Apple go to court for pricefixing, while channelling Spotify

3 June 2013

bad-apple The US government and Apple are going toe-to-toe, over allegations that the gadget-maker has conspired with publishers to push up the price of ebooks.

This price-fixing allegation comes on the back of an anti-trust lawsuit by the Justice Department, which accused Apple of having a price-fixing meeting with publishers in 2009 as they readied the launch of the iPad.

Allegedly, the purpose of this meeting was to force Amazon to raise the $9.99 price it had set for bestselling ebooks. Court papers say: "Apple wanted to sell ebooks to the public, but did not want to compete against the low prices Amazon was setting. Apple knew that the major publishers also disliked Amazon's low prices and saw Apple's potential entry as a pathway to higher retail prices industry-wide."

The Justice Department also accuses those at the meeting of making an agreement that, instead of selling books to retailers and letting them decide their own price, publishers would convert the retailers into "agents" who would be stopped from lowering the publisher-set retail price. This would also guarantee Apple a 30% commission on each item sold.

If that is the case, then this scheme could well have cost consumers tens of millions.

The report continues that Steve Jobs himself "conceded the price-fixing conspiracy when, the day after publicly announcing Apple's forthcoming iBookstore, he explained to his authorised biographer that Apple had told the publishers 'we'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway.'"

Apple have accused the government of basing their case on nothing more than "mere allegations, faulty assumptions and unfounded conclusions."

Elsewhere, Apple will be launching iRadio next week, as it tries to muscle in on Spotify and Google's new music service. It seems that the service will ape the Spotify model, with subscriptions on offer as well as an ad-based freemium service. Apple are also expected to unveil iOS 7 too, but as ever, the company won't be speculating or making comment.

TOPICS:   Technology   Economy

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