Feeds

Apple wants ebook price class action suit thrown out

Fruity firm fends off regulators' fingers

The Essential Guide to IT Transformation

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. ®

Build a business case: developing custom apps

More from The Register

next story
4K video on terrestrial TV? Not if the WRC shares frequencies to mobiles
Have your say with Ofcom now, before Freeview becomes Feeview
Nice computers don’t need to go to the toilet, says Barclays
Bad computers might ask if you are Sarah Connor
YES, iPhones ARE getting slower with each new release of iOS
Old hardware doesn't get any faster with new software
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
You didn't get the MeMO? Asus Pad 7 Android tab is ... not bad
Really, er, stands out among cheapie 7-inchers
Apple winks at parents: C'mon, get your kid a tweaked Macbook Pro
Cheapest models given new processors, more RAM
VMware builds product executables on 50 Mac Minis
And goes to the Genius Bar for support
Leaked Windows Phone 8.1 Update specs tease details of Nokia's next mobes
New screen sizes, dual SIMs, voice over LTE, and more
Microsoft stands on shore as tablet-laden boat sails away
Brit buyers still not falling for Windows' charms
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.