NEW YORK: Apple goes on the defensive today with the start of a trial in which US officials allege the company was the “ringmaster” of a conspiracy to raise prices of electronic books.
In the trial set to open in US District Court in New York, the technology icon is going solo in its fight against the US Justice Department after five large publishers named in the lawsuit settled the charges.
US antitrust watchdogs allege Apple orchestrated a collusive shakeup of the ebook business in early 2010 that resulted in higher prices. Apple is expected to argue its actions shook up a sector that had been dominated by Amazon, and that it boosted competition and improved conditions for consumers.
Early signals suggest the three-week, non-jury trial could be a tough ride for Apple, which has been struggling of late amid a dearth of new products and recent allegations that it avoided billions in taxes.
Five publishers originally named as defendants reached settlements in which they agreed to terminate their ebook agreements with Apple. The largest settlement was with Penguin for $75m, while a settlement with Hachette, Harper Collins and Simon & Schuster created a $69m fund for refunds to consumers. Macmillan settled for $26m. Apple chief executive Tim Cook dismissed the idea of a settlement because it would call for the company to sign an admission of wrongdoing.
“We didn’t do anything wrong there,” Cook told a recent California conference. “We’re going to fight.” For Apple, the case is not as much about money but maintaining what had been a stellar reputation and deciding its own business practices. A loss could also leave Apple vulnerable to private lawsuits.
“The Apple brand has been built magically over many years,” said Roger Kay of Endpoint Technologies Associates, a technology market intelligence company, who added that a defeat “would substantially harm the company’s reputation.”
The government’s case centers on a period when Amazon dominated the ebook business, selling most bestseller titles for $9.99. Leaders of the major publishing houses held “CEOs dinners” in “private rooms at upscale restaurants” at which they discussed the threat from Amazon.
Into this envir onment stepped Apple, which was readying the launch of its iPad. Rather than following the Amazon “wholesale” pricing model, Apple favoured the so-called “agency model”.
AFP
