It's the US vs Apple in court today over e-book price fixing charges

Over a year ago, the US Justice Department filed a lawsuit against Apple, claiming that the company conspired with several book publishers to fix prices on e-books for the launch of iBooks for the iOS platform in 2010. Apple has claimed repeatedly that the charges are not true. Today, the trial between the government and Apple in this case officially began.

Reuters reports that the government will try to prove their case that Apple worked out a deal with five of the biggest book publishers to set prices in an attempt to break the massive hold on Amazon's Kindle e-book business, which sets its own prices. The five book publishers (Hachette, HarperCollins, Macmillan, Penguin and Simon and Schuster) have all since agreed to settle their cases with the government for a total amount of $164 million.

For its part, Apple claims that it was not aware that most of the major book publishers were trying to conspire to fix e-book prices. It also says that since the launch of iBooks for iOS in 2010, the average price for an e-book has gone down.

If the government wins its case, it will seek to have Apple ordered by the court to not engage in similar behavior. However, Apple could still have to deal with a number of other class action lawsuits filed against it if the court finds that Apple did indeed try to fix e-book prices.

Source: Reuters | Image via Apple

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GUILTY!!! Case closed! The fine will be $1.00 as per slap on the wrist. /S
Actually Guilty with a $1B as the USA needs money and they know Apple can pay it.

Prices aren't suppose to be dictated amongst the sellers to all agree to see a product at the exact same price.

They are suppose to all sell the same product on the open market and let consumers decide.
Where consumers lose is if all of them decided to sell at 15.99 each, they were going to fail because Amazon has the same for 9.99. Apple didn't want 3.33 per book. They wanted to be able to get at least 3x's that much if they could for a book that has no productions costs. You simply right click and instantly make a new complete copy. I could literally make and sell IM books in a matter if seconds.

Apple wanted to be greedy and they got caught and now they are going to pay.
Its not about hate folks. They broke the law and the have to pay.

Samsung and LG were fined $35M for price fixing. Apple needs to be fined more for being a US company and an example need to be made of them to insure this never happens again.

Edited by Hi_XPecTa_Chens, Jun 4 2013, 4:33pm :

I could care less because Apple didn't do any thing so I really don't care. I wish that our Government would put this much effort in suing the petroleum companies for price gouging!

Spicoli said,
....

Except it's not.
It's the worst price fixing cartel in existence.
That's why I have friends who make $35,000 CAD/month on exploration dividends while tending bar in the Caribbean.

This was a great redditt comment about the situation.

Source: http://www.reddit.com/r/techno..._ebooks_pricefixing/caatz4t

Partial Quote

Back in 2009, eBooks were sold using the traditional retail model, i.e. publishers sold them to resellers (like Amazon) and the resellers sold them at whatever price they chose. Amazon chose to sell them cheaply (at $9.99), even sometimes below cost, because they wanted everyone to buy Kindles and they thought cheap eBooks were the best way to make that happen. Even though the price at which Amazon sold eBooks to consumers did not directly affect the price the publishers received for those eBooks, the publishers still hated the cheap price, primarily because it threatened the paper book industry, i.e. if eBooks were cheap, people would more readily switch to that format instead of buying paper books (I believe publishers made more money off paper books).

Around this time, Apple was looking to introduce this neat new product called an “iPad” which, among other things, could serve as an eBook reader. The then-living Steve Jobs also hated what Amazon was doing, because it led to a perception that $9.99 was the proper price for an eBook and this limited the price at which Apple could sell eBooks through the iBookstore, meaning Apple made less money. As such, both Apple and the publishers had tremendous incentive to prevent Amazon from selling discounted eBooks.

So, what were the poor beleaguered publishers to do? Well, there was this other way of selling eBooks, called the “Agency Model.” As opposed to the traditional method of reselling eBooks described above (publisher sells to reseller, reseller sells to consumer at price it chooses), when a reseller sells an eBook pursuant to the Agency Model, the publisher from which the eBook originated controls the price at which the eBook is sold to the consumer. In other words, the contracts between the publishers and Amazon (for example) would require Amazon to sell that eBook at a price dictated by the publisher, thereby preventing Amazon (or anyone) from discounting eBooks.

There is a problem, though: if only one publisher begins selling books pursuant to the Agency Model, all that happens is that that publisher's eBooks get more expensive and price-sensitive consumers switch to cheaper eBooks from other publishers. So the agency strategy only works if all publishers implement the strategy at the same time. It is the classic collective action problem: the benefits exist only if all parties move together, while the burdens fall on any party moving independently.

