Apple wants ebook price class action suit thrown out
Fruity firm fends off regulators' fingers
Apple may be keeping quiet publically about allegations of antitrust violations in ebook pricing, but a court filing in a class action lawsuit last week shows that Cupertino doesn't think too much of the claims.
The motion to dismiss the case, filed in a New York court, gave a particularly scathing view of the argument against Apple peppered with such memorable phrases as the following:
This allegation just strings together antitrust buzzwords and offers the sort of “bald assertion[s], without any supporting allegations,” that do not survive a motion to dismiss.
Apple and book publishers are facing off with two regulators, the European Commission and the US Justice Department, which are both passing a critical eye over their behaviour in the ebook market.
The concern is that, on entering the market, Apple changed the pricing structure for ebooks with the help of publishers, artificially raising prices.
Before Apple came along, Amazon dominated the ebook market by nearly 90 per cent and was using the typical pricing model with publishers, where it paid half the recommended retail price and then sold it for as much or little as it liked.
Under this model, Amazon was frequently selling new books for $9.99, even if it had paid more for the book.
When Apple moved into ebooks, it negotiated an agency model with publishers, where they set the price and Apple took a 30 per cent cut. The fruity firm also stipulated that publishers couldn't set one price for it and then turn around and sell the book more cheaply to Apple's rivals.
On the strength of Apple's deal, publishers then went to Amazon and asked for the same contract.
The argument against Apple and the publishers is that their agreements artificially lifted the price of ebooks.
Apple argued in its filing in the class action suit that it had "no discretion" over prices set by publishers and they all set their own prices. The company also said it had no reason to be setting book prices as it is not a publisher or really a proper bookseller.
Plaintiffs contend Apple acted as a coordinating hub even though they explicitly acknowledge Apple was a new entrant (not a dominant distributor), with no market power, no experience in book distribution, no business relationships with the Publishers, and no vested interest in the success of the physical book market.
Apple also poured scorn on the idea that it entered into these illegal machinations to get rid of Amazon's Kindle.
Nor does this “Kindle theory” make sense on its own terms. For example, if Amazon was a “threat” that needed to be squelched by means of an illegal conspiracy, why would Apple offer Amazon’s Kindle app on the iPad? Why would Apple conclude that conspiring to force Amazon to no longer lose money on eBooks would cripple Amazon’s competitive fortunes? And why would Apple perceive the need for an illegal solution to the “Kindle threat” when it had an obvious and lawful one which it implemented – namely, introducing a multipurpose device (the iPad) whose marketing and sales success was not centred on eBook sales?
Despite its protestations of innocence though, class action lawsuits and the scrutiny of the regulators of two massive Apple markets are not to be sneered at.
The EU launched a formal investigation of Apple and five publishers over the allegations in December last year. And yesterday, reports said that the US Justice Department is trying to get the six firms to settle against the allegations or it will take them to court. ®
To rephrase Apple's legal argument (at least as I understand it):
You can't convict me for this particular wrong thing I did because I *could have been* doing much worse things but I didn't.
The big problem is the "can't be cheaper elsewhere" clause
I think the 30% model makes *a lot* of sense for all of the new forms of electronic media, whether its software, books, or movies. You can argue it should be less, but I think the model itself makes sense. It really makes them more of a distribution platform than a retailer. This opens the doors for self publishing the same way it has paved the way for independent game developers.
With the addition of "can't be cheaper somewhere else" though, it becomes a stickier problem, and makes the price fixing suit seem more plausible. If the books can't be sold cheaper, and publishers are setting the price, it sounds like price fixing to me.
Re: @ dogged - Apple wants
I think you have the wrong people in Secret backroom agreements.
The way it really happened was Amazon bought the books from the publisher for a wholesale price. Amazon then set their own price. High or low, it was Amazons choice. The publisher already had their money and it made no difference to them what price a book was sold at.
Now Apple lets the publisher decide the price and split the proceeds. It is in both parties interest to keep the prices high. More cash is a hell of an incentive to do a deal with Apple. More so when you can then force other retailers into the same deal or face being cut off from new books.
Bending over for Amazon? The only people bending over for anybody are the general public.
They didn't use Agency Pricing
They worked like just about everything else. You sell me the book, and I sell it for what ever price I want.
But the publishers want Agency Pricing. That's price fixing by definition.
It's not SRP it's YOU MUST SELL AT THE PRICE WE TELL YOU.
Re: Net book agreement....
Must be real hard for the 150+ books/authors who have got my money in the last year. There's one guy who wrote a cookbook who's made a fortune in the last year due to the evil (according to you*) that is Amazon. The real book was published via a niche printer and that's what ebooks can do fo CHOICE.
I said I don't buy Terry Pratchett books anymore - I have enough respect for the man that I don't pirate them either.
People like you make me sick - everythings fine as long as YOU can afford the books. You neglect to mention the adverse effects the net book agreement had on libraries too.
With no respect at all - do fuck off and take your middle class bullshit with you.
*I notice that Apple is good and Amazon is bad for you. Fanbois 4tw :(