Friday, April 13, 2012

Apple fires back at DOJ over e-book price fixing lawsuit

We certainly didn't expect differently, since Apple's stance on this matter has been well-known. We just didn't know when. On Friday, two days after the Justice Department announced it was suing Apple and a number of publishers over alleged e-book price fixing, Apple fired back.

Apple's statement to the media was as follows, delivered by Apple spokesman Tom Neumayr:

"The DOJ’s accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore."

That's true, and that's the agency model that publishers wanted to keep for e-book pricing., the market leader then and now for e-book sales, wanted a wholesale model, and it had succeeded in building that, but the DOJ charges that Apple and book publishers worked together to force a move to the agency model.

Apple, along with publishers Macmillan and Penguin, plan to fight the charges. Already, however, Hachette, HarperCollins, and Simon & Schuster have agreed to a proposed settlement with the DOJ.

In addition to collusion, the DOJ has charged that Apple and the publishers inked deals with "most-favored nation" clauses embedded, meaning that no other e-book retailer would be able to sell at a price lower than Apple's.

Sharis A. Pozen, acting assistant attorney general in the DOJ's antitrust division, said that publishers reportedly referred to's $9.99 pricing scheme for new and bestselling e-books as "wretched."

Pozen also quoted former Apple CEO Steve Jobs, who reportedly said of the deal with the publishers: "The customer pays a little more, but that's what [publishers] want anyway."

That quote comes straight out of Steve Jobs official bio, where the full quote is:

"We told the publishers, 'We'll go to the 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.' They went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books.'"

A number of states have joined together and filed their own separate lawsuit. The suits say that the collusion between Apple and the publishers has cost consumers more than $100 million over the past two years.

In terms of the states, Connecticut and Texas, which are two of the aforementioned 15 states have reached agreements with Hachette and HarperCollins to provide $52 million in restitution to consumers. The amount was estimated using a formula based on the number of states participating in the suit, and the number of e-books sold in each state.

It's possible that other companies might be persuaded to join in the settlement, and other states may sign onto the agreement, as well.

The legal battle may soon reach outside the U.S. Australia is reportedly considering an investigation into Apple e-book price-fixing.

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