Sen. Charles Schumer (D-NY) has appealed to the U.S. Justice Department to drop its antitrust lawsuit against Apple and certain book publishers through an op-ed in “The Wall Street Journal,” saying it will result in restoring Amazon to the “dominant position atop the e-books market,” reports the “Wall Street Cheat Sheet” (http://macte.ch/vjOYP).
In April the United States Department of Justice filed an antitrust lawsuit against Apple, Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster in New York district court, claiming collusion over ebook pricing. Apple and Macmillan, which have refused to engage in settlement talks with the Justice Department, deny they colluded to raise prices for digital books.
The brouhaha centers on Apple’s move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in 2010. Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that “wholesale model,” booksellers were then free to offer those books to customers for less than the cover price if they wished.
Apple suggested moving to an “agency model,” under which the publishers would set the price of the book and Apple would take a 30% cut. However, Apple also insisted that publishers couldn’t let rival retailers sell the same book at a lower price.
Apple has publicly rejected charges that it conspired to fix prices of electronic books, calling the U.S. government’s antitrust lawsuit a “fundamentally flawed” endeavor that could discourage competition and harm consumers. In a filing in U.S. District Court in Manhattan earlier this year, Apple said it didn’t conspire with anyone or fix prices for e-books to thwart Amazon’s dominance of that market, the article adds. In fact, the company says its entry into the book market has actually fueled demand for ebooks by forcing Amazon and rivals, including Barnes & Noble Inc, to compete more aggressively, including by upgrading e-reader technology.
According to Schumer, Apple’s method actually helped increase competition and drive prices lower, and that the suit could “wipe out the publishing industry as we know it,” making it harder for young authors to get published, notes the “Wall Street Cheat Sheet.” The Senator argues that the e-book marketplace offers a perfect example of the challenges traditional industries face in adapting to the Internet economy.