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Apple CEO Tim Cook 'May Testify' in E-Books Antitrust Lawsuit

Apple CEO Tim Cook may testify in the e-books antitrust lawsuit filed against Apple and book publishers by the United States Department of Justice, reports Bloomberg.

The lawsuit was originally filed in April of 2012, and has focused on the so-called 'agency model' for pricing ebooks that Apple attempted to negotiate with a number of publishers. Apple had pushed for the agency model in an attempt to dilute Amazon's power in the book market, where it had offered vast discounts, even sometimes selling books at a loss, in order to attract customers who would make other purchases through the site.

But the Department of Justice believes that the agency model as implemented by the publishers at Apple's behest amounts to collusion, with contracts between Apple and the publishers including language that prevented the publishers from offering lower pricing to competitors than they did to Apple. Contrary to the government's claims of an anti-competitive impact from the agency model, Apple and several of the publishers have argued that the move has fostered competitiveness by limiting Amazon's stranglehold on the book market.

The Department of Justice has settled with all of the book publishers initially accused, while Apple remains the main target of the suit.

Tag: Tim Cook

Top Rated Comments

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52 months ago

Ironically even Apple, the largest market cap company ever, doesn't even have a basis to refute that amount of power, no matter how many lawyers they have!

Thank God that corporations do not have the power to defy governments. Not yet anyways.

Power has shifted over the centuries from the church to government. And now it is shifting again, towards the corporation.

If corporations become more powerful than governments, we will regret not having prevented it.
Rating: 10 Votes
52 months ago
Sure, Tim could testify, but they would have to reach out beyond the grave to interrogate the guy who masterminded the whole scheme.

Nobody knew how to turn a buck like Steve Jobs. Nobody.
Rating: 5 Votes
52 months ago

Thank God that corporations do not have the power to defy governments.

Corporations (legal persons) and natural persons have exactly the same amount of access to fight (defy) "government regulators" which have not yet been first PROVEN to be "arbitrary and capricious". NONE.

The cases are decided in "administrative court" with a standard of justice of "regulator presumed correct". No, I am not kidding. ALL regulators. ALL regulations. Heard of any new regulations lately?

Looks like the DoJ wants a small pot of gold themselves.

Just look at the list of the top 40 fines issued by regulators for the past 4.5 years. You would be shocked!

I would love it if Apple would publish a verified list. It might tilt the politics.

Rating: 4 Votes
52 months ago
Nothing new here. Apple's doing the same thing the Robber Barons used to do in fixing prices to keep them high. They can try to make Amazon the villain, but the facts speak for themselves - book prices soared 200-300% after the Apple deal and there's no way Tim Crook can make that turd smell better.
Rating: 3 Votes
52 months ago
Amazon's "price dumping" strategy is allegedly clearly unlawful and unenforced.
Rating: 2 Votes
52 months ago
Being a UK citizen I'm not that well versed in US law, but I'm surprised how much Amazon's own self interests have been overlooked in this case.

Yes, Apple are in no way innocent, but Amazon using a monopoly strategy in the e-book market to further their own interests should be top of any law suit.
Rating: 2 Votes
52 months ago

I publish books. I have a hard minimum wholesale price. That's my right. If Amazon unilaterally violates that it is "theft or conversion". Fact. No alleged.

Thanks for responding. I'm in total agreement with you.

I too am a publisher, and I've experienced the same problem that you've apparently experienced — Amazon lowering our prices without our consent.

If you're interested, I'd like to discuss this issue — and possible action — more with you via PM.
Rating: 2 Votes
52 months ago

Amazon are the villain. They've used their dominant position to bully book publishers into accepting outrageous terms. Those terms aren't for the benefit of customers. Their drive to to force eBook pricing at $10 or less is not because the poor oppressed people deserve $10 books. It so they have a tidy sales soundbite to drive customers away from physical books (where publishers can set their own terms) to the Kindle platform where Amazon's word is final. Basically Amazon are trying to control the entire concepts of books. They can't control the technology behind physical books, so they're trying to kill it in favour of their own. I find that pretty ugly and scary and hope they don't succeed.

Apple are the villain. They've used their dominant position to bully music publishers into accepting outrageous terms. Those terms aren't for the benefit of customers. Their drive to to force music pricing at fixed price points is not because the poor oppressed people deserve Apple-priced music. It so they have a tidy sales soundbite to drive customers away from CDs (where publishers can set their own terms) to the iTunes fairplay platform where Apple's word is final. Basically Apple are trying to control the entire concepts of music. They can't control the technology behind physical music, so they're trying to kill it in favour of their own. I find that pretty ugly and scary and hope they don't succeed.

