M-Edge’s complaint claims that, two months after signing a 3-year contract for 15% royalties on the cases, Amazon turned around and tried to pressure M-Edge into signing a contract for 32% royalties instead, and threatened it with delisting from the site when it refused. Since Amazon represents 90% of the company’s revenue, it was unable to hold out and finally signed the new contract, costing it $6.5 million it would not otherwise have had to pay.
M-Edge also alleges that Amazon created a light-equipped Kindle case of its own in violation of one of M-Edge’s patents, and played with its rankings and inventory reports in the on-line store to make it harder for customers to find.
It’s certainly no secret that Amazon plays hardball with its suppliers—witness the kerfuffle last year when five of the big six publishers imposed agency pricing on it. It would be good to see that kind of behavior get firmly smacked down. Still, I have to wonder whether there will be any satisfactory income for M-Edge. Nothing says Amazon has to carry its products at all after the terms of the current contract expire. If Amazon represents 90% of the company’s revenue, its days might still be numbered even if it wins.