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Apple on Trial for Alleged Ebook Price Fixing

Opening arguments have begun in the U.S. Department of Justice’s trial against Apple over the agency model of pricing, heralded by the iBookstore launch in 2010. The issue at stake is Apple working with all the major publishers to adopt a model where the publishers set the retail price of ebooks, instead of selling at wholesale to retailers, who then choose their own retail prices. However, things don’t look good for Apple, as Judge Denise Cote has already said, in a pre-trial hearing, “I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of ebooks.” Ironically, if the government wins, it may lead to less competition, as Amazon had previously set most ebook prices at $9.99, even if it meant selling at a loss, a move arguably designed to cement Amazon’s dominant position. Dan Moren of Macworld provides a solid overview of the case.

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