Justice Department’s case against Apple over alleged e-book price-fixing scandal, are still ongoing. As part of the case, an Amazon top executive, Russell Grandinetti, has testified that the e-retailer was forced by the publishers to give up control of e-book pricing.
During the third day of the case trial, Grandinetti revealed that the publishers gave Amazon an ultimatum in 2010. The ultimatum was simply that if Amazon didn’t give up the pricing control of e-books, publishers would withhold their newer titles from the e-retailer.
Amazon eventually gave in, abandoning the $9.99 pricing on many books. As soon as Amazon’s control over pricing was taken away, the publishers allegedly colluded with Apple and set the price of the same books to as high as $12.99 and $14.99.
However, after Amazon was forced to adopt the agency model, the company ensured that it was still getting the same selection of books and a price tag as low as the other competitors. The entire case, which is primarily positioned against Apple, alleges that Apple conspired with e-book publishers to force Amazon not to sell e-books at lower prices.
And once the publishers were able to pressurize Amazon into doing so, they started selling books at higher, but fixed across-the-board prices. This increased the profits for both Apple as well as publishers. But the testimony from Amazon’s Grandinetti now shows that the e-retailer was nearly blackmailed into taking part in this scheme. It must be noted here that most of the publishers involved in this scandal have already settled with Justice Department, but Apple has decided to fight on.