Apple Fights Back on E-Book Pricing: We Broke Amazon's Monopoly

Apple is fighting back against the Justice Department's claims

Apple hit back this week at a federal anti-trust lawsuit claiming that it colluded with book publishers to hike the prices of e-books. 

The company said that contrary to U.S. Department of Justice's claims that it allowed book publishers to set the prices on digital books so it could illegally dominate the digital book industry, its sales model leveled the playing field for retailers. 

"The DOJ's accusation of collusion against Apple is simply not true," Apple spokesman Tom Neumayr said in a statement to TheWrap. "The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry."

The department slapped Apple and five book publishers with a suit on Wednesday, alleging that the companies' actions violated anti-trust laws and cost consumers tens of millions of dollars.

Also read: Apple, Book Publishers Slapped With Federal Anti-Trust Suit for E-Book Price-Fixing

Three of the publishers — Simon & Schuster, Hachette and HarperCollins — have agreed to settle the suit, saying they wanted to avoid a drawn-out legal battle while admitting no wrong-doing. 

Apple and the two other publishers named as defendants, Macmillan and Penguin Group, have vowed to fight the charges.   

At the heart of the dispute is who has the ability to set prices for e-books — retailers or publishers. As Apple was preparing to launch its iPad device, the technology titan offered publishers an "agency model" that allowed them to establish pricing. As part of the agreement, Apple was guaranteed a 30 percent commission on sales.

Prior to the new model being embraced retailers set prices, allowing them to offer digital copies of books at steep discounts. Amazon for the most part had established a baseline price of $9.99 for e-books on its Kindle. Under the alleged pact with Apple, costs of e-books rose to as much as $16.99, the suit claims. 

Apple said its pricing model for e-books is in keeping with its approach to other products. 

"Just as we've allowed developers to set prices on the App Store, publishers set prices on the iBookstore," Neumayr said.