Just as Amazon's event to announce its new products got underway on Thursday, a federal judge approved a settlement with three major e-book publishers accused of colluding with Amazon's competitors (namely Apple) on prices.
The settlement with Hachette Book Group, Simon & Schuster, and HarperCollins will likely lead to an e-book price war in the months to come, The New York Times' Julie Bosman pointed out. It orders the publishers to sever their contracts with Apple within a week, and to terminate any contracts with e-book vendors that include so-called most-favored nation clauses, which prohibit other retailers from selling books for cheaper. The publishers also must refrain for two years from signing any new contracts that include limitations on retailers' pricing. The settlement comes as the result of a Department of Justice lawsuit against Apple and five publishers who it accused of price-fixing. Penguin Group USA, Macmillan, and Apple did not agree to the settlement, so they're going to be headed to trial next summer.
"The approval opens the door for Amazon and other retailers to steeply discount e-book titles," wrote The Wall Street Journal's Chad Bray and Jeffrey A. Trachtenberg. Amazon is bound to be delighted by the settlement approval, as its $9.99 price-point is what caused publishers to rebel against it in 2010 and make those pricing agreements with Apple in the first place. Amazon is expected to drop its prices back down to $9.99, and Bosman reports that "other retailers, like Barnes & Noble, could feel pressure to respond." Hello, e-book price war.