Months ago, Senator Charles Schumer wanted Apple to be investigated over privacy concerns. Now Apple will see his role in E-Book lawsuit as well.
According to The Wall Street Journal (WSJ), Schumer warned the US Department Of Justice (DOJ) that its suit against Apple and two major publishers could possibly “wipe out the publishing industry as we know it” by giving Amazon the chance to regain a monopoly share of the market. Apple must be surprised to Schumer in its support this time.
In his opinion piece titled “Memo to DOJ: Drop the Apple E-Books Suit: Restoring Amazon’s monopoly in digital publishing is not in the public interest,” Schumer asserted that Apple’s stake in the e-book industry was vital for competitive consumer pricing and for young writers who hoped to showcase their work.
Senator Schumer wrote:
The e-books marketplace provides a perfect example of the challenges traditional industries face in adapting to the Internet economy. Amazon took an early lead in e-book sales, capturing 90% of the retail market. Because of its large product catalog, Amazon could afford to sell e-books below cost.
Schumer went on to say that publishers faced with a Hobson’s choice between going with Amazon’s sales scheme or ignoring the march toward digital content. He wrote:
Publishers could allow their books to be sold at the prices Amazon set, thus undercutting their own current hardcopy sales and the future pricing expectations for digital books—or stay out of the e-books market entirely. In an increasingly digital age, the latter was simply not an option.
The senator was referring to Amazon’s “wholesale model” which Apple adopted when they first entered the e-book market. On the other end of the spectrum is Apple’s “agency model” which places the power with publishers to set content prices under a “most favored nations” clause.
The DOJ feels that the agency model may infringe on antitrust laws, which is why Apple and its publishing partners were taken to court. Apple denied the allegations and said that it broke up a perceived Amazon monopoly.
WSJ post also noted the DOJ’s focus on the prices of new books which have risen since Apple’s iBookstore was launched. Senator Schumer noted that the DOJ ignored the overall downward trend of average e-book prices.
He qualified this statement by saying that although consumers have a short-term interest in new releases, they have “a more pressing long-term interest in the survival of the publishing industry.”
Lastly, the senator voiced concern that the price-fixing suit had empowered monopolists and hurt those trying to innovate. Such an event could have to have a “deterrent effect” to companies in the broader US economy that are trying to adapt to the digital change.
The DOJ’s trial against Apple, Macmillan, and Penguin Group is set to begin in 2013. Thus, we will have to wait and see what the outcome turns out to be.