Recently, US Department Of Justice (DOJ) intervened in a matter involving Apple and some publishers as it felt that Apple and publishers in question had violated the antitrust laws. Apple also tried to prepare its defense to counter allegations.
Now, Reuters has reported Apple and some of its largest publishers are looking to settle of DOJ lawsuit accusing the parties involved of collusion.
US DOJ had levied a suit against Apple and some of its major publication partners accusing the parties involved of collusion in an effort to drive up e-book prices. Reuters has claimed sources close to the case indicating Apple and its partners wanted to alter some of the wording used in their contracts with publishers and retailers to avoid a long litigation process.
One particular section of Apple’s contracts has come under particular scrutiny. The clause in question states that the price of an electronic book published using Apple’s iBookstore cannot be higher than any other iteration of the same content at other retailers. This clause thus far has prevented Amazon and other competing retailers from undercutting Apple’s iBookstore in terms of e-book prices.
The “agency model” introduced by Apple and its publishing partners is under scrutiny as well. The agency business model allows publishers to prices for their content for retailers disallowing market flexibility and allowing companies like Apple to take a 30% cut from each sale. It was presumed, that publishers accepted Apple’s terms in an effort to prevent Amazon from stealing sales away from traditional book sales with undercut digital copies.
The settlement, expected to be reached in the next few weeks, will include the elimination of the agency model wording in contracts signed between Apple and publishers. As a result, Amazon should be able to gain over $1 billion in revenue according to Cowen & Co analyst Jim Friedland.