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Apple battles ebook conspiracy in US court

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Posted June 4, 2013

Apple squares off with the US government in court Monday in a trial accusing the iconic tech firm of leading a conspiracy to boost the price of ebooks.

The California technology giant is on its own in its fight against the US Justice Department, after five large publishers named in the 2012 lawsuit settled the charges.

US antitrust watchdogs argue Apple orchestrated a collusive shakeup of the electronic book business in early 2010 that resulted in higher prices.

The New York trial is expected to last three weeks, and comes with Apple under pressure for its slumping share price, eroding market share for its iPhones and iPadsand accusations in Congress it avoided billions in taxes.

Five publishers named as defendants reached settlements in which they agreed to terminate their ebook agreements with Apple.

The largest settlement was with Penguin for $75 million, while a settlement with Hachette, Harper Collins and Simon & Schuster created a $69 million fund for refunds to consumers. Macmillan settled for $26 million.

Apple chief executive Tim Cook has rejected the idea of a settlement because it would call for the company to sign an admission of wrongdoing.

“We didn’t do anything wrong there,” Cook told a recent California conference. “We’re going to fight.”

The government’s case centers on a period when Amazon dominated the ebook business, selling most bestseller titles for $9.99. Leaders of the major publishing houses held “CEOs dinners” in “private rooms at upscale restaurants” at which they discussed the threat from Amazon.

Into this environment stepped Apple, which was readying the launch of its iPad. Rather than following the Amazon “wholesale” pricing model in which the retailer sets the price, Apple favored the so-called “agency model” where the publishers set the price and the seller—in this case Apple—received a 30 percent commission.

Read more at: Phys.org

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