Apple Blames Book Publishers in E-Books Antitrust Lawsuit

ibooks_icon.jpgReuters is reporting that Apple has responded to the Justice Department's accusations that the company colluded with publishers to increase e-book pricing, saying that it negotiated with the publishers separately and reached different agreements with each.

But Apple said the publishers had decided, independent of Apple, to eliminate discounts on wholesale book prices of e-books, to sell lucrative hardcover books first to bookstores in a practice called windowing and to take other measures to push Amazon to raise prices.

In a court filing dated April 26 but released on Tuesday, Apple said it had approached publishers to create an online bookstore that would eventually become the iBookstore and had demanded a 30 percent commission, that publishers would not undercut prices paid to Apple, and that "windowing" be scrapped.

Apple said that points of contention in early negotiations centered around Apple's demand for a 30 percent commission and price caps. Apple went on to note that each publisher immediately offered its own counterproposals in what Apple described as "tough negotiations."

The company also claims that before it entered the market the publishers were engaged in a battle to break Amazon's grip on the low-cost e-book market, with Apple laying the blame for any potential collusion on the publishers.

The lawsuit was originally filed in April 2012 and included HarperCollins, Simon and Schuster, Hachette Book Group, Macmillan and Penguin, but the Justice Deparment settled with the publishers and has since concentrated on Apple. Recently, CEO Tim Cook was ordered to testify in the case.

Top Rated Comments

(View all)
Avatar
93 months ago
Score: 29 Votes (Like | Disagree)
Avatar
93 months ago
Today's forecast for MacRumors:

Mostly cloudy with a 100% chance of multiple lawsuit stories.
Score: 19 Votes (Like | Disagree)
Avatar
93 months ago
Apple blames ___________

Fill in the blank with nearly anything & it would be appropriate :)
Score: 15 Votes (Like | Disagree)
Avatar
93 months ago
Completely nonsensical. Amazon was paying publishers exactly what they asked for. It was Apple that demanded a different pricing model, and coerced publishers to use that model with all other resellers.
Score: 10 Votes (Like | Disagree)
Avatar
93 months ago

You seem to imply that before the iBook store there was a competitive situation. Can't agree. Amazon was guilty of predatory pricing in my opinion and this in itself was anti trust. Now, I agree two wrongs don't make a right, but to sanction Apple for manipulating a "market" where it wasn't possible to profit from sales is wrong. If the anti trust bodies had sanctioned Amazon for its pricing policies, and a viable market had emerged, then there would have been no need for the publishers to try to protect themselves from being beholden to a single outlet.

How can Amazon be predatory pricing when it makes a profit from selling ebooks?

It's called a loss leader. Sell some popular books at cost or below cost, sell 95% of other ebooks at profit. End result: overall profits

Supermarkets have been doing this for decades.

Apple is using this "loss leader" pricing right now for its iBookstore on a few ebooks. Apple could have competed with Amazon on prices if it wanted to. Buy ebook at wholesale like Amazon did. Have a sale on a few popular titles and sell the rest at profits.

Apple is better suited to this strategy than Amazon since Apple is many times more profitable and have a bigger cash hoard.

But Apple wanted the 30% margin. Wholesale competition means the margin would be very tiny. Best way to get the 30% margin is to forced Amazon and B&N and other ebookstore to take the 30% margin too.

When retailers are guaranteed 30% margin and no price competition, who lose out? Consumers


That's why the publishers have agreed to pay something like $52 million in restitution for the ebook price fixing.

----------

So in order to compete with Amazon, Apple should have been prepared to match Amazon's price. Even though Amazon in many cases was selling at break-even or making a loss?

The game Amazon is playing is to go for growth and worry about profit later. Wall Street gets it: Amazon is priced for MASSIVE growth in the long term. They will do this by destroying competition and preventing competitors from entering the market. Once they achieve this, they will own the publishers and be able to strike any deal they desire. They will also be able to charge the reader whatever they like within reason.

What law has Amazon broken in their quest to destroy competitions and preventing competitors from entering the market?

Amazon can't be guilty of what they haven't done yet. I.E. raising the price when they have a monopoly.

In fact, when Amazon have 90% of the ebook market and they jack up the price, buying it at $7 wholesale and selling at $12, what to prevent competitors like a guy in his garage can buy $7 wholesale and sell it at $9.

Amazon price: $12
Competitor price: $9


Look at Apple domination in digital music selling at $1.29.
Amazon competed buy selling a lot of popular songs at $0.99, less margin but increase market share. Some did switch from Itunes to AmazonMP3.
Score: 7 Votes (Like | Disagree)
Avatar
93 months ago
The situation is not clear cut

You seem to imply that before the iBook store there was a competitive situation. Can't agree. Amazon was guilty of predatory pricing in my opinion and this in itself was anti trust. Now, I agree two wrongs don't make a right, but to sanction Apple for manipulating a "market" where it wasn't possible to profit from sales is wrong. If the anti trust bodies had sanctioned Amazon for its pricing policies, and a viable market had emerged, then there would have been no need for the publishers to try to protect themselves from being beholden to a single outlet.
Score: 7 Votes (Like | Disagree)

Top Stories

iPhone 12 Sizes Compared with iPhone SE, 7, 8, SE 2, X, 11, 11 Pro and 11 Pro Max [Update]

Tuesday July 7, 2020 6:49 pm PDT by
Apple is planning on launching the iPhone 12 this fall which is rumored to be coming in 3 different sizes: 5.4", 6.1" and 6.7". The middle size (6.1") matches up with the currently shipping iPhone 11, but the other two sizes will be entirely new. Over the weekend, there was some excitement about how well the new 5.4" iPhone 12 compares to the original iPhone SE. Those who have been hoping...

