U.S. DOJ may sue Apple over ebook price-fixing as early as today, sources say

“The Justice Department could sue Apple Inc as early as Wednesday over alleged electronic book price-fixing, while settling with several publishers as early as this week, two people familiar with the matter said,” Diane Bartz and Poornima Gupta report for Reuters.

“The Justice Department is investigating alleged price-fixing by Apple and five major publishers: CBS Corp’s Simon & Schuster Inc; HarperCollins Publishers Inc; Lagardere SCA’s Hachette Book Group; Pearson and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH,” Bartz and Gupta report. “A lawsuit against Apple, one of the parties not in negotiations over a potential settlement, could come as early as Wednesday but no final decision had been made, the people said.”

Bartz and Gupta report, “Talks between the Justice Department and some publishers had been proceeding, with settlements expected as soon as this week, one of the two sources familiar with the matter said on condition of anonymity, because the discussions were not public.”

Read more in the full article here.

Sara Forden and Andy Fixmer report for Bloomberg, “Apple Inc. and the publisher Macmillan are preparing to be sued as soon as today by the U.S. Justice Department over alleged collusion in the pricing of e- books, according to two people familiar with the matter.”

“Apple and Macmillan, which have refused to engage in settlement talks with the Justice Department, deny they colluded to raise prices for digital books, the people said,” Forden and Fixmer report. “In an antitrust case, they will argue that pricing agreements between Apple and publishers enhanced competition in the e-book industry, which was dominated by Amazon.com Inc.”

Forden and Fixmer report, “CBS Corp. (CBS)’s Simon & Schuster, Lagardère SCA’s Hachette Book Group and News Corp. (NWSA)’s Hachette are seeking to avoid a costly legal battle and could reach a settlement as soon as today, two people familiar with the matter said… Pearson Plc (PSON)’s Penguin Group (PNGN) was also preparing to fight the U.S. Justice Department in court if necessary, two people familiar with knowledge of the matter told Bloomberg News April 5.”

“Apple, Penguin and Macmillan want to protect the so-called agency model that lets publishers — not vendors — set e-book prices, said the people on April 5, who declined to be identified because they weren’t authorized to speak publicly,” Forden and Fixmer report.

Read more in the full article here.

MacDailyNews Take: Unlike the U.S. DOJ, Apple busted the Amazon eBook monopoly. The U.S. DOJ ought to be thanking Apple for doing their job, not suing them.

Furthermore, as per Amazon’s penchant for discounting: With their Cash Everest, Apple could give away X number or X amount worth of ebooks with every iPad sold for, oh, approximately 812 years or until Amazon ceases to: a) be able to sell eBooks, eBook readers, and tiny screen fake iPads; or, b) exist, whichever comes first. 😉

Related articles:
Apple, two publishers reluctant to agree to U.S. and EU settlement terms over e-Book pricing, say sources – April 5, 2012
Apple & the book cabal: Is there a settlement in sight? – March 12, 2012
U.S. DOJ warns Apple, publishers; threatens to sue, alleging collusion over e-book pricing – March 8, 2012
Class-action lawsuit alleges Apple, publishers engaged in ‘price-fixing conspiracy’ to punish Amazon – January 21, 2012
U.S. Justice Department confirms antitrust probe of Apple iBookstore, publishers, e-book industry – December 7, 2011
EU investigates Apple over ‘anti-competitive’ practices in e-book market – December 6, 2011

60 Comments

          1. It never ceases to amaze me how stupid some people are. You do realize the “Boston Tea Party” was more about undoing corporate power than it was about freedom. You do understand that Thomas Paine was pretty much against Capitalism.

            What is a libtard by the way?

      1. “The ruling class has been struggling to deconstruct and recast Paine’s ideas in an attempt to legitimize a fascist corporate dictatorship. Genuine study of Paine shows that their effort cannot succeed. Paine dedicated his life to defense of the small producer: the artisan, farmer, tradesman, laborer, and poor. His vision was of a world without kings, a world without privilege and oppression. Once understood, it can never be twisted to enshrine today’s global corporations as an expression of traditional American values.”

