ONTD Political

Lawsuit alleges Apple, other publishers fixed e-book prices

7:46 pm - 04/12/2012
The U.S. Department of Justice (DOJ) yesterday announced that it has filed a lawsuit against Apple, along with five major book publishers, alleging the parties fixed prices on the eBook market.

At a press conference yesterday, Attorney General Eric Holder announced that the Department had filed a lawsuit in U.S. District Court for the Southern District of New York, against Apple and five different book publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. He said that Hachette, HarperCollins and Simon & Schuster have agreed to a proposed settlement, which if approved by the court would resolve the Department’s antitrust concerns with these companies.

The settlement would require those publishers that settled to grant retailers, such as Amazon and Barnes & Noble, the freedom to reduce the prices of their eBook titles. The settlement also requires the companies to terminate their anticompetitive "most-favored-nation agreements" with Apple and other eBook retailers.

In addition, the companies will be prohibited for two years from placing constraints on retailers’ ability to offer discounts to consumers. They will also be prohibited from conspiring or sharing competitively sensitive information with their competitors for five years. Each is required to implement a strong antitrust compliance program.

Scrutiny around eBook pricing is nothing new. In December of last year, the European Commission announced that it was looking into possible collusion amongst Apple and the same major publishing houses included in the suit. Immediately following the European announcement, the DOJ said it too was looking into a possible antitrust suit.

The investigation is aimed at uncovering Apple's role in the current state of the eBook market and dates back to launches of both the Amazon Kindle and Apple's iPad.

When Amazon first launched its Kindle eReader, it did so in conjunction with heavily discounted eBooks, pricing many popular bestsellers at $9.99 and subsidizing the loss on the titles.

Later, Apple launched the iPad in April of 2010. The company went directly to the publishers, telling them that they could price their books as they saw fit and Apple would take a 30 percent cut of anything sold through iTunes. Amazon eventually had to bend to the new model, effectively raising the price of eBooks across the board.

Acting Assistant Attorney General Sharis Pozen, speaking at yesterday's press conference, provided "a flavor of the egregiousness" of the alleged behavior, which she said "took place at the highest levels of these publishing companies."

Pozen said CEOs of the publishers bemoaned the “wretched $9.99 price point.”

"One executive said that, 'the goal is less to compete with Amazon as to force it to accept a price level higher than 9.99,'” Pozen said, adding that another executive said, "’we’ve always known that unless other publishers follow us, there’s no chance of success in getting Amazon to change its pricing practices.’”

The DOJ's complaint also quotes Apple’s then-CEO Steve Jobs as saying, “the customer pays a little more, but that’s what you [he’s referring to the publishers here] want anyway.”

The DOJ alleges that publishing company executives held "regular, near-quarterly meetings," to discuss confidential business and competitive matters, including Amazon’s eBook retailing practices, as part of a conspiracy to raise, fix and stabilize retail prices.

"Our investigation even revealed that one CEO allegedly went so far as to encourage an e-book retailer to punish another publisher for not engaging in these illegal practices," Holder said.

In an official statement, Amazon called the lawsuit "a big win for Kindle owners," saying that it "look[s] forward to being allowed to lower prices on more Kindle books."

Apple declined to comment on legal matters and the publishers involved could not be reached for comment before press time.


GOOD. There's no way an e-book should cost as much as a paperback, that's fucking ridiculous.

What are y'all reading, ontd_p?
kittymink 13th-Apr-2012 07:50 pm (UTC)
>...you do know game consoles are sold at massive losses, right?

Is this true anymore though? Maybe about Sony and idk about MS but I thought Nintendo actually turned a profit on hardware sales now.
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