The Apple ebook price-fixing suit: What it all means
Apple gets involved in a lot of lawsuits—such is the life of any large, prominent corporation. But the trial kicking off on Monday in the U.S. District Court for the Southern District of New York isn’t your run-of-the-mill intellectual property infringement or class action suit: It’s an action brought by the U.S. Department of Justice, alleging that Apple colluded with publishers to fix the prices of ebooks at a higher level.
As the trial gets under way, here’s what you need to know about this case.
The case against Apple
The case is being brought by the Department of Justice’s antitrust division—the section whose mission is “to promote economic competition through and enforcing and providing guidance on antitrust laws and principles.” The division is perhaps most well known among tech-watchers for its 1990s antitrust suit against Microsoft over bundling Internet Explorer with its Windows operating system, which ultimately ended with a settlement between the company and the feds.
The DOJ alleges Apple convinced the major publishers to adopt an “agency pricing” model across the board, resulting in less competitive ebook pricing. Under the until-then traditional wholesale pricing, the retailer (Barnes & Noble, Walmart, Amazon, your local bookstore) bought copies of a book, at wholesale prices, from the publisher; the retailer could then sell that book to customers at a chosen retail price, thus determining its own level of profit.
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