Let me proactively guess: "music is totally different than books" and "what Apple did for the music industry was save it", etc.

The concept of the competitive nature of capitalism is to drive prices as low as possible for consumers. When the competition is thinned out and/or allowed to collude, this fundamental benefit (for all) breaks down and it flips into an exploitation-based relationship between seller & buyers (see the "big 3" dominated cell-phone industry). Apple did wrong here, as the play was to make Apple and book publishers much more money at the consumer's experience... not really do anything that delivered a greater benefit to those consumers.

Amazon has it's own issues but Amazon pricing- thinnest margins or not- is generally favorable for the consumers wanting to buy what Amazon sells. Capitalism in a pure form would have competitors beat Amazon at it's own game by finding some way to price things better than them... not by entering into agreements to put profits before doing what is best for consumers. If no one could find some way to beat Amazon's pricing in a competitive market, than the drive to best competitive-driven pricing had been perfected at Amazon (move along to another market if you can't compete).

If Amazon was accomplishing this by taking a loss, eventually the losses would pile up and Amazon would go out of business. Then the market would be free to compete anew in trying to find the ideal price points for products formally sold by Amazon. There would be no more lock-in with Kindle than there is lock-in with iDevices/iTunes. Even if Amazon or Apple managed 90% market share at a loss, eventually the losses would force them out of business or into raising prices to profitability. At that point, new competitors could step in and compete.

I look at Amazon and see a good competitor for Apple... someone to keep Apple in check. If I want to fantasize about some monopoly scenario where a company is going to ultimately fully own an important market and exploit consumers by ripping us off with monopoly-based pricing, I'd be much more worried if that company was Apple (which consistently demonstrates a fundamental focus on relatively fat profit margins, right off the top). If Apple ever got a monopoly hold on any market, I'd hate to see what Apple would do with it. Note: I own a lot of Apple products and like Apple just fine but I do know enough about this particular event to believe (IMO) that Apple was very much in the wrong for it's part in this. There was no tangible benefit for consumers in what Apple did here- just wins for Apple and the book publishers if they were able to get away with it long-term.
Rating: 2 Votes
52 months ago
The part that blows my mind is that Apple is getting trouble for not allowing publishers to sell their work cheaper anywhere else when Amazon does exactly that for independent authors. If I put a book up another platform and decide to discount it for a promotion or something, Amazon will automatically change the price on their store to the lower one without my consent.
Rating: 2 Votes
52 months ago

It would seem that Apple's argument is that Amazon's stranglehold on the market makes it ok for them to create a new reality that breaks Amazon's hold on the backs of the consumer. Ultimately the government protections should be in large part pointed towards the consumer, not protecting one of the richest companies in the world from lower profits than they would prefer. Bottom line is that since DOJ stepped in ebook prices have generally been lower. So I'm a fan.

I love ebooks. They are convenient and don't require me to continually add bookshelves. But I have trouble paying more for an ebook than for a physical book which actually required additional resources to produce, warehouse and ship. I'm just saying that there should be some sort of reduction in price for an ebook versus the physical book. And it is my observation that this has been more frequently true when Amazon has been on top of the pricing hill than when Apple was.

Your post here is exactly the problem: the perception that so long as prices are falling everything is okay.

Amazon seems ideologically committed to lowering prices to the absolute rock bottom. Nobody understands why. It sells cut price eReaders supposedly to sell more eBooks but it sells cut price eBooks to suppposedly sell more readers. It's margins are so thin its practically a non-proft organisation. The only possible explanation is the the board are happy with their big salaries and everything else can go to hell. Problem being, if a huge dominant retailer like Amazon isn't making profits how can anybody else? Amazon have forced their crippling business model on publishers and authors, neither of which were doing particularly well anyway.

Apple gave the publishers a way out. Just like with the music industry Apple didn't set out to disrupt and destroy jobs, they tried to give the publishers a way to set their own prices for their products and with luck make more revenue via an attractive storefront and purchasing experience. IMO iBooks is a far better shopping and discovery experience than Amazon's tacky automated bargain bin where everything just looks worthless the moment its rendered.

But its all for nothing if the DoJ wins. The population will continue to announce that they don't care so long as they save $2, and continue to criticise their government for failing to protect the economy and the very jobs those $2 savings are helping to dismantle.

Please feel free to announce that you don't care either, but when Amazon (or Google) move in on your industry you just might.
Rating: 2 Votes

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