And then there was one. Apple Inc. (NASDAQ:AAPL) was mired in e-book price-fixing case with several e-book publishers, with the U.S. Department of Justice filing suit against Apple and publishers for fixing prices in order to reduce competition in the e-book segment. The last of the publishers, Macmillan, has reportedly reached a settlement with the Department of Justice, which leaves Apple in the lawsuit.
Apple Inc. (NASDAQ:AAPL) has been claiming innocence in the case, which the DOJ says Apple “convinced” these publishers to fix their prices for e-books. The whole story was based on the dominant market share by Amazon.com Inc. (NASDAQ:AMZN) in the e-book space. The DOJ claimed that the publishing houses in the original lawsuit, with the encouragement of Apple – which has been trying to get market share from its own online library – changed its pricing method, which sent prices up in the marketplace, including what Amazon.com would hcarge for e-books.
For the first couple of years that e-books were made widely available, publishing houses generally accepted a retail pricing method, in which the retailers determined the price of the e-books they sold. However, these publishing houses ultimately changed their pricing to one where the publishers determined the price. This meant that the retailers had to sell the e-books at or above the price that the publishing houses determined. And with all retailers getting the same suggested price, Amazon.com Inc. (NASDAQ:AMZN) did not have the competitive advantage in pricing over Apple Inc. (NASDAQ:AAPL) and others.
The DOJ reiterates that it will continue to pursue the case against Apple Inc. (NASDAQ:AAPL), which has continued to maintain innocence in this price-fixing scheme.
What do you think? Should Apple fight the charges? Should e-book publishers have the right to determine their own prices? We’d like yoru thoughts in the comments section below.
DISCLOSURE: I won no positions in any stock mentioned.
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