Apple Inc. seems to be really busy in the courtroom these days. The company has a lot on its plate; it is defending the class action for its iPod DRM and beginning the appeal for the verdict of an ebook trial that began last year.
The court has ruled Apple Inc. (NASDAQ:AAPL) as guilty; they are guilty of practicing anti-competitive measures. There are two ways in which the company is guilty;
- Publishers used to practice wholesale pricing. The publishers would sell to the retailers in bulk and then the retailers would sell at their own prices. Apple Inc. asked publishers to switch; instead of following wholesale pricing, the company said that the publishers must follow an agency model. In this model, the publishers would set the retail prices meanwhile the retailers would take a commission. According to the court, this practice reduced the competition in terms of price.
- Apple made a Most Favored Nation deal with publishers – or so it believed. According to this deal, the publishers would only offer the best of terms to Apple Inc. and no other company. This meant that the best deals would be made with Apple Inc. while the lesser would be made with other retailers. The court believes that this step also reduces the price competition. This is because larger retailers, such as Amazon, would have easily made better deals with publishers by passing savings to customers instead of publishers.
Apple Inc. argues that it is not guilty. Apple Inc.’s very step into the book market increases competition. Before iBooks the book market was dominated, undisputed, by the biggest retailer, Amazon. According to Apple Inc. some prices needed to increase so that the ebook market could become more viable for other publishers. If such price rises did not occur, then the ebook market would be smaller.
The court has already approved that Apple Inc. would have to pay damages of $450 million in the case that it loses the appeal. For a tech giant like Apple Inc., such a sum is not much. This surprises some people; Apple Inc. should just pay the damages. However, the company continues to fight. Eddy Cue from Apple Inc. said that the company feels it necessary to fight for the truth and stand up for its principles regardless of the cost.
These are not the only things that Apple Inc. (NASDAQ:AAPL) is dealing with; the company faces another suit over the issues in MacBook Pro GPU. A petition was filed with signatures of thousands of MacBook Pro GPU users that complained about the laptop. Apple Inc. was accused of its failure to solve the graphical issues in the 2011 MacBook Pro models. The issue was caused by a defected AMD GPU that does not function properly. Visual banding was experienced by users so were other screen issues.
With so much action in the court, the iPhone maker is very busy trying to prove its innocence. Hopefully, the tech giant can come out of it soon.
