DOJ Lawyer Says Apple's E-Book Price-Fixing Cost Consumers "Millions of Dollars"
June 4, 2013 12:11 PM
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Apple's lawyer said the agency model is beneficial to both consumers and markets
The e-books price-fixing trial with Apple has begun, and a U.S. government lawyer
of conducting shady business practices with the five book publishers.
"Apple told publishers that Apple - and only Apple - could get prices up in their industry," said Lawrence Buterman, a lawyer at the U.S. Department of Justice (DOJ).
Buterman also added that Apple's agency model with publishers (where publishers set the price and Apple takes a 30 percent cut) hurt consumers by raising prices.
"Overall, average prices of e-books went up, costing consumers millions of dollars," said Buterman.
The three-week trial, which started yesterday, concerns the DOJ's lawsuit against Apple in regards to its method of fixing prices for e-books.
Orin Snyder, Apple's attorney, disagrees with the DOJ's statements.
"What the government wants to do is reverse engineer a conspiracy from a market effect," said Snyder. "Agency [model] is good and beneficial to consumers and markets."
Snyder added that DOJ's evidence, such as emails from former Apple CEO Steve Jobs, will likely be misinterpreted. He also said that average e-book prices fell after Apple entered the market, dropping from $7.97 to $7.34.
Apple is the target of the e-books investigation along with book publishers Hachette Livre (Lagardère Publishing France), Harper Collins (News Corp., U.S.A.), Simon & Schuster (CBS Corp., U.S.A.), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany). However, all the book publishers have already settled with DOJ, so Apple is the only company going to trial.
This all started in April 2012, when the
U.S. Department of Justice (DOJ) sued Apple and the five book publishers
over anticompetitive practices concerning e-book sales. The book publishers were accused of partaking in an agency sales model with Apple, and the publishers could not let rivals sell the same book at a lower price. Traditionally, publishers sell physical books to retailers for about half of the cover price, which is considered a wholesale model. Retailers then had the ability to sell those books to customers for a lower price if they wanted to.
But when e-books came along, this model was challenged. Amazon started selling best sellers for as low as $9.99 to encourage its Kindle e-reader sales. Publishers were not happy with this because they thought the prices were too low.
However, Apple attempted to resolve this when it struck a deal with publishers to implement the agency model in 2010. This helped Apple at the time of its iPad and iBooks launch.
But its deal with publishers made it seem like an attempt to thwart Amazon's dominance.
In April of this year, DOJ used
an old email from former Apple CEO Steve Jobs
as evidence in the e-books case. The email (dated in 2010) from Jobs to James Murdoch of News Corporation said, "Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.”
U.S. District Judge Denise Cote, who is overseeing the trial, said last month in a preliminary hearing that the e-books price fixing case
seemed to fall in favor of the DOJ
"I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that," said Cote.
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RE: This is why so many people dislike Apple
6/4/2013 7:17:15 PM
Guess what, the Ford Pinto from the 1970's had major quality problems, but its not relevant to Apple price fixing, or their nasty tactics. Are you that desperate to change the subject or are you just going senile old man? You reply to my pointing out your Samsung distraction with more Samsung distraction... Interesting. Do you think that I care about Samsung because I don't, not at all. I have no intention of buying any product they currently have, not one of them interests me. Why do you keep bringing Samsung into this discussion even after pointed out that you are using it as a distraction? (I know, I know. "ya, but Samsung...")
"As for the ridiculous eBooks legal action. Before the Apple iBooks initiative Amazon was close to securing a monopoly position in the ebooks market with a 90% share, a position Amazon's strategy was deliberately intended to achieve. Apple challenged that monopoly and, bizarrely, as a result is being legally challenged via anti-trust laws."
Oh, thank you Apple for RAISING prices on us all and stopping a monopoly. What a hero... Oh, wait, that was illegal and now they are in trouble for it. Not even a nice try at spin.
This link is from Solandri's post below...
Maybe better that you just read the whole thing. I dont want to restate what has been stated already. If you are going to comment, try and make it relevant.
“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls
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