A U.S. Department of Justice lawsuit accusing Apple of colluding with publishers to artificially raise the price of ebooks is scheduled to start Monday in New York over a year after the Federal agency first made its accusations against the companies. Apple will be squaring off against the DOJ alone since the five publishers that were also named in the suit chose to settle out of court.
Apple, along with Penguin, MacMillan Simon & Schuster, HarperCollins, and Hachette Book Group were all accused of working together to push ebook prices higher by forcing retailers into using an agency pricing model that allows publishers to set book prices instead of stores. Apple launched its iBookstore with the agency model and terms that said other retailers couldn't undercut its prices.
The DOJ claimed those terms would cause book prices to raise artificially, and Amazon -- which would sometimes sell books below cost to undercut its competition -- didn't want to lose control over the prices it charged. Apple's deal would also put Amazon in a position where it would be forced to charge book prices publishers set instead of what it wanted to charge.
The Judge Denice Cote, who is overseeing the trial, expects Apple will have a difficult time holding its own against the DOJ's case. She expects the DOJ will present a strong case against Apple based on the evidence she's seen so far, although Apple contends it never colluded with publishers and worked independent deals with each.
None of the five pubishers admitted to any wrong doing even though they agreed to what became a US$164 million settlement deal. Instead, they felt that settling the case was less of a financial risk compared to the possibility of losing in court. Apple, however, has refused to cave in. Company CEO Tim Cook said during an interview at the AllThingsD D11 conference, "We're not going to sign something that says we did something we didn't do."
[Thanks to Reuters for the heads up]