Why You Got A Refund From Amazon Today: An Explainer

A lot of people woke up today with a surprise in their email: Cash from Amazon. In some cases, it was hundreds of dollars worth of credit. So why the sudden burst of generosity? It was ordered by the court!

So, who sued Amazon?

Nobody! Apple and five major publishers were dragged into court over accusations of price-fixing. As you may have guessed, they lost.

Wait, so Apple and five publishers were actually fixing the price of books?

It’s a little more complicated than that. Apple essentially made publishers sign a contract where the Apple store got the lowest price on ebooks. That made Apple, de facto, the price floor for ebooks. You get no points for guessing what happened next.

The publishers used that clause to jack up prices everywhere?

Yep. The prices of ebooks ballooned in 2010 and just as promptly deflated in 2012, when the government called B.S. and started handing out lawsuits. Whether or not that was a deliberate effect is a question of some dispute; it’s certainly not out of the realm of possibility that Apple just straight up did not care what the fallout was. But intentional or unintentional, a whole lot of books were price-fixed, and a whole lot of people are seeing money because of it.

So what does Amazon have to do with any of this?

Basically, it’s cheaper and more effective to meet the terms of the settlement by just refunding anybody who bought an ebook from Amazon. Amazon, surprisingly, wasn’t involved with this, maybe because they saw a hated rival about to fall off a cliff and just popped open a beer to watch the fun.

So, what about Amazon’s enormous and arguably distorting role in the market?

That, my friend, is a lawsuit for another day.