Clearly, its the highest paid lawyers that are more in demand among the top technology firms worldwide. So with the everyone-suing-everyone scenario currently being played out, the latest is against the biggest proponent of court proceedings right now. It’s Apple along with a slew of publishers that are being sued by a Washington based law firm on the grounds of price collusion. The publishers accused to be hand-in-glove with the Californian company include Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. That makes up five of the top six publishing house in the US.
The case has been filed at US Distict Court of Northern California. The law firm Hagens Berman filed the suit, saying “the complaint alleges that Apple believed that it needed to neutralize the Kindle when it entered the e-book market with its own e-reader, the iPad, and feared that one day the Kindle might challenge the iPad by digitally distributing other media like music and movies.”
Clearly, the way Amazon has a firm grasp on the e-book market is not to the liking of Apple. Further, it fears Amazon selling movies and music will put its iTunes store at risk. Amazon already has a huge consumer base and uses low initial cost of e-books to drive sales of its Kindle.
So what does Apple do? The Connecticut based company ties up with the above mentioned publishers to ensure prices of e-books would remain a notch higher than their physical counterparts. Amazon’s pro-consumer discount pricing has been immensely popular so far and Apple mooted the agency model to counter that. As per the agency model, publishers has the right to set their own pricing they provided the seller with a portion of the revenue they earned.
“As part of the unlawful agreements, and seeking to leverage its dominant position via the Apple iOS platform, Apple and the publishers agreed that prices for ebooks that were offered through the iBookstore would be calculated by a formula tied to physical books,” the lawsuit said.
“Amazon’s pro-consumer pricing meant that to enter the ebooks market Apple would likely be forced to sell at least some ebooks near or below its wholesale costs for an extended period of time. Apple did not want to enter the ebooks market subject to this margin pressure caused by Amazon’s pricing.”
“As a direct result of this anticompetitive conduct as intended by the conspiracy, the price of eBooks has soared. The price of new bestselling eBooks increased to an average of $12 – $15—an increase of 33 to 50 percent,” the filing continued
As for Amazon, it had the entire e-book reader market under its grasp with the Kindle e-reader. Sales were brisk and in millions while competition was thin. Amazon almost had the entire market to itself and it played the price card well to its advantage then. Then came the iPad and Amazon’s empire came down topsy turvy.
The rise of the iPad has been meteoritic and within just a year or so there have been tens of millions of iPads sold. So much that the Kindle e-reader from Amazon has seen a drastic shift in following and demand and there is but a very little gap that exists between these two big time e-book readers as far as demands go.
This is however not the first time that such controversy have erupted over the e-book pricing issue. Amazon themselves had played this price war game last year when they stopped publishers from selling their e-books to any other retailer except themselves. They had even stopped the online availability of such books for those publishers who had refused to toe the line.