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Apple’s Response to the U.S. DoJ Over eBook Price Fixing

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In April, Apple along with seven other publishers were sued by the U.S. Department of Justice, accused of ebook price collusion. Apple and the accused disrupted the traditional wholesale model, where prices are determined by retailers such as Amazon.

Instead, the agency model was adopted (with Steve Jobs playing a hand in the role) where publishers controlled ebook prices, which is what we currently see in the iBookstore. The DoJ wants to side with Amazon and return to the former pricing model. Apple has long noted the iBookstore has ‘fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry’. Apple has also requested a trial to defend itself against these allegations.

In a more detailed 31 page reply, Apple has responded the U.S. Government ‘sides with monopoly rather than competition’. Here is an excerpt from Apple’s legal response (PDF) to the Department of Justice:

The Government sides with monopoly, rather than competition, in bringing this case. The Government starts from the false premise that an eBooks “market” was characterized by “robust price competition” prior to Apple’s entry. This ignores a simple and incontrovertible fact: before 2010, there was no real competition, there was only Amazon. At the time Apple entered the market, Amazon sold nearly nine out of every ten eBooks, and its power over price and product selection was nearly absolute. Apple’s entry spurred tremendous growth in eBook titles, range and variety of offerings, sales, and improved quality of the eBook reading experience. This is evidence of a dynamic, competitive market. These inconvenient facts are ignored in the Complaint. Instead, the Government focuses on increased prices for a handful of titles. The Complaint does not allege that all eBook prices, or even most eBook prices, increased after Apple entered the market.

A similar ebook price-fixing class action lawsuit was launched in BC a week after the initial U.S. DoJ suit, also going after Apple and other publishers.

We certainly have more options nowadays to read our ebooks, but prices still remain pretty high for digital editions, compared to their paperback or hardcover counterparts.

[via ArsTechnica]

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  • nosnoop

    Not sure what argument Apple has here at all.  It was totally irrelevant.
    They were being sued for price-fixing, and that’s exactly what they have done.

    There is no denying that their agency model results in all of us consumers paying a lot more for the ebooks; and that returning to the traditional retail/wholesale pricing would force the price down and an increase in competitions.   Kindle was first to the market and of course they were in a dominant position.   Everyone else was playing catchup and I am sure Apple would just be as successful in terms of market share, if not more, in using the traditional model.   But of course, Apple would not be satisfied with that – they want FAT PROFIT MARGINS, as with all other Apple products, and that’s why they came up with this agency model – protecting their profit margin instead of getting into a price war (which would benefit consumers).

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