Amazon sued for bullying Kindle accessory maker M-Edge

By on December 28, 2011, 6:30 PM

M-Edge, an accessory maker for the Kindle and other such devices, has sued Amazon for "unlawful corporate bullying." Filed in Maryland, the federal suit alleges that Amazon attempted to "hijack" M-Edge's products through threats, deceit, interference with customer relationships as well as patent infringement.

M-Edge has been building protective cases for Amazon's Kindle since it first launched in 2008, addressing a common complaint about the e-reader's flimsy default cover. At the time, Amazon commissioned 8% of M-Edge's sales, but that changed as the Kindle (and inherently, M-Edge's products) grew more popular.

After the Kindle appeared on Oprah Winfrey's show in October 2008, M-Edge's inventory sold out. That drew attention from Amazon, which requested that the accessory firm become a "special partner" in January 2009. As part of the relationship, Amazon vowed to give M-Edge pre-launch details about next-generation Kindles.

A month later, M-Edge entered a "Kindle Compatible" agreement that placed its products in Amazon's "Kindle Store" page. In exchange, Amazon requested another 7% slice of the sales (totaling 15%). Amazon wanted to advance the relationship in May 2009 by making M-Edge a "first-party" seller, but the firm declined.

Fast forward to November 2009, the companies penned a three-year agreement that locked M-Edge into the 15% commission while affording it special status as a preferred seller. Only two months into that deal, the e-tail giant demanded a new contract that would grant it 32% of sales and make M-Edge a "first-party" seller.

M-Edge refused and that's where Amazon proceeded with various strong-arm tactics. The company supposedly threatened to "de-list" M-Edge from Amazon.com unless it complied. Although the parties never signed a new agreement, in February 2010, Amazon demanded that M-Edge retroactively pay the 32% commission.

Unwilling to part with the $600,000, M-Edge told Amazon to take a hike. The harassment continued through May 2010 as Amazon kept pushing new contract terms, demanding unfair retroactive pay as well as threatening to "de-list" and bury M-Edge's products on Amazon.com. M-Edge caved to the pressure in July 2010.

The revised contract granted Amazon a 32% commission, allowing it to "extort" an extra $6.5 million from M-Edge. Despite making more cash, Amazon failed to honor its old agreement to share pre-launch details about the Kindle. The third-gen e-reader launched on July 28, 2010 and M-Edge only received a one-day notice.

What's more, the filing implies this was an attempt to hijack M-Edge's sales. Amazon launched its own covers that bared a stark resemblance to M-Edge's designs, all the way down to the colors chosen. M-Edge took the beating and in January 2011, Amazon demanded even more cash -- another $150,000 a year, to be precise.

Amazon resorted to similar bullying methods, demanding onerous reporting requirements, vowing to de-list M-Edge's products and withholding payments. By March 2011, Amazon allegedly owed M-Edge nearly $2 million. That's a summarized version of the filing's background section. You can read the full 15-page complaint here.




User Comments: 17

Got something to say? Post a comment
supportme said:

That' sick !! Didn't expect a business as huge as Amazon to act this cheap

Guest said:

Whoever at Amazon decided to do these greedy moves should be fired. That employee is defnitely not healthy for Amazon to have around.

drfan said:

If this was true, I might start to look else where to shop.

Guest said:

wow lol sounds like something apple would do, not amazon

Guest said:

If anyone is surprised by this, then they do NOT know Amazon as well as they think they do. This is not an unusual or unheard of tactic from them, and personally, I hope that M-Edge wins their case. There's no reason or excuse for schoolyard bullying of third-party vendors who make your company's product look more appealing to the consumer. BAD FORM, AMAZON.

P.S. Those with a background in negotiation will recognize this as a standard tactic from the win-win negotiations playbook (which almost always results in a win-lose for the little guy unless they stick to their mission and purpose).

Guest said:

this is just shitaki i hope the win the case and recover all the money plus 1000% in damages .

Somian said:

supportme said:

That' sick !! Didn't expect a business as huge as Amazon to act this cheap

I guess companies don't get that big unless they exert these kind of practices...

andy06shake said:

Maybe Amazon should change there name to Apple!

Guest said:

Corrupted forces are drawn to perceived power such as money, the only problem is they can never achieve this power, they never have enough and always need more.

TorturedChaos, TechSpot Chancellor, said:

This surprises me. I have never really seen Amazon in the news much, especially anything bad. I wonder now that M-Edge came forward with this if other 3rd party retailers are going to start to come forward also.

Makes me a little sick since I just bough a Kindle Touch and have been very happy with everything I have ordered through Amazon. I had a pretty high opinion of them.

Guest said:

It sounds almost like an individual at Amazon, probably someone in marketing/sales that relies on commissions. Amazon is a BIG corporation, maybe this is something only a few mid level managers know; The CEO may not have known about it. If true, this person will certainly be fired and new policies put in place.

Unfortunately every big organization always have a few bad people. You can't unfairly blame an entire organization for that. Just like everyone always blames the government for everything. Yet there are many many people working hard to earn an honest living.

It's always SO easy to target and blame an antire person or organization, rather than find the underlying cause and reason. I'm not protecting Amazon, they are of course responsible.

But I' not going to stop purchasing because of a few ID10T's in the system. Just like that seasonal employee af Fedex tossing TV's over the fence.

Guest said:

Come amazon no need for this?

Guest said:

When a company goes public. The board don't give a F$ck about ethics or honor. All they want is to keep profits up and stock prices high so they can sell out.

Guest said:

I hate to say it, but Guest is right about the board's goals. Companies this large become exclusively a for-profit organization, and seldom will you find a company that functions in a capacity that doesn't revolve around wealth and greed.

Also, while a single individual or group of individuals may have been responsible for these strong-arm tactics, the fact is that these people reflect the level of integrity that Amazon is willing to hire; and it reflects the integrity of the business practices that Amazon is willing to approve of for the sake of capturing their client's attention. This wasn't a fluke; it happened over a two-year period!

Therefore, Amazon deserves any flak it receives for this, and as I said in an earlier post: there is simply no reason to bully someone who makes your products/services look better to the consumer.

BAD FORM.

veLa veLa said:

Somian said:

supportme said:

That' sick !! Didn't expect a business as huge as Amazon to act this cheap

I guess companies don't get that big unless they exert these kind of practices...

Well met.

Guest said:

Oh Deer what a Boar. If only they hadn't bared their TeeTh instead of their ****. To be Barred would be so bad.

Ghost of Kim-Jung-IL.

Guest said:

So much for buying the kindle fire.

Load all comments...

Add New Comment

TechSpot Members
Login or sign up for free,
it takes about 30 seconds.
You may also...
Get complete access to the TechSpot community. Join thousands of technology enthusiasts that contribute and share knowledge in our forum. Get a private inbox, upload your own photo gallery and more.