Apple battles ebook conspiracy in US court

June 3, 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

Related Stories

Apple CEO ordered to testify in e-books case

March 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.

Penguin joins settlement in US e-books lawsuit

December 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

April 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

Adobe bidding Flash farewell in 2020

July 25, 2017

Adobe on Tuesday said its Flash software that served up video and online games for decades will be killed off over the next three years.

Musk, Zuckerberg duel over artificial intelligence

July 25, 2017

Visionary entrepreneur Elon Musk and Facebook chief Mark Zuckerberg were trading jabs on social media over artificial intelligence this week in a debate that has turned personal between the two technology luminaries.

Microsoft Paint brushed aside

July 24, 2017

Microsoft on Monday announced the end of days for its pioneering Paint application as it focuses on software for 3-D drawing.

Hyperloop or hyperbole? Musk promises NY-DC run in 29 mins

July 21, 2017

US entrepreneur Elon Musk said Thursday he'd received tentative approval from the government to build a conceptual "hyperloop" system that would blast passenger pods down vacuum-sealed tubes from New York to Washington at ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.