Publishers Strike Back at AmazonBy: Mike Fossum - June 1, 2012
It was recently reported that the U.S. federal government is suing Apple and book publishers Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster, on the assumption that they’d worked together to raise the prices of e-books. Three of the merchants so far have settled and restored discounting options to Amazon. Those remaining, Apple, Penguin and Macmillan, have called out the U.S. Department of Justice, accusing it of siding with “monopolist retailer Amazon,” manipulating facts and piling “innuendo on top of innuendo”.
Apple and the publishers named in the suit were trying to stop Amazon from selling digital editions of new releases for $9.99, which cuts into profits for new hardcovers. Apple has been important to publishers, as before the launch of the iPad, Amazon controlled 90% of the e-book market – but as the iPad became popular, publishing executives were able to negotiate with Apple in order to set new release prices to whatever they’d like. This drove new book prices up to $14.99, with Apple taking 30% of the profits. The federal complaint states that this cost consumers tens of millions of dollars that they otherwise wouldn’t have had to pay. As of now, Amazon controls 55 to 60% of the e-book market, against Apple’s 10 to 15%.
Macmillan’s response was that the DOJ found a “lack of direct evidence of conspiracy”, and its complaint is thus “based entirely on the little circumstantial evidence it was able to locate during its extensive investigation, on which it piles innuendo on top of innuendo, stretches facts and implies actions that did not occur and which Macmillan denies unequivocally.”
Penguin’s response took more shots at Amazon, calling the retail giant “predatory,” and that it “threatened the long-term, overall health of the book publishing industry.”
Apple chimed in last week, stating that the fed “sides with monopoly, rather than competition, in bringing this case.” Now that all parties have filed their responses, the Department of Justice will move forth with their case.