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  • Apple to Defend Itself against E-Book Pricing Claims in Antitrust Trial


    The U.S. Justice Department will be taking Apple to court over allegations that the company illegally conspired with publishers to fix the prices of electronic books in order to sell them to iOS users at a higher cost. Apple is the last defendant in the price-fixing case as other publishers have already agreed to settlements with the Justice Department in recent months. According to the government, Apple knowingly engaged in a conspiracy with Macmillan, Simon & Schuster, Hachette Book Group, Pearson, and HarperCollins in order to set prices above the $10 norm that Amazon was charging for e-books.

    According to a lawyer with Patton Boggs, it is “pretty unusual” to see a case like this one go to trial because defendants usually have a tendency to settle. Observers note that it is indicative of a larger trend that has been seen with the Obama administration’s Justice Department more vigorously pursuing antitrust actions against companies.

    If the government wins the case, Apple would likely be barred from certain anticompetitive actions, including price fixing in the ebook market. Apple holds that it acted on its own, negotiating contracts with each individual publisher to establish an “agency” model. Under this model, publishers set prices for books instead of the retailers and model, Apple receives 30% of the price for each book.

    The Cupertino California company says that before it entered the ebook market, nine out of 10 ebooks bought by consumers were purchased through Amazon. Publishers were supposedly unhappy with the low $10 price that the online retailer was set on charging for their products, even though Amazon was actually paying more money to the publishers than it was charging customers for the books. Apple went on to say its entry into the ebook market gave consumers more choices, better e-readers, and lower overall prices. Even CEO, Tim Cook has been resilient in his defense of the company. At last week’s D11 conference, Cook said the following:

    The ebook case to me is bizarre. We've done nothing wrong there and so we're taking a very principled position on this... And so we're going to fight.
    The trial is set to proceed without a jury, with U.S. District Judge Denise Cote presiding. Cote’s pre-trial comments may give Apple pause, though she previously said that the government likely has enough evidence to show a knowing conspiracy on apple’s part. Lawyers for Apple and the Justice Department will be giving their opening statements in a Manhattan federal court. We’ll have to wait to see how this one unfolds.

    Source: Bloomberg
    This article was originally published in forum thread: Apple to Defend Itself against E-Book Pricing Claims in Antitrust Trial started by Akshay Masand View original post
    Comments 2 Comments
    1. unison999's Avatar
      unison999 -
      Government do not go after big corporation without solid proof, presiding Judge even gave preliminary opinion on this matter yet Apple still want to push this? Good luck, better hope government do not escalate this further and bring down "the most successful company in America" to absolutely nothing.
    1. REMED1AL's Avatar
      REMED1AL -
      Quote Originally Posted by unison999 View Post
      Government do not go after big corporation without solid proof, presiding Judge even gave preliminary opinion on this matter yet Apple still want to push this? Good luck, better hope government do not escalate this further and bring down "the most successful company in America" to absolutely nothing.
      First, the fact that a Judge who has yet to fully view all evidence, and definitely seen nothing of Apple's defense or process, has given a public opinion shows bias and is actually favorable for Apple since, if they lose, it's grounds for an appeal.

      Second, just b/c the government is going after a corporation does not mean their case is bulletproof. On the outside it could easily appear they raised prices for the consumer through price fixing but that's opinion and not fact. Apple gave each publisher the opportunity to sell their books through Apple at a 30% payout to Apple. Then Apple asked them how much they want to charge and, not surprisingly, they decided they wanted to charge more.

      Lastly, if Amazon was paying more for each book than the consumer was paying and Apple was instead taking 30%... the math makes it pretty clear as to why a business would opt to raise it's prices and come out with similar profits per book but actually gain significantly in sales thus making more money.