Apple is being sued for allegedly fixing eBook prices, fearing Amazon’s pricing could cripple its iPad sales. Apple, which is the world’s most valuable business, achieved this through its relationships with five dominant publishers.
The defending publishers include HarperCollins, Hachette, Macmillan, Penguin and Simon & Schuster, who between the five produce an almost monopolistic 85 per cent of the most popular fiction and non-fiction titles according to ninemsn.
The class action law suit filed in the US District Court claims Apple worked with the five publishers to cripple Amazon’s aggressive eBook pricing, in an effort to help Apple’s iPad steal market share away from Amazon’s Kindle.
“We intend to prove that Apple needed a way to neutralise Amazon’s Kindle before its popularity could challenge the upcoming introduction of the iPad, a device Apple intended to compete as an e-reader,” said Steve Berman, the attorney representing consumers.
Berman is arguing the five publishers forced Amazon to forgo its competitive pricing methodologies and pick up a new agency model. Publishers would set the prices for eBooks, eliminating competition between the two manufacturers, disadvantaging Amazon who offers aggressively cheaper pricing.
“Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon’s popularity and pricing structure, and that was Apple,” Berman said.
Amazon would be denied access to eBook titles if it tried to sell eBooks below the publisher predetermined price, according to the complaint.
Of particular concern was Amazon’s US$9.99 uniform bestseller pricing, encouraging competitive pricing from Apple and cutting into its profit margins.
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The plaintiffs include Anthony Petru and Marcus Matthis. The law suit was filed on August 9th, with firm Hagens Berman posting the complaint on its website.
