The U.S. Justice Department has accused Apple and two popular publishers, Macmillan and Penguin, of fixing prices of digital books to detrement Amazon’s dominance in the eBook industry. The antitrust lawsuit, filed in Manhattan and supervised by District Judge Denise Cote (pretrial), also accused three other publishers who have since settled their cases in the matter.
“If the allegations are true, this was an orchestrated effort to get Amazon to stop discounting electronic versions of books, to the extent that Apple was involved in the plot, it reflects badly on the company.” said Allen Grunes, a lawyer with Brownstein Hyatt Farber Schreck LLP in Washington.
With the launch of the iPad in mid-2010, Apple allowed publishers to set their own prices for individual books on the popular iBooks store so long as the Cupertino-based tech giant recieved a 30% cut and the publishers agreed to offer their lowest prices through Apple. Amazon prefer the standard method of buying each unit at a set price and then offering the books on their store at their own prices, usually $9.99.
“Apple clearly understood that it’s participation in this scheme would result in higher prices to consumers.” the U.S. Justice Department said in federal court in Manhattan through it’s filed complaint.
In my opinion Apple’s model makes Amazon’s system seem out-dated, almost stoneage. Sure prices for some books could end up being higher than the same offerings in rival stores such as Amazon’s, but they could also end up being alot cheaper and thus generating a higher amount of competition which has been dominated by Amazon fo far too long.