Apple to fight e-book pricing lawsuit
Cupertino demands day in court
TechLife | 19 Apr 2012 :
Apple looks set to fight accusations of e-book price fixing between itself and publishers in a US court. The US Department of Justice (DoJ) in the US filed a lawsuit against the Cupertino-based company and named HaperCollins, Hachette, Macmillan, Simon & Schuster and Penguin as co-defendants.
Three publishers have already reached a settlement while the remaining two are standing alongside Apple in defending their policies.
The lawsuit claims that since the launch of the iBookstore in 2010 Apple has conspired with publishers to fix prices, thus causing them to rise in other stores, most notably Amazon.
With Apple's iBookstore, ebook authors and sellers must hand over a 30% cut of each sale. Under this system, known as the 'agency model', publishers set their own prices, giving Apple and the publishers an incentive to charge more.
Previous to 2010, Amazon held a monopoly on ebooks and set the price itself rather than the publishers. This resulted in most e-books selling for under $10. Once Apple joined the market, publishers argued Amazon was hurting the industry through underpricing and demanded a switch to the agency model. Amazon agreed, resulting in a rise in the the price of e-books.
Apple has defended his policy, saying that the DoJ's accusations of collusion against are untrue. The company said its iBookstore "fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry" and that customers have only benefited from its offerings
At a hearing in the US on Wednesday, lawyers for Apple pushed for their day in court. "Our basic view is that we would like the case to be decided on the merits," Apple attorney Daniel Floyd said at the hearing. "We believe that this is not an appropriate case against us and we would like to validate that."
Tony Bradley of news website PCWorld said Apple's defense of needing to break Amazon's monopoly. "The problem with Apple's argument is that Amazon's Kindle pricing was only a 'monopoly' because Amazon had the courage and integrity to try and set ebook pricing at a point that was both profitable for the publisher, and more reasonable for the reader. Amazon was trying to drag publishers into the Internet era, and demonstrate that there's a tipping point where the lower price drives sales and generates more revenue and profit than the same title will achieve at a higher price," he wrote.
The next hearing is scheduled for 22 June. Meanwhile, the European Commission is proceeding with its own investigation into the price-fixing case, and said on Wednesday that it received settlement proposals from Apple, Hatchette, Macmillan, and Simon & Schuster.