Senator Tells DOJ: Drop Apple’s E-book Lawsuit!

Sen. Charles Schumer (D-NY) has appealed to the U.S. Justice Department to drop its antitrust lawsuit against Apple (NASDAQ:AAPL) and certain book publishers through an op-ed in the Wall Street Journal, insisting that it will result in restoring Amazon (NASDAQ:AMZN) to the “dominant position atop the e-books market”.

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The Justice Department filed the suit earlier this year against the iPad maker and five publishers for allegedly colluding to fix e-book prices. While Hachette, HarperCollins (NASDAQ:NWSA), and Simon & Schuster (NYSE:CBS) settled, Macmillan and Penguin Group (NYSE:PSO) are still part of the case. Amazon had set e-book prices as low as $9.99, but the suit alleges that Apple and the publishers got together to build a new business model that drove standard prices up.

According to Schumer, Apple’s method actually helped increase competition and drive prices lower, and that the suit could “wipe out the publishing industry as we know it,” making it harder for young authors to get published.

The Senator argues that the e-book marketplace offers a perfect example of the challenges traditional industries face in adapting to the Internet economy. While Amazon’s model worked well for the retailer, it put publishers and authors at a disadvantage. “They could allow their books to be sold at the prices Amazon set, thus undercutting their own current hardcopy sales and the future pricing expectations for digital books — or stay out of the e-books market entirely,” Schumer writes. Apple’s entry, according to the Senator, gave consumers multiple platforms and forced Amazon to “expand its catalog, invest in innovation, and reduce the prices of its Kindle reading devices.”

Quoting Apple’s filing in the case, Schumer says the new method also meant that the average price of e-books fell to $7 from $9.

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