Apple vs Amazon in ebook fight

Bec Fary / July 11, 2013 10:10 AM

A blow-out between two of the world’s largest media businesses is underway. 

Apple dropped a lawsuit against Amazon for using the term “Appstore” on Tuesday.

Apple launched its App Store in 2008, while Amazon opened Appstore, an online application shop for its Android-powered Kindle ebook readers, in 2011.

Apple said in a statement they “no longer see a need to pursue our case against Amazon."

"With more than 900,000 apps and 50 billion downloads, customers know where they can purchase their favourite apps," they said.

But the fight between Amazon and Apple isn’t over yet.

Another lawsuit, this time about e-book pricing, could see Apple hit with a large damages payment.

A New York judge has found Apple guilty of an ebook price-fixing conspiracy.

The trial focused on Apple’s contract negotiations with publishers ahead of its iPad launch in 2010.

At the time publishers were unhappy with Amazon charging $US9.99 for bestsellers, until Apple proposed a more profitable business model.

Amazon held contracts with publishers in which it set ebook prices, until Apple’s contracts shifted to an ‘agency model’, where publishers set prices in exchange for a 30 percent commission to Apple.

US District Judge Denise Cote said “Apple is liable here for facilitating and encouraging the publishers' collective, illegal restraint of trade".

"Understanding that no one publisher could risk acting alone in an attempt to take pricing power away from Amazon, Apple created a mechanism and environment that enabled them to act together in a matter of weeks to eliminate all retail price competition for their ebooks," she said.

Five publishers were originally named in the US government civil lawsuit, but they settled the case and left Apple to stand trial alone.

Apple said it would appeal the ruling, claiming it had done nothing wrong in pursuing “normal business practices”.

"Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations," an Apple spokesman said in a statement.

The US Justice Department said the court ruling confirmed a conspiracy by Apple.

"As the department's litigation team established at trial, Apple executives hoped to ensure that its e-book business would be free from retail price competition, causing consumers throughout the country to pay higher prices for many ebooks," Assistant Attorney General Bill Baer said.

A second hearing will be held to determine damages.

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