European Commission Accepts Proposal by Penguin to End Apple E-Book Pricing Deal

European regulators have accepted a promise by the British media group Penguin and German media conglomerate Bertelsmann to scrap deals on electronic books, also known as "e-books", with Apple which were found to be in breach of European competition policy.

Penguin was not the only company in the firing line. Back in December 2012, the Commission criticized the practices of four large publishers, Simon & Schuster, Hachette, Holtzbrinck and Harper Collins, of working with Apple via an "agency model" whereby the publishers set the retail price and the distributor takes a fee (30% in Apple's case).

Under the "wholesale model" in place before Apple entered the market, publishers sell their goods to distributors for fixed prices and allow the distributors decide the final retail prices. The agency model came under fire for causing a rise in retail prices of e-books compared to the wholesale model championed by Amazon and Google. Under Apple's "most favored nation" contract clauses, it was allowed to match lower pricing by other retailers, and with the support of the major publishers effectively forced the entire industry to switch to the agency model, raising antitrust issues in a number of regions.

ipad-2-reading-ebook
Joaquín Almunia, the European Commissioner for Competition, said in a press release from this morning:

After our decision of December 2012, the commitments are now legally binding on Apple and all five publishers including Penguin, restoring a competitive environment in the market for e-books.

The development comes after a district judge in the United States, Denise Cote, said that Apple played a "central role" in helping to fix the price of e-books. Court documents show that Apple, along with five other publishers, "conspired to raise, fix, and stabilize the retail price for newly released and bestselling trade e-books in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 ("Sherman Act") and various state laws". Apple has steadfastly claimed that it has done nothing wrong and will appeal the decision.

The European Commission is well-known for imposing large fines on companies who fail to follow practices designed to protect consumers against anti-competitive behavior. In 2009, Intel was handed a record-breaking €1.06 billion ($1.45 billion) fine for the abuse of its dominance in the computer chip market and in 2004, Microsoft was fined €497 million (around $795 million) for offering Windows Media Player standard with its operating systems as well as providing no information about competing network software to interact with Windows desktops and servers.

Top Rated Comments

Mad Mac Maniac Avatar
120 months ago
...to scrap deals on electronic books, also known as "e-books"...

Really MacRumors? Thanks for that. I've been wondering for a long time.... :rolleyes:
Score: 7 Votes (Like | Disagree)
iBoffin Avatar
120 months ago
Score: 4 Votes (Like | Disagree)
kmoreau48 Avatar
120 months ago
It kills competition. With agency, every reseller has to follow your prices so you'll never find it cheaper anywhere other then the iBook store.

So it still depends on the price that the publisher sells the books to the resellers. If the book is sold $10, then apple takes 30% from it so the publisher is making only $7 of profit...
but when it is sold to another reseller that follows the "wholesale model" for $10, the publisher is making $10 and then the reseller have a hard time making a profit because apple is selling it at $10...

1. So why would the publisher still sell its book for $10 to apple when he knows he will make less profit?

2. If other resellers want to be competitive with apple, why don't they just use the same business model and take 30% from the price?

I mean if the publisher is willing to make less profit from apple, I don't see how apple is to blame when the price is set by the publisher.

I still don't get it :confused:
Score: 1 Votes (Like | Disagree)
Oletros Avatar
120 months ago
Don't be so sure it is ending. Apple could petition successfully to have this delayed pending their appeal in the US which appears to be guidance for the EU in their actions. Then if they win the appeal it could make a muck of things in regards to nixing contracts etc without their consent.

Or Apple could find a way to sue in the EU for contract violation or some such citing the lack of anyone actually finding them guilty of anything. Or if they have been there might still be appeals that haven't finished out. Until they have you can bet Apple will do what they can to block the dissolution of contracts or being forced to change terms.

Ultimately little to nothing could change. At least for a while. And frankly that sounds about right to me. If the publishers want to settle fine, if the EU wants to set limits on what they can price their books, fine. Apple doesn't control pricing so they can't really fight that. But these moves of forcing contracts to cancel in total when no one has proven agency is anti consumer etc (even if amazon doesn't like it) is not okay. Not when it could come with the price of Apple simply cutting all sales in the EU. Putting Amazon back as THE Ebook reseller is not good, just as it wasn't good before. But neither the US or EU said boo until it was big bad Apple in the mix. And that is not good either.

What are you talking about? Apple has already settle with the EU.

Apple can't petition, the US is not a guidance for the EU case, Apple can't sue nobody for breach of contract. Really, where have you read any of what you have claimed?

----------

I still don't see what the problem is with the agency model. This allows independent writers to put their books on the iBookStore, dictate their own prices, and take home 70% just like independent programmers do with their Apps. You can actually skip the publishers altogether by purchasing your own UPC code (can be done for around $100) and then voila, you have a published book for sale.

Agency model was not a problem and is not illegal.

The problem was the alleged collusion between publishers and Apple to force the agency model to other ebook stores.

----------

It kills competition. With agency, every reseller has to follow your prices so you'll never find it cheaper anywhere other then the iBook store.

Wrong, agency model doesn't imply that the price is the same in all the stores
Score: 1 Votes (Like | Disagree)
ee13lbp Avatar
120 months ago
O, come on! Who the hell is penguin and why he isn't jumping on the north pole?

This joke is so bad it's moderately funny.

