On Monday, a United States government lawyer formally accused Apple of conspiring with publishers to artificially boost e-book prices.
The trial against Apple comes a year after the Justice Department first accused Apple of working with five publishers -- Penguin, HarperCollins, Simon & Schuster, Hachette and Macmillan -- to boost prices and spite e-book market leader Amazon.
"Apple told publishers that Apple -- and only Apple -- could get prices up in their industry," Justice Department lawyer Lawrence Buterman said during opening arguments, as quoted by Reuters. An Apple attorney characterized the deal as a legitimate business decision.
The Justice Department's case against Apple hinges on so-called "agency pricing." When Apple released the iPad, former CEO Steve Jobs allegedly offered publishers a deal to put books in the iBookstore at a higher price than the ones offered on Amazon. The deal netted Apple 30% of book profits and stipulated that publishers couldn't sell their books on other platforms at lower prices.
Publishers then threatened to pull their offerings from Amazon unless they, too, offered a similar model with higher prices and profits. Publishers had long been unhappy with Amazon's strategy of offering top-selling e-books below their cover prices to boost Kindle sales, a legal but controversial tactic publishers argued set consumers' e-book price expectations at an unsustainable low.
Thus, the DOJ argues, Apple and publishers conspired to raise prices at the expense of consumers. Jobs' strategy was first revealed more than a year ago in Walter Isaacson's biography on Steve Jobs.
The five publishers already made a consumer settlement for a total of $164 million, leaving Apple to go up against the DOJ alone. Meanwhile, across the Atlantic Ocean, Apple and four of the five publishers have already settled a similar suit engaged by the European Commission, agreeing to terminate the agreements in question.
Did Apple act nefariously to raise e-book prices, or was it a legitimate business move? Share your thoughts in the comments.