Everything New in iOS 14 Beta 2: New Calendar Icon, Files Widget and More

Tuesday July 7, 2020 11:38 am PDT by
Apple today released the second beta of iOS 14 to developers for testing purposes, tweaking and refining some of the features that are coming in the update. Below, we've rounded up all of the changes that we found in the second beta. - Calendar icon - There's a new Calendar app icon in iOS 14 beta 2, with the day of the week abbreviated rather than spelled out. - Clock icon - The clock...

Hands On With iPhone 12 Models Showing New Sizes and Design

Monday July 6, 2020 2:04 pm PDT by
Ahead of the launch of new iPhones we often see dummy models created based on leaked schematics and specifications, with those models designed to let case makers create cases for the new devices ahead of their release. We got our hands on a set of dummy models that represent the iPhone 12 lineup, giving us our first close look at the iPhone 4-style design and the different size options. Subscri ...

Developer's Visual Comparison of macOS Catalina and Big Sur Offers Closer Look at Apple's UI Redesign for Macs

Tuesday July 7, 2020 4:00 am PDT by
macOS 11 Big Sur is the next major release of Apple's operating system for Mac, and following its preview at WWDC, one of the biggest discussions has revolved around the all-new user interface redesign. Developers are still learning what the impact the new UI will have on their apps, and with that in mind, app designer Andrew Denty has compiled an extensive visual comparison of the user...

Analyst Believes iPhone 12 Pricing Will Start $50 Higher Even Without EarPods or Charger in Box

Wednesday July 8, 2020 9:35 am PDT by
Despite multiple reports indicating that Apple will not include EarPods or a wall charger with iPhone 12 models this year, one analyst believes that pricing will still increase slightly compared to the iPhone 11 lineup. In a research note provided to MacRumors, analyst Jeff Pu forecasted that iPhone 12 pricing will start at $749 for a new 5.4-inch model, an increase of $50 over the base...

14-Inch MacBook Pro With Mini-LED Display Expected to Enter Production in 2021

Wednesday July 8, 2020 7:51 am PDT by
Apple suppliers will begin competing to win manufacturing orders for new 14-inch and 16-inch MacBook Pro models with Mini-LED displays in the first quarter of 2021, according to Taiwanese research firm TrendForce. Rumors of a 14-inch MacBook Pro have surfaced since Apple replaced the 15-inch MacBook Pro with a new 16-inch model last year. Apple analyst Ming-Chi Kuo has previously said that...

Apple Seeds First Betas of iOS 14 and iPadOS 14 to Public Beta Testers

Thursday July 9, 2020 10:14 am PDT by
Apple today seeded the first public betas of upcoming iOS and iPadOS 14 updates to its public beta testing group, two weeks after first providing the updates to developers after the WWDC keynote and a day after seeding the second developer betas. Public beta testers who have signed up for Apple's beta testing program can download the iOS/‌iPadOS‌ 14 updates over the air after installing ...

Apple's Arm-Based Macs With Apple Silicon Chips Will Support Thunderbolt

Wednesday July 8, 2020 3:14 pm PDT by
Apple is working on Macs that use its custom Apple-designed Apple Silicon chips instead of Intel chips, but Apple has committed to continuing to support Thunderbolt, reports The Verge. In a statement, an Apple spokesperson said that Apple's upcoming machines will offer support for Intel's Thunderbolt USB-C standard. "Over a decade ago, Apple partnered with Intel to design and develop...

Apple Cuts iPhone Trade-In Values as iPhone 12 Launch Nears

Tuesday July 7, 2020 7:46 am PDT by
With just two months to go until the usual timeframe for Apple's iPhone launch events, Apple is cutting back on maximum trade-in values of previous-generation iPhones for those looking to upgrade to a new model. Maximum values on more recent models have dropped by $30–$50, while older models have generally dropped by $5–$20 with a few models seeing no change in value.iPhone XS Max: $500 to...

Some iPhone Users Report Significant Battery Drain Due to Music App Background Activity in iOS 13.5.1

Wednesday July 8, 2020 1:49 am PDT by
A significant minority of iPhone users have taken to Apple's Support Communities and Reddit to report battery drain issues largely related to the Music app and high levels of background activity. Hundreds of users, many running iOS 13.5.1 on devices both new and old, are experiencing rapid battery drain when the Music app is not in use. In some cases, the background activity occurs over...