Anyhow, nice to see more lawsuits ending.
Score: 1 Votes (Like | Disagree)
ka-spot Avatar
120 months ago
O, come on! Who the hell is penguin and why he isn't jumping on the north pole?
Score: 1 Votes (Like | Disagree)

Popular Stories

apple watch ultra deuglify 1

Apple Watch Ultra User Mods Titanium Casing to 'Deuglify' Design

Tuesday September 27, 2022 8:05 am PDT by
An Apple Watch Ultra user has modified their new device's casing to add a brushed finish and remove the orange color of the Action Button in an effort to make it more visually appealing. The Apple Watch Ultra offers the first complete redesign of the Apple Watch since the product line's announcement in 2014, and while the design has been met with praise from many users, some have criticized...
Dark Sky App Featured

Dark Sky Removed From iOS App Store Ahead of Upcoming Shutdown

Wednesday September 28, 2022 4:27 pm PDT by
The Dark Sky weather app that's owned by Apple is no longer available for download in the U.S. App Store, suggesting that it has been removed ahead of schedule. Apple acquired Dark Sky back in March 2020 and has since incorporated elements of the app into the Weather app available on the iPhone (and soon, the iPad). Dark Sky remained available for purchase as a standalone weather app...
iphone 14 pro max vs 13 max 2

Camera Comparison: iPhone 14 Pro Max vs. iPhone 13 Pro Max

Thursday September 29, 2022 7:44 am PDT by
The iPhone 14 Pro and Pro Max introduce some major improvements in camera technology, adding a 48-megapixel lens and low-light improvements across all lenses with the new Photonic Engine. We've spent the last week working on an in-depth comparison that pits the new iPhone 14 Pro Max against the prior-generation iPhone 13 Pro Max to see just how much better the iPhone 14 Pro Max can be. Subscrib ...
apple watch ultra hammer test

YouTuber Tests Apple Watch Ultra Durability With a Hammer: Table Breaks Before the Watch

Sunday September 25, 2022 2:27 pm PDT by
A YouTuber has put Apple's claims for the durability of the Apple Watch Ultra to the test by putting it up against a drop test, a jar of nails, and repeated hits with a hammer to test the sapphire crystal protecting the display. TechRax, a channel popular for testing the durability of products, first tested the Apple Watch Ultra by dropping it from around four feet high. The Apple Watch...
tony blevins car

Apple Procurement VP Departs Company After Vulgar TikTok Comment

Thursday September 29, 2022 12:38 pm PDT by
Tony Blevins, Apple's vice president of procurement, is set to depart the company after he made a crude comment about his profession in a recent TikTok video, reports Bloomberg. Blevins was in a video by TikTok creator Daniel Mac, who was doing a series on the jobs of people he spotted with expensive cars. After seeing Blevins in an expensive Mercedes-Benz SLR McLaren, Mac asked Blevins what ...
iPhone 14 Pros in Hand Black Background Feature

Verizon iPhone 14 Pro Customers Reporting Cellular Connection Issues

Monday September 26, 2022 6:23 am PDT by
iPhone 14 Pro customers on the Verizon network in the U.S. are reporting issues with slow and unreliable 5G cellular connections and calls randomly dropping. Several threads on Reddit (1,2,3) and the MacRumors forums chronicle issues faced by Verizon customers and Apple's latest iPhone. According to user reports, signal strength on the iPhone 14 Pro is unreliable and weak, while other...
iPhone 15 to Switch From Lightning to USB C in 2023 feature sans arrow

Kuo: iPhone 14 Pro Max Popularity Could Lead to More Differentiation Between iPhone 15 Pro and iPhone 15 Pro Max

Wednesday September 28, 2022 10:22 am PDT by
Apple has seen high demand for the 6.7-inch iPhone 14 Pro Max, which could lead the company to further differentiate the next-generation iPhone 15 Pro and Pro Max, according to Apple analyst Ming-Chi Kuo. Apple could add exclusive features to the iPhone 15 Pro Max in an effort to encourage more people to purchase the larger and more expensive device. Kuo last week said that Apple asked...
iPhone 14 Pro Sports Scores Dynamic Island

iPhone 14 Pro Features Live Sports Scores in Dynamic Island on iOS 16.1

Monday September 26, 2022 7:52 am PDT by
Earlier this month, Apple announced that iOS 16.1 will enable a new Live Activities feature that allows iPhone users to stay on top of things that are happening in real time, such as a sports game or a food delivery order, right from the Lock Screen. On the iPhone 14 Pro and Pro Max, Live Activities also integrate with the Dynamic Island. Premier League match in Dynamic Island via Paul Bradford ...
iOS 16

Everything New in the Latest iOS 16.1 and iPadOS 16.1 Betas: Stage Manager Expansion, Wallpaper Tweaks and More

Tuesday September 27, 2022 11:36 am PDT by
Apple today released new betas of iOS 16.1 and iPadOS 16.1 to developers, tweaking some of the functionality that's been introduced in prior betas and in the case of iPadOS 16.1, adding a major new feature to Stage Manager. We've rounded up everything new in both betas below. Wallpaper Updates Apple has updated the Wallpaper section of the Settings app to allow users to swap between...
General iOS 16 Feature Yellow

Some iOS 16 Users Continue to Face Unaddressed Bugs and Battery Drain Two Weeks After Launch

Monday September 26, 2022 7:34 am PDT by
Today marks exactly two weeks since Apple released iOS 16 to the public. Besides the personalized Lock Screen, major changes in Messages, and new features in Maps, the update has also seen its fair share of bugs, performance problems, battery drain, and more. After major iOS updates, it's normal for some users to report having issues with the new update, but such reports usually subside in...