The trial between the US DoJ and Apple continued with a plethora of testimonies from top executives at Google and Amazon. Testimonies in the day included those from Thomas Turvey (Google director for Strategic Partnerships), David Nagar (Vice President for Kindle content at Amazon) and General Manager of Kindle, Laura Porco. The trial accuses Apple and five other publishers (Hachette, HarperCollins, Macmillan, Simon & Schuster and Penguin) of fraudulently increasing prices of e-books when the technology giant first entered the market with its first version of the popular tablet; the iPad. Director of New York University Law School’s Competition, Innovation and Information Law program Harry First asserted that this was horizontal price fixing on Apple’s behalf. Although it is legal to set a firm price independently with a multitude of companies, Apple however was accused of fixing prices with different publishing houses simultaneously.
A survey from Reuters indicated that Amazon controlled 90% of the e-book market in 2009. Amazon would purchase books at wholesale rates from publishers and sell them to customers at a base price of $9.99. Although this model didn’t imply assured success for Amazon on book sales, it was done in the hope that the Kindle would be able to gain monopoly over the e-book market before making the decision to increase prices. Although this model didn’t cause any harm to publishers who continued to receive the same sum of money from Amazon, publishers raised concerns over the fact that the low prices set by Amazon would lower the value of print books, eventually causing cumulative revenue to slacken.
In the long run, this would cause lasting damage to publishers, who claimed that hard copy books only formed a part of Amazon’s sales, implying that Amazon didn’t direct much attention towards the consequences of the model on publishers. Despite arguments pertaining to Amazon’s lack of attention towards publishers’ concerns, First stated that the turning to another giant in the form of Apple was not the answer either. Amidst all the commotion, the biggest point of debate continues to remain why Apple didn’t settle outside of the court, following the path adopted by the five publishing houses. Although none of the publishing houses admitted to any wrongdoing, they settled for a sum that totalled $164 million. Apple on the other hand, seemed to have a reputation to protect and thus went ahead with the case.
