Apple Folds in Euro Ebooks Antitrust Case

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Apple has folded in an EU antitrust investigation on ebook pricing, joining four other publishers in restoring Amazon's ability to dump ebooks below cost. The move comes even while Apple continues to vigorously defend itself in a nearly identical case in the U.S.

Publishing in Europe

In both cases, Apple and five major publishers were accused of anticompetitive practices relating to Apple's iBooks platform. Apple engineered a makeover of the industry by signing publishers to distribution contracts with agency pricing.

This is the same pricing model Apple uses for music, TV, movies, and apps, and it allowed publishers to price their titles as they wished, while Apple took 30 percent off the top. It included a clause that prevented publishers from allowing their books to be offered for less elsewhere, which earned the nickname of the "most favored nation" clause.

Publishers embraced this deal because they were concerned about Amazon's practice of dumping ebooks to gain share for its Kindle platform. Amazon routinely priced best sellers and some other books below their own wholesale cost, and the company garnered 90 percent of the ebook market as a consequence.

In addition to fearing Amazon's monopoly power in this market, publishers were concerned that Amazon was training customers to value best sellers at $9.99, the typical price it would charge.

Antitrust regulators in the U.S. and EU leapt into action, concerned that the industry was engaging in price fixing in cahoots with Apple. In the U.S., Apple and two publishers vowed to fight, but Reuters reported on Tuesday that Apple and four publishers had proposed a plan that would end the agency model and restore Amazon's ability to dump.

More specifically, Reuters reported that those EU regulators are going to accept the deal proposed. That deal includes the promise not to use the agency model for two years and to not have a most favored nation agreement for five years.

The Mac Observer Spin The Mac Observer Spin is how we show you what our authors think about a news story at quick glance. Read More →

Spin: This is an interesting development (if you're interested in this issue at all, which this reporter is). Regulations and laws governing the market in the EU are far from identical to those in the States, but it's not like they are diametrically opposed. Accordingly, is Apple caving in the EU a signal that it's going to fold in the U.S., too?

That doesn't appear to be the case, as Apple has been busily pushing that U.S. case towards a jury trial. That's an expensive process to go through if you don't think you can win or don't intend to fight. It would be far easier for Apple to do what it did in Europe and simply cave.

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Comments

geoduck

You got to know when to hold em’ know when to fold em’...
Some gotta win and some gotta lose…
If it weren’t for bad luck I’d have no luck at all…
Some days you get the bear some days the bear gets you…

...???...

Bosco (Brad Hutchings)

It’s a regular origami exhibition in Apple land lately.

Some fallout of the recent stock folding.

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