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All stories relating to Apple

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Apple facing $840 million ebook price-fixing claim

Apple’s legal troubles are heating up again, less than a year since a judge concluded that the tech giant conspired with five publishers to fix ebook prices.

On Jan. 31, attorney Steve Berman filed an $840 million class-action suit representing ebook customers in 33 states. Berman says he will use evidence presented last year as part of the U.S. Justice Department’s successful case against Apple to prove that the company owes plaintiffs approximately $281 million in damages. The claim further states that this amount should be tripled to $840 million, which equals 0.5 per cent of the $158.8 billion in cash reported by Apple at the end of 2013.

Meanwhile, Apple will learn tomorrow whether its emergency request to remove Michael Bromwich, its court-appointed compliance monitor in the DOJ suit, will be approved. In an appeals court filing, Apple lawyers argued that “the monitorship the district court imposed on Apple is unprecedented, impermissible and unconstitutional.”






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Big Six publishers to testify against Apple at ebook price-fixing trial

All Big Six publishers are expected to testify in U.S. federal court against Apple during its ebook price-fixing trial, which begins June 3.

According to a court document filed yesterday, executives from Hachette, HarperCollins, Macmillan, Random House, and Simon & Schuster will admit to conspiring with Apple to adopt the controversial agency model, in an attempt to increase ebook prices and quash Amazon as a competitor.

Last August, Hachette, HarperCollins, and S&S settled with the U.S. government, reimbursing ebook consumers for more than $69 million. Penguin settled in December and Macmillan in February, leaving Apple as the sole defendant. The original lawsuit filing alleges that the publishers colluded in “private dining rooms of upscale Manhattan restaurants,” an accusation denied by all parties in affidavits submitted to the court.


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Apple adds social-media sharing to iBooks

Although most of the social-media buzz around Apple’s product launch today focused on the new iPad Mini, the tech giant’s ebooks program received a facelift, too.

The new version of iBooks supports 40 languages, continuous page scrolling, and improved synchronization across devices. Thanks to a feature similar to Kobo’s Reading Life, readers can now highlight quotes from an ebook and share them on Facebook and Twitter.

Aimed at textbook publishers, the latest version of iBooks Author includes embedded and custom fonts, fixed layouts, mathematical equations, new templates, and multi-touch widgets.

Both iBooks and iBooks Author will be available for download later today.


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Macmillan, Penguin fire back at U.S. Department of Justice

Two of the publishers named in a U.S. antitrust lawsuit alleging illegal price fixing of ebooks have shot back at the Department of Justice in affidavits filed last week in New York.

In an affidavit filed last Wednesday, Macmillan states that it adopted the agency model “independently” in an attempt to counter “Amazon’s monopolization of eBook distribution.” The affidavit states that there was no conspiracy to fix prices at all:

Macmillan independently adopted an agency model for eBook distribution solely as a result of bilateral negotiations between Macmillan and Apple. Apple proposed to distribute Macmillan’s eBooks (on a device that came to be known as the iPad) only on the basis that Apple would serve as Macmillan’s sales agent in exchange for receiving commissions on each sale. Apple had previously used the agency model in its iTunes App Store, and Macmillan uses the agency model in its distribution of the print books of other publishers. Apple provided these terms to Macmillan on a “take it or leave it” basis.

Penguin, meanwhile, uses its filing to lay out the case against Amazon as anticompetitive in the ebook market:

Penguin admits that it viewed some of Amazon’s business practices, most especially its practice of sometimes selling new release eBooks and eBooks versions of New York Times bestselling titles well below the prices paid by Amazon to Penguin for these eBook titles, as anticompetitive and detrimental to the long term process of expanding opportunities for developing authors and creating more content.

An article in the Guardian quotes the affidavits as also responding to allegations that collusion occurred over the course of various upscale dinners in New York:

The government complaint said the move to the agency model followed meetings between chief executives in “private dining rooms of upscale Manhattan restaurants,” where “confidential business and competitive matters, including Amazon’s ebook’s retailing practices” were discussed.

Macmillan denied this. “For the record: Macmillan did not conspire with other publishers in New York City restaurants. Macmillan’s CEO, John Sargent, dined once or at most twice with peers from certain other publishing houses, but these dinners were social in nature,” its response says. “No conspiracy was hatched over any such dinner.”

While Penguin chief executive John Makinson did attend certain dinners, these were social events, said the publisher. Penguin’s submission added that “while, in addition to purely social matters, general book industry issues and trends were discussed at high-levels of generality, including the growth of ebooks and Amazon’s role therein, Makinson did so pursuant to antitrust legal advice and avoided competitively sensitive topics like terms of trade, prices, or confidential competitive matters.”


Email reveals Steve Jobs’ involvement in agency pricing negotiations

Seventeen more U.S. states, including New York, have joined the class action lawsuit against Apple, Macmillan, and Penguin, accused of allegedly colluding to raise the price of ebooks. Unlike the U.S. Department of Justice’s investigation, the 31 states involved are seeking monetary compensation for consumers, who, according to the amended complaint, “paid over $100 million in overcharges.”

New information, previously redacted from the DoJ lawsuit, has also been revealed about Steve Jobs’ role in the negotiations with the five big publishers involved (Hachette, HarperCollins, and Simon & Schuster have already settled).

According to Paid Content, Jobs wrote to an unnamed publishing executive:

1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.

2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70 per cent of $9.99. They have shareholders too.

3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.

Maybe I’m missing something, but I don’t see any other alternatives. Do you?

