Apple battles ebook conspiracy in US court

Jun 03, 2013 by John Biers

Apple squares off with the US government in court Monday in a trial accusing the iconic tech firm of leading a conspiracy to boost the price of ebooks.

The California technology giant is on its own in its fight against the , after five large publishers named in the 2012 lawsuit settled the charges.

US antitrust watchdogs argue Apple orchestrated a collusive shakeup of the business in early 2010 that resulted in higher prices.

The New York trial is expected to last three weeks, and comes with Apple under pressure for its slumping , eroding for its iPhones and and accusations in Congress it avoided billions in taxes.

Five publishers named as defendants reached settlements in which they agreed to terminate their ebook agreements with Apple.

The largest settlement was with Penguin for $75 million, while a settlement with Hachette, Harper Collins and Simon & Schuster created a $69 million fund for refunds to consumers. Macmillan settled for $26 million.

Apple chief executive Tim Cook has rejected the idea of a settlement because it would call for the company to sign an admission of wrongdoing.

"We didn't do anything wrong there," Cook told a recent California conference. "We're going to fight."

The government's case centers on a period when Amazon dominated the ebook business, selling most bestseller titles for $9.99. Leaders of the major publishing houses held "CEOs dinners" in "private rooms at upscale restaurants" at which they discussed the threat from Amazon.

Into this environment stepped Apple, which was readying the launch of its iPad. Rather than following the Amazon "wholesale" pricing model in which the retailer sets the price, Apple favored the so-called "agency model" where the publishers set the price and the seller—in this case Apple—received a 30 percent commission.

The result was an increase in price to $12.99 or $14.99 for most books.

Apple throughout the negotiations informed the publishers of the status of its dealings with other publishers. Apple was the "ringmaster" of the "," the complaint alleges.

The government is expected to use emails and comments from the late Apple CEO Steve Jobs, which indicated that as part of a deal to force a new pricing model, publishers should "hold back your books from Amazon."

"The sharply higher prices consumers have paid... are the direct, quantifiable result of defendants' conspiracy," the government said.

Apple dismisses the "conspiracy" charge and said its negotiations with the publishers were "difficult and contentious."

Apple acknowledged that it did inform publishers about its talks with other firms, but characterized this as a "standard negotiation tactic."

Explore further: Adamant Apple in court to fight ebook conspiracy

add to favorites email to friend print save as pdf

Related Stories

Apple CEO ordered to testify in e-books case

Mar 13, 2013

A judge on Wednesday ordered Apple's chief executive Tim Cook to testify in a case brought by the US government accusing the tech giant of conspiring to raise e-book prices.

US class-action ebook price-fixing suit can proceed

May 15, 2012

A judge Tuesday allowed a class-action case to proceed against Apple and six publishing houses alleging a price-fixing scheme for electronic books, citing "ample" indications of a conspiracy.

Penguin joins settlement in US e-books lawsuit

Dec 18, 2012

Penguin Group has agreed to join three other publishers in a settlement of a US government lawsuit alleging an e-book price-fixing conspiracy with Apple, officials said Tuesday.

Apple denies e-book pricing conspiracy

Apr 13, 2012

Apple denied a charge that it schemed with publishers to hike prices for e-books, portraying itself as a hero for prying Amazon's "monopolistic grip" from the market.

Recommended for you

New US-Spanish firm says targets rich mobile ad market

2 hours ago

Spanish telecoms firm Telefonica and US investment giant Blackstone launched a mobile telephone advertising venture on Wednesday, challenging internet giants such as Google and Facebook in a multi-billion-dollar ...

Technip, Heerema win third giant Angolan oil contract

5 hours ago

The ultra-deep Angolan offshore oil project called Kaombo generated the third huge contract in three days on Wednesday when French group Total picked two firms to carry out underwater engineering worth $3.5 billion.

Yahoo sees signs of growth in 'core' (Update)

19 hours ago

Yahoo reported a stronger-than-expected first-quarter profit Tuesday, results hailed by chief executive Marissa Mayer as showing growth in the Web giant's "core" business.

User comments : 0

More news stories

Quantenna promises 10-gigabit Wi-Fi by next year

(Phys.org) —Quantenna Communications has announced that it has plans for releasing a chipset that will be capable of delivering 10Gbps WiFi to/from routers, bridges and computers by sometime next year. ...

Unlocking secrets of new solar material

(Phys.org) —A new solar material that has the same crystal structure as a mineral first found in the Ural Mountains in 1839 is shooting up the efficiency charts faster than almost anything researchers have ...

Floating nuclear plants could ride out tsunamis

When an earthquake and tsunami struck the Fukushima Daiichi nuclear plant complex in 2011, neither the quake nor the inundation caused the ensuing contamination. Rather, it was the aftereffects—specifically, ...

New US-Spanish firm says targets rich mobile ad market

Spanish telecoms firm Telefonica and US investment giant Blackstone launched a mobile telephone advertising venture on Wednesday, challenging internet giants such as Google and Facebook in a multi-billion-dollar ...