Caltech and NYU economists call for Apple ebooks trial verdict to be overturned

ebooks

Apple’s prospects of a successful appeal against the ruling in the ebooks trial may be improved by a brief filed by two economists from Caltech and NYU who suggest that the ruling was in error and call for it to be reversed.

Apple was found guilty of anti-competitive practices on two grounds. First, it asked publishers to switch from a wholesale pricing model – where publishers sold books in bulk and retailers set their own prices – to an agency model, where publishers set prices and retailers took a percentage cut. This, the court found, reduced price competition …  Read more

Apple finally comments on DOJ antitrust charges: ‘We’re breaking monopolies not starting them’

Apple finally commented late this evening on the U.S. Department of Justice’s antitrust suit against the company. What did Apple think up with those extra 48 hours? Peter Kafka got the scoop from Apple’s 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.

The civil antitrust suit alleged 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 books than they should have.

Read more

Analysts: Apple has a strong case in DOJ’s lawsuit over eBook price-fixing

Yesterday, the U.S. Department of Justice filed a lawsuit against Apple and five other publishers over eBook price-fixing. The Department of Justice reached a settlement with three of the publishers in the suit, but Apple, MacMillan, and Penguin are standing strong (the U.S. is also after Simon and Shuster). Yesterday, MacMillan’s CEO released a letter on the matter and explained why the publisher chose not to settle. In the note, he said 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.”

As CNET noted, the Department of Justice may have a more difficult case against Apple. For one, Apple does not have a strong-hold in the eBook market, because Amazon has the commanding lead with its Kindle sales. The Department of Justice has a case against the publishers rather—and that is most likely why three of them have already chosen to settle. Apple only holds open the store, while publishers are the ones who choose the prices to set.

The settlement reached with three of the publishers yesterday is said to give them “freedom to reduce the prices of their e-book titles,” which allows Amazon to go back to its previous wholesale model.

A key point that the Department of Justice is using in its lawsuit is when all five of the publishers met together at a hotel in London to talk over eBook prices. Apple was not present at the meeting, so this may give the Department of Justice a harder time to press the Cupertino-based Company. Of course, the Department of Justice could still come out victorious, but it may have to dig a little deeper against Apple than it did with publishers. We are sure there will be more out of this case as time goes on.

Read more

The Justice Department probing Apple and five major US publishers over alleged price fixing of electronic books

The Wall Street Journal reports that the United States Justice Department threatened to launch an antitrust lawsuit against Apple and five of the nation’s biggest book publishers over an alleged price-fixing that has resulted in higher prices of e-books.

Several of the parties have held talks to settle the antitrust case and head off a potentially damaging court battle. If successful, such a settlement could have wide-ranging repercussions for the industry, potentially leading to cheaper e-books for consumers. However, not every publisher is in settlement discussions.

The government is specifically aiming to probe CBS Corp.’s Simon & Schuster Inc., Lagardere SCA’s Hachette Book Group, Pearson PLC’s Penguin Group (USA), Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, and HarperCollins Publishers Inc., a unit of News Corp. that also owns The Wall Street Journal.

At question: The so-called agency model where publishers freely set prices of their titles on Apple’s iBookstore before the Cupertino company reaps 30 percent of the proceeds. The freedom to pick the price has led most—if not all— publishers to allegedly raise prices of e-books across the board as they feared customers would get accustomed to inexpensive $9.99 Kindle books from Amazon.

Barnes & Noble CEO William Lynch already gave a deposition to the U.S. Justice Department. He said abandoning the agency model would allow a single party to achieve dominance in the marketplace, alluding to Amazon. According to the people familiar with the matter, the U.S. Justice Department believes that Apple and the publishers “acted in concert to raise prices across the industry, and is prepared to sue them for violating federal antitrust laws.”

Read more