Apple Fighting Ebook Price-Fixing Charges: 10 Issues in the Case

 
 
By Don Reisinger  |  Posted 2013-06-03 Email Print this article Print
 
 
 
 
 
 
 

NEWS ANALYSIS: Apple, fighting an antitrust suit claiming that it engaged in price-fixing with ebook publishers, doesn't seem inclined to seek a settlement.

Apple is defending itself against charges that it engaged in a price-fixing scheme with book publishers to effectively limit competition in the ebook market and become a dominant force in the sale of digital books across mobile platforms.

The antitrust trial started June 3 in U.S. District Court in Manhattan with opening statements from Apple and U.S. Justice Department lawyers.

Several book publishers were included in the original lawsuit the Department of Justice brought against Apple. A large number of them have simply settled with the government rather than spend cash on a costly trial. Apple, though, has held out, saying that it did nothing wrong, and would like its day in court to prove that. Whether Apple will be able to make that case effectively and win its judgment against the Department of Justice remains to be seen.

But what should members of the ebook-buying public know about the case? Here are some of the issues.

1. Apple has little help from publishers

When this kerfuffle started, Apple was named in the lawsuit along with several prominent book publishers, including Penguin, Simon & Schuster and others. However, those companies have all settled the case, leaving Apple to defend the case on its own. After all, if they're already out of it, why would they want to help the iPhone maker?

2. Steve Jobs didn't help matters

Steve Jobs might have been the chief reason Apple is in such trouble right now. When Jobs (who passed away in 2011) was running Apple, he sent an email to a book publisher discussing setting prices. He told the author of his biography that he held discussions with book publishers about the so-called "agency model, where [publishers] set the price, and we get our 30 percent, and yes, the customer pays a little more, but that's what you want anyway." That's not good for Apple.

3. The judge doesn't seem too confident in Apple's defense

Judge Denise Cote, who's presiding over the case, doesn't seem all that confident in Apple's defense. In fact, in a pretrial brief, she wrote that she believes the U.S. government "will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of ebooks."

4. Amazon was previously selling ebooks for less

The issue at play is the aforementioned agency model. Under that model, booksellers must sell titles at a price set by publishers. Prior to its establishment, Amazon was the top ebook seller in the market because it set its own prices. Publishers would then get a piece of whatever it brought in. Apple and the publishers allegedly changed that to generate more revenue.



 
 
 
 
 
 
 
 
 
 
 
 
 

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