Apple Inc. (AAPL) On Trial For Ebook Price Fixing

Apple Inc. (AAPL) On Trial For Ebook Price Fixing
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Apple Inc. (NASDAQ:AAPL) goes to court today to face allegations of e-book price fixing. The Wall Street Journal reports that the company already appears to be at a disadvantage, although that’s contrary to what was reported a year ago when the Department of Justice filed the suit. The judge who is overseeing the case has already said that it looks like Apple Inc. (NASDAQ:AAPL) was in collaboration with publishers to fix e-book prices.

Apple Inc. (AAPL) On Trial For Ebook Price Fixing

Why Didn’t Apple Settle?

Three of the five other companies which were accused of e-book price fixing along with Apple settled with the Department of Justice a year ago, and the other two settled in February. The five publishers which were accused with Apple were Penguin, Simon & Schuster, Macmillan, Hachette and HarperCollins.

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According to CNN Fortune’s Philip Elmer-DeWitt, the settlement involved allowing, Inc. (NASDAQ:AMZN) to once again sell e-books at a price of $9.99 if it chose to do so and dump the deal it had made with Steve Jobs, which essentially forced Amazon to meet the higher prices set by Apple Inc. (NASDAQ:AAPL).

DOJ officials claim they have email messages from Jobs and a number of other executives proving that Apple Inc. (NASDAQ:AAPL) fixed the prices. Other evidence the agency reportedly is in possession of came from Jobs’ biography. It highlights the agency model of book pricing, which enables publishers and the owners of content to set the prices. That’s contrary to the wholesale model, which enables retailers to buy in bulk and sell at or under cost to boost their sales.

Apple’s Response To The Lawsuit

Current CEO Tim Cook made some comments last week at the D11 conference which indicate that the company believes it has a shot at winning, even though the deck seems to be stacked against it. Cook basically echoed Apple Inc. (NASDAQ:AAPL)’s response to the suit a year ago.

“The e-book case to me is bizarre,” Cook told All Things D at the conference. “We’ve done nothing wrong there, and so we’re taking a very principled position. … We’re not going to sign something that says we did something we didn’t do. … So we’re going to fight.”

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