DoJ Apple ruling upsets top publishers in the industry

by Public Libraries on August 13, 2013

Gavel Books

The recent Department of Justice ruling against Apple in the ebook price fixing case has left executives at top publishing houses outraged, resulting in them filing objections to the ruling and its punishments. HarperCollins, Macmillan, Penguin Random House, Simon & Schuster and Hachette all filed objections the week of August 8, citing that the punishments are as detrimental to the publishing companies themselves as they are to the Apple corporation.

In July, the U.S. District Court for the Southern District of New York found Apple guilty of conspiring with publishers to raise the prices of ebooks, and ultimately found the company guilty of violating the Sherman Act and antitrust laws. Previously, Apple had worked with five top publishing companies to come up with an agency pricing model. Ultimately, this allowed publishing companies to set their own prices for ebooks, with the agreement that Apple would take a 30 percent cut of every sale.

Ultimately, this pricing arrangement led to higher prices for the consumer, and drove up the cost of ebooks. This launched an investigation by the Department of Justice into Apple and the five publishing companies. Prior to the trial, the publishing companies had settled with the Department of Justice, and only Apple continued the fight.

At the time of the ruling in July 2013, the Department of Justice claimed that it was a winning situation for the average American consumer who intended to purchase ebooks on the Apple app store. According to a statement released by the Department of Justice, the company was found guilty of conspiring to raise the price of ebooks and simultaneously eliminate the competition.

“Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so. This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions,” said Assistant Attorney General Bill Baer in a press release dated July 10, 2013.

Now, the punishment has been released and the publishing industry is up in arms. The publishing companies and Apple must work for five years now without any sort of agency model. Previously, the publishing companies had agreed to two years without an agency model in a settlement, and they feel the Department of Justice is backing down from the original agreement. At the same time, other publishing companies must be allowed to sell their rival ebooks on their own apps without paying any commission to Apple.

United in outrage, the five publishing companies filed objections in hopes of doing damage control. As it stands, the publishing companies are set to take a harder hit financially than Apple. Considering the tumultuous state of the publishing industry, this is not a risk the top publishers are willing to take. In addition, Apple has also filed objections to the ruling, and all companies involved feel the Department of Justice is meddling too much in their ability to run and operate a business in the United States.

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