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You are here: MacNN Forums > News > Tech News > Apple heads to trial in e-book price fixing case

Apple heads to trial in e-book price fixing case
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Jun 3, 2013, 11:07 AM
Apple is today headed to trial to defend itself in the antitrust case brought against it by the US Justice Department over e-book pricing, Bloomberg notes. The company is accused of conspiring with major publishers -- Macmillan, Simon & Schuster, Hachette, Pearson, and HarperCollins -- to artificially inflate the prices of e-books over the $10 threshold that was once standard at Amazon. The publishers were also involved in the case at one point, but each decided to settle before matters went to trial.

Apple has insisted that there was no conspiracy involved when, in 2010, it negotiated an "agency" model for e-books which gave publishers more control over pricing than retailers. The terms helped ensure that the newly-launched iBookstore would have e-book prices on par with or better than other vendors, but only by forcing prices higher across the industry. Amazon remains the leading e-book seller in the US, but now more regularly prices titles over the $10 mark.

"The e-book case to me is bizarre," claimed Apple CEO Tim Cook at last week's D11 conference. "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 being handled by US District Judge Denise Cote, and will come to a ruling without a jury. Cote has previously stated that the Justice Department likely has enough evidence to prove a conspiracy. Should a verdict indeed go against Apple it could force the company to change the way it negotiates book prices, though whether or not they would fall is uncertain.
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Jun 3, 2013, 11:25 AM
...'and yet no one has gone to prison for the financial crisis of 2008'... (as one of CNN's nightly announcers keeps reminding us...? Can the US legal system even comment on conspiracy with any authority...?
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Jun 3, 2013, 12:38 PM
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Jun 3, 2013, 12:46 PM
Well, some sort of price-fixing must have been going on for these companies to be offering digital books at equal, or very close to equal, the price of a printed copy (which is much more useful: read in the tub, sell or give away, read on airplanes during the period when electronic devices must be off, read easily in the sun, drop without breaking it, etc. etc.) The only other possibility I can see that could arrive at people buying something that is worth maybe $2 or $3 for $9 or more would be if the majority of consumers are collectively a bunch rampant idiots. Oh, wait..... But seriously, there has got to be some sort of scam going on here. People aren't really dumb enough to pay nearly full price for a eBook, are they?
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Jun 3, 2013, 01:37 PM
Apple did not set the price. The publisher set the price and Apple took 30% for credit costs, hosting, etc. Amazon was using all sorts of under the table methods to soak the publishers at the time.

Just a thought.
Reality, what a concept! :-)
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Jun 3, 2013, 02:11 PM
You can be guilty of price fixing without having to also be the entity that sets the final price.

Emails between Apple and publishers were discovered where Steve Jobs was discussing what price points to set the books at. While this does, in no way, express any kind of guilt, it's just an good example of why they're even in court over this to begin with.

While I don't believe they did, if Apple colluded with publishers to set the price somewhere as an anti-competitive measure, they can be guilty right along with the publishers. This is what the courts are going to try to prove true or false, hopefully.
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Jun 3, 2013, 03:27 PM
If the DOJ sincerely believes that Apple colluded to set e-book prices -- which I doubt, but I don't have all the facts -- then by all means they should take them to court. What mystifies me is that we have a rock-solid case of Amazon engaging in predatory pricing to lock out competitors and abuse their monopoly -- which is most definitely illegal -- and the DOJ couldn't be less interested. Of course, there is a lot of evidence that Amazon is a lot cosier with the DOJ than Apple, but I hate to be that cynical.
Charles Martin
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