        1. You tell ’em CX! All the stupid fcsker who drink the Wall Street kool-aid. If you are one of the 99% yet stand up for the 1% then you’ve drank deeply and prop up a corrupt and unethical status quo. Do you think you can ever rise to their ranks? Not in a million years! They work hard to keep you down, that’s what the economic meltdown was all about. Consolidation of wealth in the hands of the few. Nothing changes.

            1. You Citizen Zero need to get out of the producers in society’s wallets, rights, and life. You fit the profile of a mommy’s basement dweller far more than Maxwell or any other hard working conservative.

              You can go to Hell.

  1. What kind of country is that, where even the doj is out for Apple’s blood? You all want apple to move production back into the usa, and your people want apple to do more for america, but look at things.. from the people who lobby false accusations against apple and sue to try to gain money because theyre either unemployed or just stupid ( gee the iPad isn’t like a book so I will sue, etc).. all the way up to the justice people. Why should apple even stick around for a nation that is so ungrateful and hateful of apple?

    1. It isn’t the nation… it is just the white house. The seated president appoints the attorney general, who (directly) runs the entire DOJ. The white house also has “liaisons” within the DOJ who lobby to make sure the presidents voice is heard at all levels (particularly so with the current WH administration)

      1. When I mentioned that Encyclopedia Britannica was “folding shop,” I was referring of course to their print version. Indeed, their on-line will be available by subscription and their DVD will continue to be sold.

        No need for books. Like Brian the dog on Family Guy when he was in a bar trying to pick up a 20-something blonde who was busy texting as they “conversed”:

        Brian: I’m a book writer.
        Blonde: Huh? What’s that?
        Brian: A book? It’s like a long magazine.
        Blonde: Huh?
        Brian: It’s like the Internet made out of trees.
        Blonde: Oh. Wanna go into the ladies room and have sex?

    2. I agree with you, nikonfox. Apple struggled to get the record labels onboard with iTunes and they clearly struggled with the book publishers, who are getting creamed by the Internet; they’re looking for a business model that can actually make money today. (*sound of audience gasp*)

      After 244 years, Encyclopedia Britannica is folding shop. Yesterday, I bought one of the last 500 sets still in their warehouse. People want CHEAP stuff so bad…

      I would watch as so many acquaintances who I had evangelized to buy a Mac who would instead go buy a Dell POS-2000. After I asked them several months later how things were going, they’d tell me they had signed up for a class at the community college to learn Windows 2.0 and Lotus 1-2-3.

      And so it is today. Rather than fork over fair bucks to buy an Italian-made espresso maker that will last a lifetime, people buy a $49 Chinese made one from Target and throw it away several months later.

      …And go back to Target and repeat the process whereby some more American dollars flow to China so we may obtain crud we throw away again.

      I went to my downtown library a few days ago. It looked like a bus station in the seedy side of town. The majority of patrons there had knit caps on and were lugging their backpacks. And, no, they were not reading books; they were coming down from upstairs where the computers are located. It was not this way six years ago. Much has changed in a short time.

      The book publishers had finally thought they had found a business model that might make them profitable in the digital age. And they had done so, they thought, by allying themselves with the industry leader of the future of computing.

      Alas, the DOJ is out to show that the book publishers can just go and continue their slide into mediocrity and oblivion.

  2. I guess I just don’t see how Apple is responsible here. Their entire business model for eBooks is “you set the price, we’ll sell them.” I definitely agree that the publishers are colluding, and should be taken to task for that, I just fail to see how any of that is Apple’s responsibility.

    1. Actually, now I remember:

      It’s because Apple has that provision stating that they can’t sell the book for a lower price at any other store. And I agree that that provision is a problem. All they have to do is remove it from their terms and they’d be good to go. They’d have to start operating their business a little differently, but isn’t that better than an anti-trust injunction?

      1. yes, of course, and the government has rules that state they must be given the best price for anything you sell – you can’t sell to someone else for a lower price than what the gov’t pays. so they have been doing this for decades and it is ok for them to enforce this. so i don’t see why a private company can’t do it. after all, the private companies are entering into a legitimate contract between equals; when the gov’t enforces this it isn’t really a contract because the gov’t has all the power.

      2. No. The “Most Favored Nation” clause means that the publishers can’t sell ebooks (wholesale) to another store for less than they sell to Apple.

