May 31, 2013
Next Monday, June 3, the eyes of the tech world will be focused on Apple. No, the Worldwide Developers Conference wasn’t moved up a week. Rather, Monday is the day when the U.S. Department of Justice's anti-trust trial against Apple over alleged e-book price fixing finally begins. The trial is scheduled to begin at 9:30 a.m. EDT in a Manhattan courtroom. The DOJ believes that when Apple launched the iBookstore in 2010, they did so after colluding with book publishers over the prices they charged for e-books throughout the entire industry. This alleged collusion lead to what is known as an “agency model,” where publishers, not booksellers set the price. Apple continues to deny any wrongdoing. Unfortunately, the facts and circumstances on the ground might not be on their side. For one, since charges were first filed in 2011, the five publishers originally named as co-defendants in the case, have each settled with the DOJ. These include Hachette Book Group, HarperCollins Publishers, Simon & Schuster, Macmillan Publishers, and the Penguin Group. For another, the late Apple CEO Steve Jobs made not one, but two very public comments that seemed to suggest that his company was involved in price fixing. Paragraph 77 of the complaint says:
Apple understood that the final Apple Agency Agreements ensured that the Publisher Defendants would raise their retail e-book prices to the ostensible limits set by the Apple price tiers not only in Apple’s forthcoming iBookstore, but on Amazon.com and all other consumer sites as well. When asked by a Wall Street Journal reporter at the January 27, 2010, iPad unveiling event, “Why should she buy a book for … $14.99 from your device when she could buy one for $9.99 from Amazon on the Kindle or from Barnes & Noble on the Nook?” Apple CEO Steve Jobs responded, “that won’t be the case …. the prices will be the same.”You can see Jobs make the above comments right here at the 1:55 mark: The DOJ also says that Jobs told his biographer, Walter Isaacson the following prior to his death in October 2011:
We told the publishers: 'We'll go to the agency model, where you set the price, and we get our 30 percent, and yes, the customer pays a little more, but that's what you want anyway'.Key Apple executives, including CEO Tim Cook, and Senior Vice President Internet Software and Services Eddy Cue may take the stand during the two week trial. As usual, we'll keep you updated. For more information on the case, see: Apple Denies E-Book Pricing Collusion Charges, Blames Tough Talks With Publishers.