Cue on agency model: ‘I don’t think you understand. We can’t treat newspapers or magazines any differently than we treat FarmVille.”

By now you probably know that the U.S. Department of Justice launched an antitrust lawsuit against Apple and two publishers this month following an investigation into Apple’s eBook pricing agency model. Three publishers, including Hachette, HarperCollins, and Simon & Schuster, decided to reach a settlement with the Department of Justice to return to Amazon’s set-your-own price wholesale model. Meanwhile, Apple, Macmillan, and Penguin will take the fight to court.

Interestingly, a report from The Wall Street Journal, which is owned by the HarperCollins’ parent company News Corp, suggested Apple was only ever trying to continue its App Store business model. The Wall Street Journal’s L. Gordon Crovitz described visiting Senior Apple Executive Eddy Cue to discuss changing Apple’s policies for publications. He quoted Cue as comparing book pricing to apps and not wanting to treat publications differently than app developers:
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Apple wants to go to trial in eBook price-fixing, no settlement planned

An Apple lawyer told Reuters today that the Cupertino, Calif.-based Company wants to go to trial over allegedly working with five other publishers to raise the prices of eBooks. A few analysts already said that Apple has a good chance of winning in court, which is most likely why Apple will not choose to settle and will instead fight it out. An Apple lawyer told Reuters: “Our basic view is that we would like the case to be decided on the merits. We believe that this is not an appropriate case against us and we would like to validate that.”

Three of the five accused eBook publishers already settled with the U.S. Department of Justice, but Macmillan and Penguin chose to also fight the Department of Justice. All five publishers are accused of meeting in a London hotel to discuss raising the price of eBooks.

Apple may have a strong case, because it did not participate in the meeting and it does not set the price of publishers’ eBooks. The civil antitrust suit alleged, however, that Apple’s move to let publishers set their own prices—and it is a requirement that publishers do not sell their digital books for cheaper elsewhere—forced consumers to pay millions more for eBooks than they should have.

Apple was also accused of setting a monopoly over the eBook market, but the company would like to think otherwise.

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Report: DOJ to sue Apple this week over fixed eBook pricing allegation

The U.S. Department of Justice will sue Apple as early as tomorrow morning over allegations of fixing eBook prices with five major publishers, according to Reuters. The five publishers, which are also in question, will be looked at later in the week.

The Justice Department is investigating alleged price-fixing by Apple and five major publishers: CBS Corp’s Simon & Schuster Inc, HarperCollins Publishers Inc, Lagardere SCA’s Hachette Book Group, Pearson and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH.

A lawsuit against Apple, one of the parties not in negotiations with the Justice Department for a potential settlement, could come as early as Wednesday but no final decision has been made, the people said.

The news of a lawsuit comes just weeks after the Department of Justice launched a probe into Apple and the five publishers. We will keep you updated with any more news about this case. Read more

Apple explains stance on e-book price fixing and the ‘Kindle threat’ in court documents

Yesterday, reports from The Wall Street Journal claimed the United States Justice Department was planning to launch an antitrust case against Apple and the country’s five largest book publishers related to claims of e-book price fixing. The European Commission announced in December that it would begin investigating whether Apple and book publishers “engaged in illegal agreements or practices that would have the object or the effect of restricting competition.” Many believe the probes are a direct result of Steve Jobs’ comments documented in Walter Isaacson’s Steve Jobs biography where the late CEO said: “Amazon screwed it up.”

“We told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30 percent, 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.’ “

Today, new court documents from a request by Apple to throw out a class action case over e-book price fixing revealed Apple’s stance on the issue. PaidContent explained: “Apple argues that its business plan was to sell as many e-books as possible and that it had no incentive to raise prices.” Meanwhile, Apple argued: “Why would Apple offer Amazon’s Kindle app on the iPad.” The company’s comments sidestepped all claims about Apple allegedly conspiring to slow Amazon’s entrance into the tablet market with Kindle Fire:

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