Apple
has been accused of acting as ringleader of a price-fixing racket, enlisting
half a dozen market-dominating companies in a conspiracy to profiteer through
anticompetitive practices and artificial price inflation. The market: e-books.
The
U.S. Department of Justice has sued Apple along with a handful publishers,
accusing them of orchestrating a sales agreement that effectively changed the
business model under which e-books were sold. The syndicate, according to the
DoJ, pushed an agency model upon the industry, basically limiting retailers to
selling e-books only for the prices named by publishers, as opposed to a
wholesale model, which would allow retailers to establish their own prices.
Apple
rounded up the major publishers named in the suit and convinced each of them to
sign functionally identical agency contracts, according to the DoJ. That would
eliminate price competition and facilitate Apple's habit of taking a 30 percent
cut of the total revenues earned through downloads of things like apps and
e-books. Those publishers then allegedly turned around and demanded that
everyone else who sold their e-books jump on the agency bandwagon too.
One
of the biggest losers in Apple's alleged dealings with publishers was Amazon
(Nasdaq: AMZN), which lost some control over how it priced its e-books.
About
half the publishers named in the suit folded immediately and settled with the
DoJ. But Apple and others fought on, and it seems that Cupertino may have a
good shot at getting off the hook, for the most part. Even if Apple were the
syndicate hub, it's not much of a book publisher itself, so it might be more
difficult for the DoJ to sell a case that it was responsible -- to the same
degree as publishers -- for price-fixing in an industry in which it
participates only indirectly. So Apple may not have to pay as much to make this
go away.
The
other publishers face a tougher fight. Publishing is their game, and as some of
the biggest names in the business, it'll be easier to prove they were colluding
to fix prices.
There's
also a question of just how much damage this alleged activity really caused.
Apple's huge, and the publishers involved are among the biggest in their field,
but price-fixing is an accusation that's usually shot at companies that are
already enormously dominant in their fields. And in the field of e-books,
Amazon happens to be the top player.
View orginal artical here- Apple
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