It’s like a movie: Apple conspired over ebooks price fixing with publishers

Following a trial that has lasted a long time, Apple was finally found guilty by the judge – in an on going dispute regarding ebook and their prices. Manhattan Judge Denise Cote ruled in the latest saga of ‘book wars’ that Apple had “conspired to restrain trade”. Apple have released a statement that they would fight any: “false allegations” and have been clear from the beginning these claims are not the case.

naxos-ibook

During April 2012 the U.S Justice Department brought claims against 5 publishers and Apple over the seemingly high prices of ebooks within their store. HarperCollins, Macmillan Publishers, Penguin Books, Simon & Schuster, and Hachette Book Group, Inc had been placed under the microscope in order to obtain why ebooks remained at an astonishing rate. The Southern District Court of New York had said that the firms conspired to fix ebook prices in fear of Amazons continuing success and discounts within their Kindle store. Apple, inp particular not being a publisher, was seen as a tool to this conspiracy and a facilitate – information emerged that although Apple was complacent to work with the publishers they also knew it would result in higher end user prices. HarperCollins, Hachette and Simon & Schuster have now settled their case and have paid Texas and Connecticut $52 million in consumer restitution. This later left Apple, Penguin, and Macmillan as the remaining firms under the legal spotlight. Following a lengthy wait the court ruled on the 10th July 2013 that Apple did have a case to answer. In non jury trial it was decided that Apple had violated federal antitrust law and has played a “central role” in the conspiracy to fix prices. The issue surround the model of selling that Apple and publishers used. Publishers set the price of books and and then gives the seller, Apple, a 30% cut in the profit – rather than retailers setting prices at their own stores.

Judges have ordered a new hearing to decide the imposed damages on Apple. Judge Cote said:

“The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy.Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010.”

Apple has been portrayed as an evil and sinister figure in this latest battle. The Attorney General said that the case was a victory for all consumers who read electronic books. Ironically Apple is now celebrating their 5th anniversary of their App Store, one of the largest worldwide and has boasted its openness and diversity. Apple has always been seen as a company that thrive and innovates. At the time Jobs was at the helm the money wasn’t really the top agenda. He would casually select manufacturing methods, design process or simple designs that outweighed all other costs, non conventional and expensive. What mattered was the design and the end user experience. However the latest step from Apple can tell another story. The finances behind the scandal meant Apple charged higher prices and received a greater profit, in fear Amazon would takeover the entire market. Previously Apple would not have cared about finances or market share; at least not as much – but now things seem to have changed. Tim Cook is CEO now, at the time in 2010 Jobs was still at the helm but Cook and other executives were reportedly having a greater influence, Eddy Cue Sn VP has also been targeted as a “ring leader”. Cook isn’t Steve Jobs neither is he trying to be – but financial goals seem to now drive Apple. Just an observation. Apple had previously hoped that the introduction of iBooks would be the start of something new and the beginning of the wider adoption of e-books. Apple released the following statement after the case:

“Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong and we will appeal the judge’s decision.”

Apple clearly has plans to move e-books forward, to encourage their wider use, it looks unlikely now as consumers celebrate the ruling, condemning corporate control of markets. But as Apple now waits for damages to be read the publicity of the case means that consumers may think twice before buying from Apple. They currently hold the majority of the market share in the tablet industry and this could have led them to arrogance, the iPad is their main distribution for iBooks but now they risky both sales. This may mean in the long run Apple will face a harsh battle to regain trust and will have to become more competitive amongst their profit margins or lose custom…

ibooks_hero

Advertisements