Apple Just Got a New Weapon for its E-Books Battle Against Amazon
Apple (NASDAQ:AAPL) appears to be returning to its e-books market battle against Amazon (NASDAQ:AMZN) with a vengeance. As first reported by TechCrunch, Apple has acquired BookLamp, a small Idaho-based startup that provides digital book analytics services. Apple subsequently confirmed the purchase with its standard boilerplate acquisition statement given to Re/Code. “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans,” stated Apple. According to TechCrunch’s sources, Apple paid between $10 million and $15 million for BookLamp.
While BookLamp has long provided several companies — including Apple and Amazon — with book data analytics services, the company’s Book Genome Project technology may have been what led Apple to outright acquire the company. “At first Apple and BookLamp talked about growing their contract, but then they talked more from a strategic standpoint,” stated one of TechCrunch’s sources. “What Apple wanted to do was, instead of contract, they wanted to make sure whatever work was done was done just for them.”
Similar to what Pandora’s (NYSE:P) Music Genome Project does for music recommendation; BookLamp’s Book Genome Project does for books, by analyzing various data points using natural language algorithms. This technology allowed BookLamp to provide readers with book recommendations based on similarities found in writing styles, thematic ingredients, and plot elements. As noted by TechCrunch, BookLamp’s technology will likely be used by Apple to bolster its iBookstore with an effective personalized book recommendation and discovery service. While Apple’s iBooks app already provides users with recommendations based on authors, categories, and best-seller lists, it lacks a finely-tuned personalized recommendation service like the one BookLamp is capable of providing.
More importantly, the acquisition of BookLamp gives Apple yet another weapon to use in its ongoing battle for e-books market domination against rival Amazon. According to one of TechCrunch’s sources, “in broad strokes, the goal that [BookLamp founder Aaron] Stanton and three of the folks he was working with from the original BookLamp crew is to beat Amazon at their own game.”
Apple suffered a setback in its e-book market ambitions last year when U.S. District Judge Denise Cote determined that the company had violated antitrust laws by orchestrating an illegal e-book price-fixing conspiracy with five publishers by coordinating the use of agency model contracts. In her ruling, Judge Cote noted that before 2010, Amazon was dominating the market by selling e-books at a standard price of $9.99. However, after Apple’s pricing arrangements with various publishers took effect ahead of the iPad’s debut, some e-book prices increased from $9.99 to as high as $14.99. The ruling resulted in several e-book market restrictions being imposed on Apple, including the implementation of a staggered contract renegotiation schedule with the five publishers involved in the conspiracy in order to prevent future collusion.
Although Apple recently agreed to settle with consumers that alleged they were harmed by the e-books price-fixing conspiracy, the company is still in the process of appealing the original ruling. Despite still dealing with its long-running e-books litigation, Apple’s recent acquisition of BookLamp shows that the Cupertino-based company is still focused on challenging Amazon’s ongoing dominance of the e-books market. CEO Tim Cook reiterated the Apple’s overall approach to acquisitions during the company’s last quarterly earnings call. “We’re always looking in the acquisition space, but we don’t let our money burn a hole in our pocket and we don’t do things that aren’t strategic,” said Cook according to a transcript provided by Seeking Alpha.
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