        Most Favored Nations clauses are common in business. They are generally difficult to enforce because it is difficult to determine what a supplier is selling its products to a competitor for.

        Interesting story…

        There was a company called Rubbermaid that agreed to a “Most Favored Nation” clause with a company called WalMart. WalMart was by far Rubbermaid’s largest customer. Unfortunately Rubbermaid’s internal systems where horrendous. They offered a veritable rabbit warren of rebates and incentives to customers so convoluted that no one knew what they were actually selling product for. Unfortunately for Rubbermaid, WalMart hired K-Mart’s buyer. His first day on the job he asked why WalMart was paying more than K-Mart for Rubbermaid products. WalMart said, “What?” and immediately ceased purchasing all Rubbermaid products. Rubbermaid went bankrupt.

        The Department of Justice had no comment.

        1. But they aren’t selling to Apple, they’re just giving them a cut. Apple hosts the file and sells it at the publisher’s set price, but they don’t pay to acquire the file. Put another way, Apple doesn’t own what’s on their shelves, they just take a percentage each time an item is sold. It’s this, combined with the lowest price requirement, that is the issue.

          Amazon operates (operated?) like what you describe. They purchased the books from the publishers, and then were free to set any price they liked. After Apple came along, the publishers raised their prices across the board, perhaps to make up for Apple’s 30% cut. By contract they also had to raise their prices elsewhere.

          I have no problem with the agency model, it’s when it is combined with that requirement that it becomes an issue.

      3. … the top two comments – both posted within half an hour of the initial posting – suggest someone’s Right Wing rights/values are being trampled. The law that is in question is a Freedom of Trade act -the Feds are saying “allow Free Trade”.
        Now, Lemming, were this “Communism”, it would be the government insisting on setting the prices rather than insisting on “Free Trade”. So … is Lemming a troll who’s comment should be deleted? Or an ignorant idiot who should merely be ignored?
        And, Paddy, me boyo, the “Libtards” … you know there really is no such thing, right? There are no offices set up where people with tin-foil hats sit around raising leftist rabble. Honest … not that such a word means much to you. Anyway, the Progressive take on this – we don’t have offices such as those run by the Tea Party Whack Jobs, either – is that Apple has a right to this business. The publishers may – MAY – be bending (breaking? possibly) a law or two, but Apple (and Amazon, AND Barns & Nobles) are within their rights.

        1. Progressives = Communists = Dictators = Liberals = DemoTards = Lemmings = Drones = Socialists = Marxists = Zombies = Freedom Haters = Racists = Haters = Parasites

  3. Look, I’m as much an Apple-fanboy as the next guy, but there is something to this argument to allow Vendors to set the prices of the goods they sell and not the publishers. In economics we call that a “free market”- you buy (from the publishers) at whatever price they want for their goods and you sell it at whatever price you want. Sometimes this will be at a loss to bring people to the store (this is a common supermarket technique called a “loss-leader”).

    Why should publishers set the prices of goods they are not selling directly to end users? This suit seems legit to me…

    1. Amazon did this. The problem is Apple’s provision that any book in the iTunes Store can’t be sold for a lower price elsewhere.

      If Apple wants to run an Agency model while Amazon is a loss leader, that’s fine, it’s that provision that’s the problem.

      Amazon better be careful here though. What if Apple decides to become a loss leader? Apple’s pockets are deeper than anyone else. They could be a loss leader ad infinitum.

      1. MrMcLargeHuge, I thought that the provision, you refer to, only applied if the publishers used iBooks Author. That the publishers couldn’t use Apple’s software to make their books and sell for less elsewhere, unless they gave them for free on all platforms. Am I wrong in my understanding or have just confused 2 separate things?

        1. Yeah, you’ve confused two different things.

          iBooks Author is a recent thing that came out with Apple’s textbook initiative. What they’re being sued for has been happening since iBooks was launched (two years ago?).

  4. Something nefarious is going on. The allure of eBooks was that without the printing, shipping & warehousing costs the cost of a “paperback” would come down. Well, if anything, it’s only gone up! Way up!
    Publishers are only inviting pirates to come normalize their industry as the did to the record labels.

    1. You haven’t been to any torrent sites recently have you? (although it is not new, usenet too)

      Books are just as available as music, movies, tv shows. The only thing new is the quality level, they are getting better.

