APPLE GOT STUNG and so did HaperCollins, Hachette and Simon & Schuster when late last week U.S. District Judge Denise Cote approved a settlement with the three publishers accused of conspiring with Apple to fix prices against Amazon’s “agency model.”
With her ruling, Cote set in motion the termination of contracts between Apple and three of the nation’s largest publishers – HarperCollins, Hachette and Simon & Schuster – and placed control of pricing for e-books back in the hands of retailers, particularly Amazon. [...] Amazon, which released a new version of its Kindle e-reader Thursday, is set to be the biggest winner. The company’s dominance – it once controlled 90 percent of the e-books market and currently has an estimated 60 percent share – was what spurred Apple and a gang of publishers to develop a new business model for selling digital books, the Justice Department has alleged.
And that’s what gave rise in 2010 to the so-called agency model – a pricing structure government officials allege is intended to force Amazon to abandon its tactic of selling e-books for its Kindle e-reader on the cheap.
Thursday’s ruling is just the first chapter in what is expected to be a lengthy e-books antitrust battle between Apple and the Justice Department.
But experts say it clearly highlights how Apple and the five publishers tried to muscle Amazon into submission by designing a new pricing structure – and how they failed to topple the e-commerce company.
Apple states it will appeal the settlement, which Judge Cote found wholly unimpressive.