AfterDawn: News

E-book lawsuit is flawed, says Apple

Apple comes out swinging at DoJ.

It is rejecting U.S. government charges that it colluded with several publishers to thwart Amazon.com's influence in the emerging e-book market, and to raise the prices of content.



Apple defended itself in a filing in U.S. District Court in Manhattan on Tuesday. It argues that its entry into the market was good for competition, and that the actions of the Justice Department are fundamentally flawed and pose a danger to the market.

"Apple's entry into e-book distribution is classic procompetitive conduct," the court filing read. "For Apple to be subject to hindsight legal attack for a business strategy well-recognized as perfectly proper sends the wrong message to the market. The government's complaint against Apple is fundamentally flawed as a matter of fact and law."

Amazon has been selling e-books for some time now, priced around $9.99. The Justice Department has quoted the late Apple co-founder Steve Jobs as saying he wanted to give publishers the ability to boost prices and "create a real mainstream e-books market at $12.99 and $14.99."

Apple claims that the government did not "accurately characterize" Jobs' comment. Two publishers - Macmillan and Penguin Group - have also opted not to settle the case.

Written by: James Delahunty @ 23 May 2012 19:28

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• 6 comments

• Notcow

  Now set the lawsuit for $80 billion.
  

  24.5.2012 17:13 #1

• GernBlan

  As much as it makes my skin crawl to state this, I agree with Apple. The market should decide this -- I don't even feel that collusion occurred.

  25.5.2012 13:52 #2

• chrialex

  Originally posted by GernBlan: As much as it makes my skin crawl to state this, I agree with Apple. The market should decide this -- I don't even feel that collusion occurred. Just curious, are you basing that on this article or have you been following along with the case and have you read the conversations back and forth between Apple and the publishers?
  
  Personally, from following along and reading everything, I think that they did in fact 'collude' as the DoJ put it, but to what extent that I have no idea since the only ones that would know are the companies themselves.

  26.5.2012 02:26 #3

• GernBlan

  I don't feel it was collusion because I disagree with the DOJ's definition. I know, I know...who am I, but it is impossible for them to prove why it occurred, which is why the DOJ is claiming collusion. Were they specifically trying to kill Amazon or were they just combining forces to strongly and aggressively compete against a giant that was likely to, if not already, be heading to a virtual monopoly?
  
  I feel that publishers should be allowed to sell their books through whoever they want. If that means a group of publishers banding together to all sell in one place, then it's up to the other store(s) to come up with a more attractive offer to get the publishers to come to them instead. To me, that's the base definition of competition. The DOJ is poking their nose into it too early. At this stage, it's basically just aggressive competition by way of negotiation. If the publishers don't like that Amazon is discounting their books, then Amazon should come back with a guaranteed price level for a guaranteed period of time or some other offer that appeases the publishers, which is exactly what Apple did. The publishers want to make the most money possible without looking like they're offering discount books to the market. Amazon was only heavily and immediately discounting the books because they were trying to sell Amazon hardware (Kindle).
  
  Again, not an Apple fan -- in fact, the opposite. However, I find it a bit ironic that this is the one time that Apple overpricing everything is getting them into trouble? That's just crazy.

  26.5.2012 10:19 #4

• chrialex

  I agree, somewhat. Impossible to prove and all that. However, the publishers didn't like that Amazon was selling their books so cheap, but instead of talking to Amazon, they all went to Apple and Apple and they all agreed to sell them at a higher price. They did price fixing, if not technically, then essentially. I agree that companies should be able to set their price at whatever they want to make money, however, to all band together to sell books in a different market, if you will (apple store/itunes) at a price higher than other Amazon (virtually the only other market, but not for those with Apple products) they artificially increased the price. It was not a supply/demand or price-what-they-will-pay model, it was more of a here is a price almost 50% more than elsewhere, pay it if you want an ebook on your locked system.
  

  Do what you can while its still questionably Legal, before it becomes UNQuestionably ILLegal.
  chrialex

  26.5.2012 10:42 #5

• pmshah

  Increase the price from 9.99 to 14.99 ! What are they trying to do ? Build a whole new generation of e-book pirates because they pissed them off by price increase?
  
  Remember Gitmo ? One was not sure if the detainee was a terrorist going in. He most certainly was when coming out !

  29.5.2012 23:45 #6