SPOILER ALERT: THIS IS WHERE THINGS GET ILLEGAL. Two things then (allegedly!) happen, one involving Apple and one not. The latter first: the publishers begin discussing among themselves agreeing to implement the Agency Model simultaneously, thereby making sure prices rise across the board. But they could not really make it happen until the second thing happened.

.....

Couple folks also made reference to monopolization. Also not an issue here. Apple is not, and never was, a monopolist in the eBooks market. The case is about horizontal agreement, i.e. good old cartelization & price-fixing.


Apple will lose this one in the courts. They have enough evidence, I think, at this time to at least be guilty of collusion. It's not hating on Apple as I own many of their products. It's because it was wrong and profits were the only thing on their minds.

Hah, I like the typical Apple metric spin. "Average" ebook prices are falling, they say. Right there is a reason to be suspicious of Apple--they took a metric that is thoroughly understood to be a result of the growth of self-publishing ('traditionally' published books are not seeing this trend), and misrepresented it. Either they're throwing around numbers before they ever researched them, or they're willfully pushing spin.

From the BBC article:

It says Mr Jobs explained to his biographer that Apple had told publishers:
"We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway."

Apple - where the customer always pays more.

I am typically always the devils advvocate, so here i go agian. If I write a book, I fix the price to what I want to sell it for. Who ever publishes the book, they too bought my book rights and they too can fix the price to whatever they want to sell it for. I don't see the evil in apple setting prices and sticking to them.

rippleman said,
I am typically always the devils advvocate, so here i go agian. If I write a book, I fix the price to what I want to sell it for. Who ever publishes the book, they too bought my book rights and they too can fix the price to whatever they want to sell it for. I don't see the evil in apple setting prices and sticking to them.

I guess there in lies the difference between Socialism and Capitalism..!

PoohGQ said,

I guess there in lies the difference between Socialism and Capitalism..!

That's not the issue, the justice department filed suit because they claim they have evidence that Apple encouraged and acted as the go between to have the publishers work together, and help price fix. That's illegal in Capitalism.


In July 2010, Mr. Jobs, Apple's former chief executive, told the chief executive of Random House, Markus Dohle, that the publisher would suffer a loss of support from Apple if it held out much longer, according to an account of the conversation provided by Mr. Dohle in the filing. 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.

http://www.nytimes.com/2013/05...id=tw-nytmedia&_r=2&;

Not that simple. Looks like they strong armed others to get their way.

Edited by techbeck, Jun 3 2013, 8:00pm :

PoohGQ said,

I guess there in lies the difference between Socialism and Capitalism..!

Socialism = taxes are spend across all citizens.
Capitalism = taxes are spend across all banks.

PoohGQ said,

I guess there in lies the difference between Socialism and Capitalism..!

Maybe true. I see it this way. The set price was so low, it prevented anyone from being able to compete. SO all the other guys simply did the same thing.

The problem is this. If I write a box and then I do my own electronic conversion, that cost me money. But it forces me to sell the book at a lesser proice in fears I won't sell at all because if they buy my book they will sell it for far less than I think it is worth to me. If I think my book is worth 15.99 I am prevented from selling it at that cost because Apple will sell it for 9.99 in which they take 30%.

This is no different than Samsung being busted for price fixing along with LG and others with TV's. It is simply dishonest for everyone who has a similar product to agree to fix a cost as oppose to competing in the open market and let the market dictate price. Doing it behind closes doors is like signing a non-compete agreement.

The other problem is Apple never admits to any wrong doing even if caught redhanded. How did they think that grabbing the countries or world biggest publishers behind closed doors and saying, "hey lets agree to sell books at the exact same price so that we all make a fair amount of money for something that cost us nothing to product." Yeah good idea until someone ratted them out. Serves them right.

Brony said,

Socialism = taxes are spend across all citizens.
Capitalism = taxes are spend across all banks.

Socialism = taxes are spent across all citizens
Capitaliam = what taxes? money is paid under the table or huge campaign donations to law makers to encourage lawbreaking.

Astra.Xtreme said,
Didn't take long for the trolls to crawl out.
It's not trolling if it is something that is true. Apple was caught breaking a law. They need to pay as does Microsoft and everyone else. Its called Justice, not trolling.

TechieXP said,
It's not trolling if it is something that is true. Apple was caught breaking a law. They need to pay as does Microsoft and everyone else. Its called Justice, not trolling.

Where's the proof?