Apple, charged by the Justice Department for alleged antitrust violations, is pointing the finger at Amazon for its e-book pricing.
In Brief boils down complex events to give you the heart of the matter -- today and what it means for tomorrow -- clearly and simply.
What Happened: Apple stayed silent immediately after the DoJ announced its case against Apple, but now is responding to the lawsuit against it and two publishers for price-fixing in iBookstore.
"The DoJ's accusation of collusion against Apple is simply not true," said Apple spokesman Tom Neumayr. "The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry."
Apple arranged an agency pricing model with five major publishers upon release of the iPad to help combat Amazon and its popular Kindle eReader, which previously guaranteed the lowest e-book prices on the market. Amazon's wholesale pricing allowed for lower pricing, but Apple's agreement with the publishers caused Amazon's market share drop from 90 percent to 60 percent after iBookstore's release.
What Really Happened: In defending its actions, Apple turns the tables on the antitrust allegations and denies any wrongdoing, essentially saying its rival Amazon actually holds the monopoly in the e-books market.
Apple and the publishers' adoption of the agency pricing model did balance out the market by boosting Apple e-book business and may have prevented Amazon from securing a monopoly, but Apple also got a 30 percent cut in the process.
Now, it's up to the Department of Justice to prove Apple actions violated federal antitrust laws. If Apple can prove its agreement with the publishers wasn't a violation of antitrust laws, it could pave the way for new methods of competition in a changing industry.
What's Next: Amazon will likely tread cautiously about lowering its prices in response to the lawsuit, which the retailer is in the process of doing, because it could be subject to the same accusations Apple faces.
And as Apple argues the case, it could bring to light info about Amazon's own pricing models that could result in further investigation of its e-retailer rival. Apple's public defense will likely be its legal position, and the company is expected to point out its relative small e-book market share hardly constitutes the monopoly upon which the DoJ is basing its case upon.
The Takeaway: So far, Apple is not admitting to any wrongdoing in its arrangement with publishers. If Apple wins the case, it could mean such arrangements aren't considered to violate antitrust laws but serve as a vehicle to keep one competitor from cornering the market. But Apple is secure in its industry power, and the ability to undercut others' pricing methods gives it that much more. As the case continues, the court will determine what's right for e-book pricing, likely setting new boundaries and expectations for how the market will evolve in the future.
What Happened: Apple stayed silent immediately after the DoJ announced its case against Apple, but now is responding to the lawsuit against it and two publishers for price-fixing in iBookstore.
"The DoJ's accusation of collusion against Apple is simply not true," said Apple spokesman Tom Neumayr. "The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry."
Apple arranged an agency pricing model with five major publishers upon release of the iPad to help combat Amazon and its popular Kindle eReader, which previously guaranteed the lowest e-book prices on the market. Amazon's wholesale pricing allowed for lower pricing, but Apple's agreement with the publishers caused Amazon's market share drop from 90 percent to 60 percent after iBookstore's release.
What Really Happened: In defending its actions, Apple turns the tables on the antitrust allegations and denies any wrongdoing, essentially saying its rival Amazon actually holds the monopoly in the e-books market.
Apple and the publishers' adoption of the agency pricing model did balance out the market by boosting Apple e-book business and may have prevented Amazon from securing a monopoly, but Apple also got a 30 percent cut in the process.
Now, it's up to the Department of Justice to prove Apple actions violated federal antitrust laws. If Apple can prove its agreement with the publishers wasn't a violation of antitrust laws, it could pave the way for new methods of competition in a changing industry.
What's Next: Amazon will likely tread cautiously about lowering its prices in response to the lawsuit, which the retailer is in the process of doing, because it could be subject to the same accusations Apple faces.
And as Apple argues the case, it could bring to light info about Amazon's own pricing models that could result in further investigation of its e-retailer rival. Apple's public defense will likely be its legal position, and the company is expected to point out its relative small e-book market share hardly constitutes the monopoly upon which the DoJ is basing its case upon.
The Takeaway: So far, Apple is not admitting to any wrongdoing in its arrangement with publishers. If Apple wins the case, it could mean such arrangements aren't considered to violate antitrust laws but serve as a vehicle to keep one competitor from cornering the market. But Apple is secure in its industry power, and the ability to undercut others' pricing methods gives it that much more. As the case continues, the court will determine what's right for e-book pricing, likely setting new boundaries and expectations for how the market will evolve in the future.
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