Apple’s E-Book Loss Is Making Amazon Very Happy

Amazon

U.S. District Judge Denise Cote recently ruled that Apple (NASDAQ:AAPL) violated antitrust laws by conspiring with publishers to fix prices in the e-book business. Now some analysts believe that Internet retail giant Amazon (NASDAQ:AMZN) can turn Apple’s loss into a market advantage.

During the trial, U.S. Department of Justice lawyers contended that Amazon was the primary target of Apple’s e-book price-fixing conspiracy. Before Apple’s entry into the e-book market, Amazon was dominating the market by selling e-books at a standard price of $9.99. However, the recent verdict against Apple may give Amazon the upper hand in future negotiations with publishers.

“Amazon emerges as the winner from all of the activity related to e-book pricing. The company seems to be free to price the way it wants to, which, by Amazon’s standards, is aggressively to gain market share,” said Telsey Advisory Group analyst Tom Forte via Bloomberg.

After Apple convinced several major publishers to adopt the agency model, Amazon was also forced to adopt the agency model and raise its e-book prices. However, Apple has previously used similar negotiation tactics in other markets. “Apple is using that agency model in a number of contexts and they chose to use it in part for e-books because they were using it in other contexts,” S&P Capital IQ analyst Scott Kessler told Bloomberg.

Apple may now have to reconsider using the agency model for other content markets. Apple will also have to pay a financial penalty to the U.S. government and settle with various states that were involved in the lawsuit. However, the greatest impact on the Cupertino-based company may be how it conducts future negotiations in other content markets.

Apple may also be subject to antitrust compliance monitoring by the government as part of the eventual resolution of this lawsuit. “We’re likely to see pretty broad, invasive government monitoring. This case could have a big effect on how they set up new businesses,” noted Cleveland State University law professor Christopher Sagers via Bloomberg.

Here’s how Apple and Amazon have traded over the past five days.

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