The dispute over Apple’s alleged price-fixing of e-books comes to a head today as a case brought against the company by the U.S. Justice Department in 2012 goes to trial in federal court in Manhattan.

ibooks_heroApple is accused of conspiring with book publishers to raise prices on e-books via the iBookstore. The Justice Department claims that a set of agreements between publishers and Apple constitute a violation of the Sherman Anti-Trust Act.

Those agreements, primarily signed in 2010 around the launch of the iPad, were designed to combat Amazon’s hold on the e-book market at the time.

Apple was originally charged alongside book publishers Hachette, HarperCollins, MacMillan, Penguin and Simon & Schuster. The five publishers chose to settle with the Justice Department, leaving Apple as the sole defendant for the case that starts today.

Apple, for its part, has denied any wrongdoing.

“Apple did not conspire to fix eBook pricing,” spokesman Tom Neumayr said in a statement issued last month. “We helped transform the eBook market with the introduction of the iBookstore in 2010 bringing consumers an expanded selection of eBooks and delivering innovative new features. The market has been thriving and innovating since Apple’s entry and we look forward to going to trial to defend ourselves.”

According to statements made by Tim Cook, who called the case “bizarre,” the opposition to settlement with the government is philosophical.

“We’re not going to sign something that says we did something that we didn’t do, so we’re going to fight,” Cook said at last week’s D11 conference.

Opening the trial this morning, a lawyer for Apple echoed Cook’s statements, according to an Associated Press report from the courtroom.

While Apple’s chief may believe Apple didn’t do anything wrong, the judge assigned to the case, Denise Cote, has already indicated that she disagreed.

“I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that,” Cote said, according to a Reuters report on a pretrial hearing about the case.

In the event Apple loses the case, the company may be fined up to $100 million under the provisions of antitrust law.

What do you think? Has Apple run afoul of federal law?

Comments

  • guest

    They should have just settled like everyone else involved. Instead, their arrogance is going to end up costing them even more. It’s reminiscent of MS v DOJ. Only in this case the harm to consumers is much easier to quantify and Apple’s contravention of the law is tougher to dispute.

  • Not an Amazon fan

    The irony here is that the DOJ should be going after Amazon. Amazon was guilty of price-fixing by telling the publishers what they could charge. Amazon was free to set a retail price, but when they forced a wholesale price on publishers, they crossed the line. The fact that Amazon’s price fixing might have lowered ebook prices is irrelevant because, in fact, it was intended to increase Amazon’s own revenue by selling more Kindle hardware.

    In contrast, Apple told publishers they could set their own prices. How is that price fixing? The fact that Apple took a fixed 30% of retail is also irrelevant. Costco makes a flat 15% markup on wholesale prices, and they negotiate for lower wholesale prices, but it is ultimately the seller (or publisher) who decides what the price is. That’s pretty much a free market.

    • My idiotic alias

      Gee, it’s a wonder we’re even having a trial. They could have just come to you.

    • Stupid Apple Apologist

      Just about every statement you made here is demonstrably inaccurate.

      • Not an idiot, not anybody’s fa

        Demonstrably inaccurate, eh?. Yet you fail to make a single argument.

  • Guest

    We handed Tim Cook a gun with 6 bullets in it. Let’s run down how those bullets have been fired.

    1. Introduced iPhone 4S when we expected the 5. BLAM! Right in the foot.

    2. Introduced iPad Mini which is cannibalizing full pad sales every day. BLAM! Foot.

    3. iPhone 5, a year late and tragically short on features like NFC and modern UI affordances. BLOOT!

    4. Appears before Congress to talk taxes, an humiliation that no CEO should ever subject himself to. BOOT!

    5. Fails to settle ebook price fixing lawsuit, leading to a costly trial. BLOT!

    Once the next underwhelming piece of leadership comes from the captain’s chair in Cupertino, the barrel will be empty and we’ll be rid of Tim. Thanks.

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