DoJ calls Apple out for allegedly facilitating e-book price fixing


As you know, publishers Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster all settled with the US Justice Department (DoJ) in an antitrust lawsuit the government filed against them and Apple in April 2012. In turn, DoJ is focusing on Apple now and, according to a new report, is calling Apple out for being a facilitator of an alleged price fixing related to electronic books sold on its iBookstore.

Furthermore, DoJ claimed it collected evidence that proves Apple was the “ringmaster” in the price fixing conspiracy…

Bloomberg reports that DoJ accused Apple in a court filing of engaging in a horizontal price-fixing scheme with said publishers to violate antitrust laws by working “to strip retailers of pricing authority.”

DoJ took issue with Apple’s agency model that lets publishers set e-book prices themselves, with Apple retaining 30 percent of all proceeds. Compared to Amazon’s wholesale model, Apple’s agency model has resulted in e-book price increases for consumers, the government asserts.

One of DoJ’s key pieces of evidence is a Steve Jobs letter to Rupert Murdoch. The media magnate’s News Corp empire owns the HarperCollins book division.

Apple’s iTunes Store and App Store have over 120 million customers with credit cards on file and have downloaded over 12 billion products.

This is the type of online assets that will be required to scale the e-book business into something that matters to the publishers.

And then this part:

Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.

The New York Times writes that Jobs in July 2010 told Random House CEO Markus Dohle that he would suffer a loss of support from Apple if he held out much longer.

Two months later, Apple threatened to block an e-book application by Random House from appearing in Apple’s App Store because it had not agreed to a deal with Apple, the filing said.

Apple on its part says it did not conspire to fix e-book pricing.

We helped transform the eBook market with the introduction of the iBookstore in 2010 bringing consumers an expanded selection of eBooks and delivering innovative new features.

The market has been thriving and innovating since Apple’s entry and we look forward to going to trial to defend ourselves.

Since Apple is the only defendant left in the lawsuit, the government is unlikely to let the iPhone maker off the hook anytime soon.