Digital Spy

Search Digital Spy
2

Media News

Apple sued in US over eBook 'price fixing' claims

By
Exterior view of the Apple iPad 3 launch event in San Francisco

© PA Images / Paul Sakuma/AP

Apple has been accused by the United States government of colluding with publishers including HarperCollins, Macmillan, and Penguin, to fix eBook prices.

The US Department of Justice has filed a lawsuit against Apple and the publishers today in a New York District Court, claiming that they have conspired to fix prices in the eBook market, rather than allowing retailers to set them.

Alongside Apple, the law suit also names Hachette Book Group, HarperCollins, MacMillan, Penguin Group, Pearson Plc and Simon & Schuster, a unit of CBS Corp.

"Apple facilitated the publisher defendants' collective effort to end retail price competition by co-ordinating their transition to an agency model across all retailers," said the complaint.

Reports suggest that Simon & Schuster, Hachette and HarperCollins have settled their suits today, but The Daily Telegraph cites sources familiar with the matter as saying that Apple and Macmillan have refused to engage in the negotiations, denying that they have ever engaged in price fixing.

They are understood to believe that pricing agreements between Apple and publishers have enhanced competition in the eBooks market against the dominant Amazon.

But Bloomberg reported that the US Justice Department is investigating how Apple may have allegedly manipulated the way publishers charged for eBooks on the iPad after it launched in 2010.

Penguin Group is also understood to be prepared to take the US Justice Department to court if required.

At the heart of this case is a dispute over how eBooks should be sold. Apple, Penguin and Macmillan want the 'agency' model, in which prices are set by publishers, while 'distribution' platforms take a cut of sales, in Apple's case - 30%.

However, the US government feels that the wholesale model, in which Amazon and other retailers decide what to charge, is more beneficial for consumers and competition.

Steve Jobs introduces the iPhone, 2007
Apple has always protested its innocence in eBook pricing, but its stance has been questioned following a controversy over previous comments made by its late co-founder Steve Jobs.

The US government says that the alleged conspiracy involved the defendants shifting from a wholesale to an agency model, effectively ending price competition through their collaboration with Apple.

The complaint even quotes Steve Jobs as saying: "We'll go to [an] agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway."

In its law suit, the department adds: "Each Publisher Defendant desired higher retail e-book prices across the industry before '$9.99' became an entrenched consumer expectation.

"By the end of 2009, however, the Publisher Defendants had concluded that unilateral efforts to move Amazon away from its practice of offering low retail prices would not work, and they thereafter conspired to raise retail e-book prices and to otherwise limit competition in the sale of e-books.

"To effectuate their conspiracy, the Publisher Defendants teamed up with Defendant Apple, which shared the same goal of restraining retail price competition in the sale of e-books."

Should some of the publishers opt to cut a deal with Apple, they might provide further evidence proving a conspiracy, making Apple's position more difficult.

The Justice Department has taken on large technology companies in the past and forced through changes, including a case in 2010 when it investigated Apple, Google, Pixar and other firms over "no employee poaching" agreements in staff contracts. Prosecutors reached a deal with the firms to eradicate the practice.

> Apple market value exceeds $600 billion

You May Like

Comments

Loading...