmful to consumers, by preventing other e-book distributors from innovating and competing effectively with Amazon."

In a statement, Amazon said it was "confident that our agreements with publishers are legal and in the best interests of readers." The company said it would "cooperate fully during this process."

The investigation in Europe contrasts with what Amazon has experienced in the United States. Amazon introduced the Kindle, the first truly popular electronic reader, in 2007. When Apple introduced the iPad three years later, publishers tried to use the new device as leverage against Amazon. The result was an antitrust price-fixing lawsuit filed by the United States Justice Department against five of the biggest publishing houses and Apple.

The publishers settled and Apple lost, which gave Amazon ample public-relations leverage and complete market dominance. It also left a lot of bruised feelings.

Apple is appealing the antitrust case, and a hearing in New York last December seemed to show that two of the three judges might be sympathetic to its arguments. A ruling is expected shortly.

Penguin Random House, the largest book publisher, is negotiating new contract terms with Amazon, and the discussions are reportedly not going well. Negotiations between Amazon and another publisher, Hachette, produced a monthslong battle last year that sent authors to the barricades and inspired discussion about whether Amazon was saving the world of reading or ruining it. …

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