An ongoing trial, in which the U.S. Department of Justice accused Apple Inc. (NASDAQ:AAPL) over fixing ebook prices, has revealed that the iPhone maker’s iBooks business was up 100 percent, in 2012, and held 20 percent market share.
Apple Inc. (NASDAQ:AAPL) has been accused by the government as the mighty partner which along with the book publisher is working on increasing the prices and at the same time the government also claims the company “forgot to focus on customers.”
Seth Klarman Tells His Investors: Central Banks Are Treating Investors Like “Foolish Children”
"Surreal doesn't even begin to describe this moment," Seth Klarman noted in his second-quarter letter to the Baupost Group investors. Commenting on the market developments over the past six months, the value investor stated that events, which would typically occur over an extended time frame, had been compressed into just a few months. He noted Read More
Facts Revealed in Court
According to a report in Publishers Weekly, during the trial, government counsel asked Apple Inc. (NASDAQ:AAPL) executive Keith Moerer about the market share of Apple Inc. (NASDAQ:AAPL)’s iBookstore at the time it was launched and in 2012.
In response, Moerer answered that the market share of iBookstore during its launch in 2010 was 20 percent and that thesame is the case in 2012, as well. Apple Inc. (NASDAQ:AAPL) made a deal with large publisher Random House in 2011.
The iBookstore of Apple Inc. (NASDAQ:AAPL) was categorized in the failure segment by the government as the government holds the view that the price charged by Apple Inc. (NASDAQ:AAPL) is not fair to consumers, and also that books sold by Apple are less in number due to high prices.
Moerer said that he disagrees with government counsel. He said that sales of eBooks increased 100 percent in the previous year at iBookstore and that the store caters to more than 100 million customers.
Amazon Accuses Apple
The case of the government over Apple Inc. (NASDAQ:AAPL) takes into consideration that the Cupertino based firm formed a conspiracy with publishers to increase prices over the $9.95 price point set by Amazon.com, Inc. (NASDAQ:AMZN) earlier.
Executives at Amazon.com, Inc. (NASDAQ:AMZN) accused Apple Inc. (NASDAQ:AAPL) that the strategy was adopted to reduce the success of the Kindle. The popularity of Kindle has been backed up by the wholesale model of e-books by Amazon, through which the company was able to sell again the publisher’s book at a low cost that reduced the hardcover pricing of the publisher.
Publishers Unhappy with Apple
The statements of publishers, however, reflect that the publishers alone wanted to fix the price by rather than following the price that has been set by a mighty seller.
John Sargent, Chief Executive of Macmillan, said that he wished to increase prices for some selected books but did not because of price pressure from Apple Inc. (NASDAQ:AAPL).
When Apple Inc. (NASDAQ:AAPL)’s attorney Orin Snyder cross examined Sargent, he said that Amazon.com, Inc. (NASDAQ:AMZN) had the advantage of early entry into the market, which acted as a barrier to entry for others.