Last week, we reported that Apple is facing the ire of United States Department Of Justice (DOJ).
Apple has started making preparations to defend itself against the possibility of a DOJ antitrust action. DOJ is alleging that Apple conspired with publishers to fix ebook prices.
Last week, Apple requested that a class action suit alleging price-fixing on ebooks be thrown out. Part of that suit hinged on a comment that Steve Jobs made to the Wall Street Journal (WSJ)’s Walt Mossberg in January 2010. Jobs said that unhappy publishers might decide to withhold ebooks from Amazon.
Lawyers in the class action suit are of opinion that Jobs’s comment meant that Apple and publishers were conspiring to force Amazon to raise ebook prices. Apple’s retorted, saying that that the lawyers “mischaracterized” the exchange. Apple said that Jobs only meant that Apple’s strategy in the ebook business was different from that of Amazon.
Apple said that it wanted to sell as many ebooks as possible, which is totally believable since Apple is still a relative bit player in the ebook market. As a result, Apple would not have an incentive to raise prices on ebooks. But Apple’s argument fails to address accusations that Jobs schemed with publishers to slow Amazon’s eventual move into the tablet market with the Kindle Fire.
Apple’s lawyers responded in their court filing last week by downplaying the threat of the Kindle Fire:
“But this allegation just strings together antitrust buzzwords.. Nor does this “Kindle theory” make sense on its own terms. For example, if Amazon was a “threat” that needed to be squelched by means of an illegal conspiracy, why would Apple offer Amazon’s Kindle app on the iPad? Why would Apple conclude that conspiring to force Amazon to no longer lose money on eBooks would cripple Amazon’s competitive fortunes? And why would Apple perceive the need for an illegal solution to the “Kindle threat” when it had an obvious and lawful one which it implemented – namely, introducing a multipurpose device (the iPad) whose marketing and sales success was not centered on eBook sales?
According to some rumors, some publishers are currently in settlement talks with the DOJ. These publishers might be exchanging damning information for a lesser settlement. If these rumors are to be believed, very soon, there can be trouble for both Apple and other publishers.