The complaint also suggests that Apple and the five publishers “worked together to force” Random House to adopt the agency model (which it did a year later). According to the complaint, Penguin CEO David Shanks sent an email to former Barnes & Noble CEO Steve Riggio asking the retailer to “stop any promotion or advertising of Random House titles” and to “make Random House hurt like Amazon is doing to people who are looking out for the overall welfare of the publishing industry.”
Although, as Paid Content writer Laura Hazard Owen astutely points out, this doesn’t prove the five publishers acted together.

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Lawsuits allege ebook price-fixing conspiracy in Canada

The Globe and Mail is reporting that several lawsuits have been filed in Canada alleging that, like their counterparts south of the border, the Canadian subsidiaries of foreign publishing houses conspired to lower the prices of ebooks.

While there are, as yet, no reports of representatives from Canadian firms meeting in high-end restaurants to fix prices, the Globe reports that the publishers named in the lawsuits “included” the defendants implicated in similar cases in the U.S. and EU – namely, Apple, Hachette Book Group, HarperCollins, Macmillan, Penguin, and Simon & Schuster, as well as their Canadian subsidiaries.

So far, lawsuits have been filed in three provinces. The Globe has details from the B.C. case:

A proposed class-action lawsuit filed in B.C. Supreme Court by the Vancouver firm Camp Fiorante Matthews Mogerman alleges that Apple Inc. and a number of publishers engaged in a “conspiracy” to lessen competition and “fix, maintain, increase or control the prices of e-books.” It is the most recent of at least five such suits filed recently in courts in Ontario, Quebec and B.C.

It also alleges that the defendants or their representatives communicated secretly, in person and by phone, to discuss and fix e-book prices, in the lead-up to the introduction of Apple’s iPad, which can function as an eReader, in April of 2010.

In addition it alleges that the growing Canadian eBook market is highly concentrated, making it more susceptible to collusion.

The lawsuits appear to imply that, like U.S. consumers, Canadians were victimized by the slight rise in ebook prices when agency pricing was introduced in 2010; they don’t appear to allege that Canadian firms were actively involved in a parallel conspiracy. Still, it’s hard not to be struck by the irony of the last line quoted above, since the introduction of agency pricing actually made the Canadian ebook market less “highly concentrated,” not more.

But if U.S. consumers are getting their day in court, so should Canadian consumers, at least according to the lawyers involved in the suits:

“The U.S. case isn’t going to cover Canadian consumers. So it’s the same underlying facts, it’s the same consumer protection agenda, but it is for different consumers in a different country,” said lawyer Reidar Mogerman, who filed the suit in B.C. Supreme Court last week on behalf of plaintiff Denise E. McCabe, a non-practising Kamloops lawyer who has purchased a “significant” number of e-books.

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Book links roundup: TTC launches book club, activists concerned about London Book Fair’s China focus, and more

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The “agency” model for ebooks goes on trial

News broke earlier today that the U.S. Department of Justice is pressing ahead with a lawsuit against Apple and the five original “agency” publishers for allegedly colluding to raise the price of ebooks. According to early reports, some of the publishers are choosing to settle the case, while others will fight the charges in court.

A little background: the antitrust lawsuit centres on early 2010, when Apple was preparing to enter the fast-growing ebook market with the launch of the iPad. Book publishers welcomed the news, viewing the entry of a deep-pocketed competitor like Apple as an opportunity to stand up to Amazon’s virtual monopoly of the ebook market.

One strategy for combating that perceived monopoly was to adopt the so-called agency pricing model, in which retailers act as commissioned sales agents who receive a cut of the publisher-determined retail price. (Under the previous “wholesale” terms, retailers were free to discount from the publisher’s list price.)

The question at the heart of the current lawsuit is whether publishers acted in concert to adopt the agency model en masse, or whether they were simply reacting in parallel to a situation they viewed as untenable.

According to The Wall Street Journal, the lawsuit alleges that publishers began meeting privately no later than September 2008 for a period of at least one year. These meetings are said to have taken place in “private dining rooms of upscale Manhattan restaurants,” including in “‘The Chefs Wine Cellar,’ a private room at Picholene [sic].”

The U.S. publishers named in the lawsuit are Macmillan, Simon & Schuster, Hachette Book Group, Penguin, and HarperCollins. Of the Big Six U.S. publishers, the only firm not implicated is Random House, which held off for a year before adopting the agency model.

Three of the publishers have agreed to settle the case, the WSJ reports: Hachette Book Group, Simon & Schuster, and HarperCollins.

John Sargent, CEO of Macmillan, explains why his firm has opted not to pursue a settlement, which would have avoided the expense (and unwanted public attention) of a drawn-out court case.

Sargent begins by noting that the charges against Macmillan are civil, not criminal, and that “Macmillan did not act illegally. Macmillan did not collude.” He goes on to note that “[i]t is … hard to settle a lawsuit when you know you have done no wrong.”

From Sargent’s response:

We have been in discussions with the Department of Justice for months. It is always better if possible to settle these matters before a case is brought. The costs of continuing – in time, distraction, and expense – are truly daunting.

But the terms the DOJ demanded were too onerous. After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model. We also felt the settlement the DOJ wanted to impose would have a very negative and long term impact on those who sell books for a living, from the largest chain stores to the smallest independents.

A statement from Penguin is expected later today.

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Book links roundup: Ottawa reviews Target, Harry Potter ebook sales over $1.5 million, and more

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Book links roundup: Philip Pullman adapts classic Grimm tales, Reddit’s new literary video site, and more

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