Jobs Involved In Alleged E-book Price Fixing; Judge Denies Request To Dismiss Case
May 16, 2012

Jobs Involved In Alleged E-book Price Fixing; Judge Denies Request To Dismiss Case

A New York-based District Court judge has denied a request by Apple and five major publishers to throw out a case which charges them of colluding to inflate electronic book prices in 2010.

The lawsuit by consumers originated from accusations that Apple and the publishers -- Hachette Book Group, HarperCollins, Macmillan, Penguin, and Simon & Schuster of collaborating to inflate prices in order to challenge's cost-based dominance of the e-book marked, Grant McCool of Reuters wrote on Tuesday.

The defendants filed court papers claiming that the evidence did not support accusations of an alleged pricing agreement, because the digital book prices became more varied as a result of their deal, not more uniform. In her ruling on the matter, Judge Denise Cote of the District Court for the Southern District of New York declared, "it is presumed that the conduct by all parties would be unlawful under the rule of reason," McCool added.

According to CNET's Charles Cooper, the lawsuit "alleges that Apple acted as the ringleader of a coordinated attempt by the five publishers to push prices higher on e-books," and that the government's complaint against the six companies, which is a separate issue, "stems from 2010 meetings between Apple and several of the book industry's biggest publishers when they agreed to set their own prices on the electronic books that were carried on Apple's iPad. The government contends that that arrangement amounted to price fixing as prices since consumers subsequently paid more to buy e-books."

Apple has denied those allegations, Cooper said. As for the suit, HarperCollins, Simon & Schuster and Hachette have reached settlements, while Apple, Macmillan and Penguin have previously announced that they want the change to defend themselves in court, the UK newspaper The Guardian has reported.

In other news related to the case, PCWorld reporter John P. Mello Jr.  reported on Tuesday that documents filed in the case by 31 states, the District of Columbia and Puerto Rico have revealed that late Apple co-founder Steve Jobs "got directly involved" in the alleged e-book price-fixing conspiracy.

The email exchange took place between Jobs and an unidentified publisher, and came after representatives from that unnamed firm became hesitant to agree to the pricing structure, Mello and CNNMoney writer Philip Elmer-DeWitt reported on Tuesday. Jobs wrote to "high-ranking officials" in that publisher's parent company to try and persuade them, PCWorld added.

In the message, Jobs told the publisher that they had "the following choices: 1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99. 2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too. 3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I've seen this happen with my own eyes. Maybe I'm missing something, but I don't see any other alternatives. Do you?"

As a result of the arrangement, "Amazon was forced to abandon the $9.99 model and for two years“¦ e-book prices were the same on the iPad, the Nook and the Kindle," Elmer-DeWitt said. That lasted until the US Department of Justice filed their lawsuit, he continued.

Since then, Amazon has once again begun selling New York Times bestselling e-books for under $10.

"It seems wrong that the government would give a pass to Amazon -- an e-book monopolist selling titles below cost -- and instead sue five publishers gasping for air in a shrinking market," the Forbes reporter added. "Adding insult to injury, Amazon has since started signing up authors for its own imprints, threatening to cut publishers off at the source."