Apple responds to DOJ, Amazon over charges of iBooks price-fixing

Apple has officially responded to Department of Justice (DOJ) charges, which alleges Apple conspired with publishers to force an agency pricing model that ultimately makes e-books more expensive for consumers. AllThingsD quotes Apple spokesman Tom Neumayr:

The DOJ’s accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.

So Apple is basically playing the Tron card, claiming they fight for the user against the Amazon MCP. Interesting, but will it prove effective? It's not the agency model itself which is in question, it's the charge that publishers secretly met and colluded to fix the pricing under the agency model. If the idea had just happened to simultaneously and independently occur to them, the DOJ might not have a case. Either way, it will be tougher to make a case against Apple, who absolutely benefits from the 30% cut and most favored nation (MFN) clauses in their agency model, and may have encouraged it, but who may not have been in on the same meeting at the same time decisions were made. That remains to be seen -- or proven.

On the other side, Amazon benefits from the dissolution of the agency model because they can go back to leveraging their (now pseudo-, thanks to Apple) monopoly position to drive down costs and force competitors out of the market.

Absent DOJ intervention, there are arguments to be made either way for letting the market decide. If ebook prices are too high, people will stop buying them and Apple's agency model will fail and prices will have to come down to account for the lower demand and higher supply. (Unlike the App Store, there are far fewer players involved so a race-to-the-bottom is extremely unlikely.) If ebook prices are too low, publishers will go out of business and Amazon's retail model will fail and prices will have to go up to account for the higher demand and smaller supply.

Personally, I don't mind paying slightly more if it ensures a better market and ultimately better content. I'd prefer paying $5 to $10 for better iOS apps to ensure even more, better iOS apps in the future. Just like entertainment companies refusing to release timely content at fair prices is bad for -- not entitled -- consumers (why can't I buy Game of Thrones Season 2 on iTunes yet?), consumers refusing to pay a fair price for timely content is bad for the industry (why can't an awesome iOS game fetch the same price as a Happy Meal that's gone in 5 minutes?). In a perfect world, both would be in balance and everyone would benefit.

My opinions -- and yours -- aside, it doesn't look like Apple is going to be settling this one any time soon.

Source: AllThingsD