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In 1995, Jeff Bezos founded Amazon.com, an Internet book retailer, in the garage of his Seattle home. By the end of 1996, the company had sales of $16 million and losses of $5.8 million. In January 1997, Barnes & Noble announced that it would open its own Internet retail site and offer a 30 percent discount on all in-stock hardcovers, together with a 20 percent discount on all in-stock paperbacks. Amazon must decide how to respond to this new on-line competitor. See also the B case (M-0550).