Apple (AAPL) To Appeal Decision That They Colluded On E-Books
Apple Inc. is planning to appeal the e-book case where a federal judge ruled that the company colluded with all of the big publishers to fix e-book pricing through an agency model. In April 2012, the Department of Justice filed an antitrust complaint against Apple and the six major book publishers. Five of the book publishers settled with the Department of Justice, leaving Apple all alone. Apple settled another antitrust lawsuit without admitting guilt in a similar e-book lawsuit with the European Commission.
“Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong and we will appeal the judge’s decision,” said Apple in a statement.
“Apple played a central role in facilitating and executing that conspiracy,” stated Judge Denise Cote in the ruling. “Apple seized the moment and brilliantly played its hand. Through the vehicle of the Apple agency agreements, the prices in the nascent e-book industry shifted upward, in some cases 50% or more for an individual title,”
After Apple launched the iBookstore in 2010, they were the little guys behind Amazon.com. The e-book publishers were using an agency model pricing model. Amazon.com named their prices for e-books and print books. This is when publishers decided to help Apple out by setting up prices for books at between $12.99 or $14.99. Amazon.com was charging $9.99 for new releases, but the Kindle was not as popular as the iPad so the consumers would make up the difference in the prices. Then Apple forced publishers to put the same price on the Kindle Store.
Amazon.com’s VP of Kindle content Russell Grandinetti testified in the Department of Justice lawsuit and said that publishers threatened to pull their catalogs from the Kindle Store unless they switched to the same e-book pricing model. Now publishers and e-book stores will have to end the agency pricing model for the next two years.This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at +AmitChowdhry