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Publishers in Apple Price Fixing Case to Testify Against Apple as the Senate is Asking Questions About Offshore Money

by on15 May 2013 1088 times
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Earlier today we published an article showing how Apple is trying to get out of the price-fixing jam they are in with the US DoJ. Their new tactic is to try and show that they did nothing wrong or that the publishers that they dealt with had not already intended to do. Looking over the evidence and Apple’s pattern in dealing with partners actually looks more like Apple was behind things and used their knowledge of the situation to bring the others onboard. Now we are finding out that the DoI feels this way too and that they also have some evidence to back it up in the form of testimony from the 5 publishers in the original suit.

When the DoJ first brought this suit against Apple they had five Co-Defendants: Macmillan, Hachette, Harper Collins, Simon & Schuster and Random House. These five have already settled which is not an indication of guilt, but typically companies do not settle unless there is at least a fear that they cannot defend against the charges or they feel fighting will cost too much money. Now these groups are turning against their former partner and have agreed to testify against Apple in the continuing suit that now paints Apple as the leader of the group.

Many people feel this attention is unfair as they claim that Amazon abused their position prior to the deal that Apple made before the launch of iBooks. The problem with this claim is that it does not hold much water. Amazon did not make agreements with publishers, fix prices higher than was the standard for the market. They also did not injure the consumer with their pricing. What Apple did was to create a market where they earned 30% of all earnings, the best price of all new eBooks, and first run of eBooks as they came out. They also made a deal to resell the books at a higher than market standard price fixing them at $12.99 and $14.99 at a time when the common price was $9.99.

But eBook price fixing is not all that Apple has to worry about. They are also under investigation for not bringing money earned outside the US back home. According to some sources they might owe as much as $13 Billion (yes, Billion with a B) on these profits. Apple is not alone in this one as well, they are joined by Microsoft. Both of these companies are keeping these money offshore, yet they claim ownership in the US. By law they are supposed to bring their earnings back here to the US and pay taxes on them. Instead they are keeping them outside the US to avoid that. Apple in particular is actually borrowing money to pay their stockholders instead of paying them out of this gigantic stash of money they have outside the US. They are set to testify in front of the Senate on May 21st and explain why they are doing this. We hope they have a good answer as this could seriously impact their bottom line and might hurt consumer confidence.

We will be sure to keep you up-to-date on what is going on with thee two items.

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Last modified on 15 May 2013
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