ATG Hot Topic of the Week: DOJ sues Apple and Major Publishers – Apple Responds but has Amazon Already Won

As the ATG NewsChannel (and numerous other sources) reported yesterday, the US Department of Justice is making good on its threat to sue Apple and five major publishers alleging that they were “colluding over the prices of e-books they sell.”  While three of the publishers Hachette, HarperCollins and Simon and Schuster have already settled,  Apple, Macmillan and Penguin are vowing to fight the lawsuit.  Putting it simply, the DOJ claims that Apple’s agreement with book publishers to move to an “agency model” (Publishers setting the price for each book and e-reader companies take an agreed percentage of the revenues) is evidence of collusion between Apple and the publishers. (You can read the actual complaint at: US vs Apple and publishers.)

Now Apple has responded.  According to this article in Fortune, Apple is keeping it simple.  They have narrowed their position down to four sentences:

  1. “The DOJ’s accusation of collusion against Apple is simply not true.”
  2. “The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry.”
  3. “Since then customers have benefited from eBooks that are more interactive and engaging.”
  4. “Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.”

However, an article in The Atlantic claims that the real take away from the DOJ’s action is that “for the next two years, Amazon CEO Jeff Bezos will be free to dictate the price of eBooks across much of the publishing industry…  Already, three publishers have settled on terms so friendly to Amazon that, as Wired’s Tim Carmody put it, Bezos should send the attorney general an early Christmas card… The settlement gives Amazon carte blanche to discount the eVersions of popular titles, much as it used to.”  If this turns out to be true, it could give Amazon a near monopoly on the ebook market.   The Atlantic article goes on to wonder whether after the two years “will there be any company that can challenge Amazon in the digital market?”   The immediate upside is that it will mean lower prices for the consumer, but for how long?  With ebooks an ever growing part of the book business this lawsuit has big implications for not only for Apple, Amazon and book publishers,  libraries and readers will be affected too. What will the eventual impact be on prices?  How will it affect the number of titles published?  What about service and technology improvements? And what will be the impact on the academic market, if any?  These questions among others, remain to be answered.

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