New Evidence And Video Show Apple’s Efforts To Break Amazon’s Ebook Monopoly

New Evidence And Video Show Apple’s Efforts To Break Amazon’s Ebook Monopoly

New information made public in anti-trust suit against Apple and publishers

The Justice Department’s anti-trust suit and the accompanying class action suit brought by various states (totaling 31 plus the District of Columbia) on behalf of consumers against Apple and the major publishing houses has always been tinged with more than a little irony. After all, the alleged price fixing and collusion actually broke Amazon’s monopoly-like hold on the ebook market. In doing so, it opened the door for products and platforms to compete with Amazon’s Kindle.

The idea of Apple as a sort of digital age Robin Hood is a powerful one in the narrative and one that could give Apple a viable case in the anti-trust suit if the actually goes to trial. Unfortunately, new evidence in the class action suit throws a bit ice water on Apple’s attempt to cast itself as the good guy (or at least as the better guy than Amazon).

An amended complaint that was filed on Friday as sixteen states and D.C. joined the suit includes information that was redacted in the original complaint and in the DOJ case. That newly public information shows Apple trying to persuade the publishers to move to the agency model in which publishers set their own prices.

Included are details on attempts by Macmillan CEO John Sargent to negotiate an easier move to the agency model with Apple’s Senior Vice President of Internet Services Eddy Cue. There’s also an email from Steve Jobs to a “Conspiring Publisher” that was sent when Cue couldn’t secure an agreement to move to the agency model (it’s unclear if it was sent Sarget or an executive at one of the other publishers).

As I see it, [Conspiring Publisher] has the following choices:

1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.

2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.

3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.

Maybe I’m missing something, but I don’t see any other alternatives. Do you?

That email and related evidence, which was pulled together yesterday by Paid Content, may not conclusively prove Apple was leading an orchestrated revolt against Amazon. Still, it certainly doesn’t help Apple’s case to be seen as pushing to change publishers minds about their overall options in the ebook market and the agency model in particular.

In same ballpark is a short video clip that Philip Elmer-DeWitt dug up this morning for Forbes in which Jobs states very confidently that the publishers planned to withhold releases from Amazon if the company didn’t agree to move to an agency model and set prices comparable to Apple’s iBookstore.

The prices will be the same. The publishers are actually going to withhold their books from Amazon.

There’s also evidence that after the first five publishers agreed to Apple’s agency pricing model, they “worked together to force” Random House to adopt it as well – a move that may or may not have had Apple’s involvement.

For the most part, this corroborates what we’ve already known (or at least assumed) about Apple’s relationship with the major publishers. Is it enough to win a case against Apple? That’s hard to say without knowing what other evidence has yet to be made public.

In the end, even though it’s easy to argue that Apple and the agency model did further competition, the company still could be found guilty of violating the letter of the law rather (even if it didn’t violate the spirit of it). Meanwhile, Amazon has reverted to selling ebooks under the wholesale model that gives it the right to undercut other ebook vendors by pricing most books at $9.99.

  • tylerprich

    How is Apple like Robin Hood? The company insured the same higher prices across the marketplace. Because of a new agency model had publishers determine, Amazon had no choice but to raise prices or get lost. It’s called fixed-rate pricing, and it’s illegal for a reason. In this case, Apple is more like a conniving fat cat acting in its own interests (and maybe the interests of book publishers). Apple’s practices didn’t benefit consumers.

  • shannon_f

    How is Apple like Robin Hood? The company insured the same higher prices across the marketplace. Because of a new agency model had publishers determine, Amazon had no choice but to raise prices or get lost. It’s called fixed-rate pricing, and it’s illegal for a reason. In this case, Apple is more like a conniving fat cat acting in its own interests (and maybe the interests of book publishers). Apple’s practices didn’t benefit consumers.

    Amazon has/had a monopoly on the ebook market right? So isn’t breaking that in the best interests of the consumers and the authors? I used to love Amazon but they banned my seller account for no reason and now I try to withhold money from them whenever possible so I’m slightly biased. But I definitely will side with Apple over Amazon at this point. Also, why the hell can’t we read Apple ebooks on our Macs??

About the author

Ryan FaasRyan Faas is a technology journalist and consultant living in upstate New York who has written extensively about Apple, business and enterprise IT, and the mobile industry. In addition to writing for Cult of Mac, he is a contributor to Computerworld, InformIT, and Peachpit Press. In a previous existence he was a healthcare IT director as well as a systems and network administrator. Follow Ryan on Twitter and Google +

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