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Bad Apple Exposed Device Vendors Warned To Be Careful

By David Richards | Thursday | 11/07/2013

Device vendors negotiating content deals in Australia are going to have to be extremely careful as to how they "cut the deal" claims antitrust layers after Apple was exposed for trying to "collude" with book publishers to fix the price of books downloaded to an Apple device.

U.S. District Judge Denise Cote ruled overnight that Apple colluded with five major U.S. publishers to drive up the prices of e-books in the months ahead of it entering the market in 2010.

The Wall Street Journal an ardent fan of all things Apple has claimed that a US federal judge's decision that the iPad maker colluded with global publishers to artificially drive up the prices of e-books could have broader implications for the entire consumer electronics industry.

 They have reported that providers of electronic media from music to books to movies are going to have to be extremely" careful as to how they negotiate content deals in the future.

"If you're a tech company and you are looking to aggregate content, you have to be exceptionally conscious about how you talk to your suppliers," said Ankur Kapoor, an antitrust lawyer at US Company Constantine Cannon. He said that brands such as LG, Sony Samsung and Panasonic and the likes of Google are now under a very fine microscope."

The US blow to Apple's attempt to sting consumer's high fees for books is not the only Country where Apple is being probed. 
In Australia a Senate Committee was set up to probe their constant price gouging in Australia and overnight French antitrust authorities announced they were looking into the influence Apple and other technology companies have over the sales of applications for mobile devices.

Apple who never responds to complaints about their products was quick to issue a statement when the latest ruling went against them.

In a statement issued in the USA Apple said it did nothing wrong and said it plans to appeal. "Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations," an Apple spokesman said. 

The WSJ claims that the decision opens the door for the U.S. Department of Justice to take a closer look at Apple's other business activities.

The US Justice Department who bought the case against Apple has asked the court to adopt a variety of measures to ensure Apple doesn't engage in similar conduct in the future, including not entering "most-favoured nation" clauses that would require publishers to match lower prices of competing e-book sellers in Countries like Australia.

"Under antitrust law, you cannot only prevent the unlawful conduct, but also prevent other conduct that can lead to a similar result," said David Balto, a former policy director at the Federal Trade Commission told the WSJ.

Apple, which has a reputation as an aggressive negotiator, is disliked by carriers in Australia with former Telstra executives telling SmartHouse that the Company was only "tolerated" because they drove traffic into Telstra stores.

"When Apple first launched the iPhone Telstra was not going to range the device because all the margin was going to Apple. Telstra had no alternative to range the iPhone because it drove demand and network capacity" a former senior Telstra executive told SmartHouse. 
"They are still hated" today the executive added. 


Apple's quarterly revenue from its iTunes store has more than doubled since the introduction of e-books in April 2010. In its civil antitrust lawsuit, the Justice Department claimed that Apple agreed with the publishers in January 2010 to allow them set a higher price for best sellers and new releases in response to the publishers' "Amazon problem" where books were being sold for $9.99.

As a result, prices for e-book best sellers rose to between $12.99 and $14.99, the government claimed.

The publishers have all since entered into settlements with the Justice Department, as well as in a separate lawsuit by a group of state attorneys general.

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