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 fromThe 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’sL. 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: Read more
The U.S. Department of Justice and Attorney Gen. Eric Holder just announced (via CNN) a settlement with three publishers—Hachette, HarperCollins, and Simon & Schuster— following this morning’s report that it would launch an antitrust suit against Apple, Macmillan, and Penguin, which refused to settle. The settlement is said to give publishers the “freedom to reduce the prices of their e-book titles,” allowing Amazon to return to its previous wholesale model.
The states are seeking $51 million in restitution that will be provided through a credit toward a future book purchase or a check, although the Department of Justice’s charges remain civil. The exact details of the settlements with the three publishers were not discussed, but Apple, Penguin, and Macmillan will continue to fight charges in the lawsuit filed earlier today in New York.
As for exactly why Apple and the two other publishers have decided to take the case to court, at least one publisher is speaking. Macmillan’s Chief Executive Officer John Sargent published an open letter today explaining the company’s stance (via PaidContent). In the letter, Sargent claimed the Department of Justice’s settlement demands “could have allowed Amazon to recover the monopoly position it had built before our switch to the agency model.” He also said it is “hard to settle a lawsuit when you know you have done no wrong” and called the agency model the future of an “open and competitive market.”
Interestingly, AllThingsD pointed us to a line from the Department of Justice’s official complaint that indicates Apple proposed teaming up with Amazon at one point:
In addition to considering competitive entry at that time, though, Apple also contemplated illegally dividing the digital content world with Amazon, allowing each to “own the category” of its choice—audio/video to Apple and e-books to Amazon.
Go past the break for Sargent’s full letter, which is a great rundown of the case from the perspective of the publishers that have decided not to settle: Read more
Sen. Herb Kohl, D-Wis., who chairs the Senate’s Antitrust Subcommitteee, is calling for regulators to block the proposed merger of AT&T and T-Mobile:
”I have concluded that this acquisition, if permitted to proceed, would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies.”
“We believe that AT&T’s acquisition of T-Mobile would be a troubling backward step in federal public policy–a retrenchment from nearly two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace,” House Energy and Commerce Communications and Technology Subcommittee Chairwoman Anna Eshoo, D-Calif., Rep. Edward Markey, D-Mass., and House Judiciary ranking member John Conyers, D-Mich., wrote in their letter to FCC and the Justice Department. ”Such industry consolidation could reduce competition and increase consumer costs at a time our country can least afford it.”
Not exactly what AT&T wants to hear. T-Mobile, if it gets out of this AT&T merger, also gets a $3+B check from AT&T for the dance. Read more