Apple preparing DoJ court battle over e-book fixing: report
Summary: Apple is reportedly preparing to take allegations of e-book price fixing to the Department of Justice.
Apple will take the allegations that it 'fixed' e-book prices in a bid to undermine Amazon's business to court, reports Bloomberg, citing sources famililar with the matter.
The two other publishers are thought to be Macmillan and Pearson's Penguin Group, who earlier this week were reportedly "reluctant" to settle the case before an antitrust investigation begins.
The case is being taken further as publishers attempt to defend the 'agency' model -- which allows the publisher rather than vendor to set e-book prices. This, in turn, gives publishers control over pricing and consumer discounts.
The Justice Department will be investigating whether the Cupertino-based company conspired with publishers to control pricing structures and limit competition within the e-book market.
According to Bloomberg's sources, the government wishes to establish a settlement that would allow competing retailers, such as Amazon, to revert to a wholesale model. In comparison to an agency model, wholesale structures ensure retailers retain control over the price of goods that consumers are required to pay.
CBS-owned Simon & Schuster (ZDNet is also owned by CBS), Hachette Book Group, and HarperCollins are attempting to avoid a potentially expensive and lengthy legal battle, and may be willing to reach an agreement by next week.
It is possible that a settlement would void certain clauses in the contracts that Apple issues book sellers; such as the clause that requires participants to provide the company with the lowest prices offered to competitors.
Apple was unavailable for comment at the time of writing.
Image credit: ZDNet
Related:
- Apple to fight on in e-book price-fixing 'cartel' case
- Europe begins antitrust case against Apple, e-book publishers
- EU regulators willing to settle in Apple e-book ‘cartel’ case
- Justice Dept. to sue Apple, other publishers over e-book ‘cartel’
- Mystery Apple event to focus on education, iTunes U, digital publishing?
- CBS News: Apple denies e-book price fixing to beat Amazon
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Talkback
"Agency model" can not "fix" the prices, contrary to Amazon's model
Apple takes 30% from whatever price the [i]seller[/i] wants to set. Before Apple came to the market Amazon was setting end-user prices and only paid small money to publishers. Apple's deal seemed more fair to publishers so Amazon had no other choice but to offer better conditions.
This all resulted in raise of average end-user prices. However, since [b]Apple has no word on how big or small end-user price has to be[/b] (contrary to Amazon), DoJ will hard time going after Apple for that. Publishers is another matter. How much success can DoJ have pursuing them is not clear; lets see.
This is not to say that average price hike is any good for consumers. Steven Jobs said that this is only short-term effect, and in the long run agency model will allow to sell significant amount of books cheaper than $9.99 price that Amazon would set on them.
Not accurate
Can you name any other non-cartel business that uses this in the consumer sector? Any other business where one reseller says "I don't care what you sell them for but I ALWAYS get the lowest price."? It is literally guarranteed the lowest price by contract.
Apple knew full well the affect this model and the pricing constraints it insisted upon would have on all other ebook vendors including Amazon.
For me as a former avid ebook consumer, I know it significantly affected my pricing payment structure - I am getting a lot less today for the same dollar spent.
You need to stop rolling out the "$9.99" exhibit as the affect was way beyond that. As an example: Out of print books: you can order them new or like new for less than the publishers are setting as the ebook price.
Either way, I hope in a fashion this does go to trial. It will be a very interesting case. My personal thought is either the defendants will get their asses handed to them or will settle out of court.
Apple disputes that it ever dealt with prices for other electronic stores
Read the Agreement Details
Go read the original and tell me your interpretation.
Where to read the original?
This one is a no brainer for Apple to win....
+1 for DeRSSS...
I don't know why anyone would try to drag them into this... They don't set the prices, so how could they "fix" any of them to be anti competitive? Makes you wonder what the collective IQ of the DOJ is... 45???
In the Real World
You are correct
TF&ITW
Contact: TheFashionAndITAmerica@yahoo.com
Website: http://thefashionanditamerica.wordpress.com/??
111
Anticompetitive behavior?
Totally off base
This is like saying Apple is going to sell cars and as a result they cannot be undersold and in doing so disallows any car dealership to sell cars for less than the MSRP which the manufacturers can change to suit their needs. Any discounts are automatically granted to Apple and others get them at the manufacturers discretion.
More like
I see now.
Apple convinced the publishers to no longer sell e-books at a wholesale price to Amazon or other vendors. The publishers agreed that no distributor could sell e-books for less than Apple. The Apple deal came about in 2010, as Amazon was scaring publishers by selling new titles for less than the wholesale price. The online retail giant wanted market share for its Kindle line of handheld electronics, which competes with Apple's iPad. Amazon was willing to take a loss on some of the most popular e-books for the sake of promoting Kindle over iPad. The publishers worried that Amazon had too much market power. They viewed its loss-leader pricing as predatory, since it would discourage Apple, Barnes & Noble and other retailers from selling e-books. After all, who wants to get into a competition that's guaranteed to lose money? The upshot of the Apple deal was higher prices for new e-book titles.
Apple obviously argues that it did not really "convince" publishers to ...
Antitrust
Here is the undeniable fact:
Apple and most of the major publishers (who have an almost total monopoly) got together and negotiated a way for them to control the price of the book being sold to the consumer. They basically decided that anyone who wants to buy a book from them would basically pay a price set by the publisher. On that effort, they were then going to use that leverage and force amazon into a similar arrangement. This would mean that they had the intent of using their dominant power in the publishing industry and apple's ecosystem to control and manipulate the price of their works without the input of a free market system.
Here is what is alleged:
1. They were going to use their monopoly to control the price of their product and dictate that price to bookstores, amazon, etc.
2. This was not done on a one on one basis but a concerted organized effort to change the pricing structure irregardless of the open market value of the item.
3. They aren't accused of setting prices on the product and selling it, they are accused of setting the price of the book AND dictating that price to the retailer.
Some may speculate that the eventual goal would result in lower prices and others may claim that this gives amazon too much power, but the main question is not what may or could happen, the question is WHAT ACTUALLY happened.
Did anti-competitive behavior and monopoly abuse occur? (whether it was for the betterment of our world or not is not the issue here) I think the answer is yes but I'm not sure on damages and how egregious it was. That is something the mega-lawyers and the doj are going to fight it out about.
Its great