Print 17 comment(s) - last by ven1ger.. on Aug 5 at 2:27 PM

A hearing to discuss remedies and hold a trial on damages will take place on August 9

Apple lost the ebooks battle earlier this month when a judge ruled that the tech giant had conspired to raise prices, and now, Apple has been handed some potential consequences as a result of that ruling. 

The U.S. Department of Justice and 33 U.S. states and territories have proposed that Apple be banned from entering anti-competitive e-book distribution contracts for five years; end its business models with the five publishers it conspired with; use an outside monitor to make sure that its antitrust policies are effective, and allow retailers like Amazon and Barnes & Noble to provide links to their options for two years.

"Under the department's proposed order, Apple's illegal conduct will cease, and Apple and its senior executives will be prevented from conspiring to thwart competition," said Bill Baer, head of the Justice Department's (DOJ) antitrust division.

These proposals have to be approved by U.S. District Judge Denise Cote, who is overseeing the ebooks trial.

All of the five book publishers have already settled with the DOJ, while Apple was the only one to go to trial on June 3.

The ebooks fiasco 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. These book publishers were 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).
The book publishers were accused of partaking in an agency sales model with Apple, which meant that publishers were allowed to set the price of a book and Apple would take a 30 percent cut. In addition, 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. Apple then came along with iBooks, and publishers began to worry that it would take over the book industry the way Apple's iTunes took over the music industry, where customers would choose to purchase cheap, digital books instead of physical books.

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.
Last month, Lawrence Buterman (a DOJ lawyer) said that Apple's move to increase e-book prices hurt consumers by costing them "millions of dollars." 
Cote ruled that Apple tried to raise the prices of e-books through an agency model with other book publishers after a non-jury trial, which ended on June 20. 

A hearing to discuss remedies and hold a trial on damages will take place on August 9.

Source: The U.S. Department of Justice

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: Obviously incompetent business leaders
By spread on 8/2/2013 8:37:53 PM , Rating: 2
A CD is much easier to produce than a heavy book. It's small, light, contains very little materials and can easily be shipped.

If you had a choice. Someone throwing 20 CDs at you or 20 hardcover books, which would you choose?


Printing presses aren't exactly easy to operate and costs aren't as low as stamping a CD master onto some plastic discs and then putting a sticker on top. Shipping costs more for everything.

RE: Obviously incompetent business leaders
By Nortel on 8/2/13, Rating: 0
By sprockkets on 8/3/2013 9:25:32 AM , Rating: 2
VHS movies were once over $50 each (not adjusted for inflation) so why are blu-rays $25 and CD's $15? Why were cd's more than cassette tapes when CD's were cheaper to produce?

It wasn't due to costs but due to the stupid studios trying to make money on a dying market.

CDs *were* more expensive to make, like back in 1980. Like anything else manu. costs come down.

Apple didn't re-invent the wheel, they simply took the MODEL of digital music and applied it to digital books. I can't fathom how selecting a price model for an item can ever be considered 'price fixing', if anything they are being chastised for bucking the trend.

And you are forgetting they forced everyone else to follow suit and forced everyone else to have the same prices as well.

RE: Obviously incompetent business leaders
By ritualm on 8/3/2013 7:10:22 PM , Rating: 4
Apple didn't re-invent the wheel, they simply took the MODEL of digital music and applied it to digital books. I can't fathom how selecting a price model for an item can ever be considered 'price fixing', if anything they are being chastised for bucking the trend.

Apple used its dominant position in the digital music business to create conditions in the ebooks market that are purposely favorable to themselves.

The entire scheme is price-fixing at its worst. Show me TEN, yes, 10, instances where consumers clearly benefited from this anti-competitive behavior.

You're an iSheep nubcake.

RE: Obviously incompetent business leaders
By Acupuncture on 8/3/13, Rating: -1
By drlumen on 8/4/2013 11:52:42 AM , Rating: 2
Why wouldn't the publishers love the ibook format? They get to set higher than normal (e-book) prices and they decrease price competition across the majority of the industry.

To differ, Apple/itunes set a $.99 price for songs and forced the publishers and artists to accept the terms or not sell through itunes. Many music publishers initially balked because they wanted to sell songs for more than $.99. (Some artists/publishers still don't sell through itunes)

The ibook deal was completely the opposite. They went to the market leaders, got them all together to say "lets raise the price and not allow any distributor to sell it for less".

There was clearly collusion amongst the publishers and Apple and it is unbelievable that you can't see it.

Also, you have given ZERO proof that physical distributions and electronic distributions costs the same. For example, ship a copy of "Atlas Shrugged" on a thumb drive to a person and then ship that same book in physical format. Let me know which is cheaper. Add this to the fact that this is only a simple example of distribution.

By ritualm on 8/4/2013 4:12:57 PM , Rating: 2
You're failing Conspiracy 101.

Rule #1: If there is no actual conspiracy , claim there is a conspiracy. Denying that it exists means you have confirmed the suspicions of others.

Case in point: General Keith Alexander claimed in last year's DEFCON that accusations of NSA spying on Americans at home were overblown. Then came Edward Snowden, whose leaks affirmed those very accusations. Alexander was caught lying in public; the NSA was indeed spying on Americans at home, when it claimed all along it wasn't doing it.

Oh and by the way, it was no ordinary convention. It was DEFCON, where trust is everything, and there are grave consequences when you breach the trust of others.

Result: all government representatives are not welcome at this year's DEFCON.

Congrats, your continuous denials are giving us proof there IS a price-fixing conspiracy by Apple.

"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins

Most Popular ArticlesTop 5 Smart Watches
July 21, 2016, 11:48 PM
Free Windows 10 offer ends July 29th, 2016: 10 Reasons to Upgrade Immediately
July 22, 2016, 9:19 PM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki