Apple is on trial for colluding with five publishing companies to fix prices of e-books.
Alexander F. Yuan/ AP/ File
The Apple e-book trial, U.S. v. Apple, continued Thursday with testimonies from the Google director of strategic partnerships, Thomas Turvey, the VP of Kindle content, David Nagar, and Kindle’s general manager, Laura Porco.
In the trial, Apple is accused of colluding with five publishing companies -- Hachette, HarperCollins, Simon & Schuster, Macmillan, and Penguin -- to raise the prices of e-books back in 2010, when the media giant first entered the market.
This means that Apple would have created a horizontal price-fixing, says Harry First, the director of New York University Law School’s Competition, Innovation, and Information Law Program. While it would be legal for the company to set a firm price independently with multiple companies, Apple allegedly set standard prices in simultaneous dialogue with five different publishing.
“It’s a hub and spoke conspiracy,” Mr. First says. “Apple is in the center and then five publishers make up the spoke,” connected by Apple.
In 2009, Amazon controlled 90 percent of the e-book market, according to Reuters. The company would buy books wholesale from publishers and then resell them at a baseline price of $9.99. Even though this retail model sometimes meant that Amazon lost money on book sales, the hope was that Kindle would be able to corner the e-book market before raising prices, says Jim Milliot from Publishers Weekly.