      1. “socialist” and “fascist” are mutually exclusive, they leaves “pinko fags”. But doesn’t specify if the “pinko” refers to the “fags” comment or is intended to imply political bent.
        MUST I note that calling someone a “fag” is both immature – unless you KNOW they are homosexual – and a sign that you are insecure in your own manhood? Next time you are tempted to call someone you don’t KNOW is a homosexual a “fag”, or “gay”, or “butt…er”, maybe you should give a few seconds of thought to your own hidden fear that you might be one, too! Work that problem out and you might be the first in your family to graduate grade school!

    1. … comment (above) either was not posted in time to prevent this or BLN is not so much an idiot as a troll. Not saying he can’t be both. For the ignorant out there: Communism is a political system that allows (requires?) the government to set prices for goods. When the government defends those who would set their own prices, that is NOT “Communism”.
      Let it be known that Balmer’s Left Nut is here-to-fore to be known as Balmer, the JackAss.
      😉

        1. … did you find some brilliant counter to my argument? Or some fatal flaw in my argument?
          No.
          Or you kept it to yourself.
          Add Captain Obvious to the JackAss list! I mean, you’re cute, butt stupid! 😉

          1. Answer this question you Commie.

            Why does Maobama surround himself with proven communists??

            Why do liberals always lie about their true intentions??

            Because communism is the end goal you idiot.

            Google communism and the democrat party. You’ll learn something if your lemming brain is capable of absorbing anything but propaganda!

  5. After all, who the hell do these publisher think they are..? Setting their own prices for their own publications?

    The president can publish his self made birth certificate on the White House web site, so how dare other publishers try to publish their stuff the way they want.

      1. … could you explain it in short words for me? Please?
        These “publisher”(sic) have been setting their own prices for centuries, right? Apple has told them that they need to use Apple’s price structure if they want to sell through Apple, right? Oh, and they can’t sell the same property at a lower price to someone else. The price set for sales to Apple was lower than the publishers wanted – as demonstrated by the long, drawn-out discussions had over it. However, there is nothing saying the publishers can’t sell at a HIGHER price to someone else.
        Or did you mean that follow-up drivel … “his self made birth certificate”? I’ve seen a Hawaiian “birth certificate” and can tell you the one in question looks authentic. I was in Japan, in the ’60s, and a fellow serviceman had his and his wife’s. He was only a Hoale, but she was “native”. Ubermac, have YOU seen an actual Hawaiian “birth certificate” to compare it to? About 95% of all Americans have not – other than the reputed presidential version. There are reputable people out there saying “it looks real” or “it came from the hall of records” and then there are mouthpieces from the Radical Right saying “it’s a lie”. He, at least has something akin to “proof” to show you. They have nothing but “how can a black be our President!”. The answer to them is “because we elected him”. If you want the story to have a different ending, you damn straight better come up with something more mature, more informed, than “I don’t believe it”. We didn’t believe the Supremes elected Bush to his first term or the rigged ballot boxes did it for his second. There’s lots of village idiots in Texas, we didn’t challenge HIS birth certificate. (was he a still birth?)

  6. I cannot understand how people are calling this communism. No-one is suggesting that the government should set the prices, nationalise Apple or the book industry, hand the profits and production to the workers or seek common ownership of the means of production. It is not even close to socialism.

    The government seeks to protect the market. Pro-market is not synonymous with being pro-business. It is in the public good that business be required to compete and to be prevented from engaging in anti-competitive behaviour to defeat the efficient working of competition in the market. It is regulation which promotes competition and the market, rather than supplanting it.

    If, and only if, Apple is using a dominant position in the market to prevent products being sold more cheaply elsewhere then that may be a form of market abuse. Additionally, and a separate point, most countries prohibit the practice of manufacturers dictating the final price at which their product sells to the consumer – whether by stamping the price on their items or otherwise. As a matter of public policy, the reseller is entitled to set their own sale price, regardless as to the manufacturer’s recommended retail price.

    1. But Apple is NOT preventing the publishers to sell their books cheaper. It is the publishers who decide at what price they want to sell eir books. Apple is not keeping them from selling them cheaper.

Leave a Reply to I'm sorry, but ... Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.