Apple guilty in ebook price-fix trial

Jul 10, 2013
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Apple has been found guilty of ebook price fixing, with a New York federal judge ruling today that the Cupertino firm conspired with publishers to drive up the cost in its iBookstore. The ruling will now be followed by a trial for damages, Reuters reports, which will decide how much Apple must pay the US government and several states.

The non-jury trial began in early June, with Apple defending itself against the Department of Justice over claims it worked with publishers to move the digital book market to the so-called "agency model." Whereas previously, retailers such as Amazon had been setting their own prices for ebooks for Kindle, and similar, Apple and the publishers preferred the greater margins available through themselves setting the sticker price.

According to the DOJ, that counted as manipulating the market, and it threatened to haul five of the big publishers - Hachette, HarperCollins, Simon & Schuster, Macmillan, and The Penguin Group - into court as well as Apple. Over time, each publisher settled - though admitted no wrongdoing in the process - so as to escape greater censure, but Apple insisted on taking the case all the way to the courtroom.

Even before the trial started, however, the outlook looked grim. The judge, having only reviewed preliminary evidence, suggested that Apple was likely to lose, despite the best efforts of the Cupertino firm's legal team to argue the DOJ was presenting evidence selectively to mislead.

In fact, Apple said, it was acting in the best interest of publishing overall. The company warned of a "chilling effect" on ebooks if it was found guilty.

"The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy," US District Judge Denise Cote wrote in a 160-page ruling on the case. "Without Apple's orchestration of this conspiracy," she said, "it would not have succeeded as it did in the Spring of 2010."

It's unclear to what extent the damages could run, though we'd guess Apple will be doing everything in its power to appeal the decision. The exact details of the settlements each of the five publishers eventually agreed with the DOJ have not been revealed, but Penguin is known to have coughed up $75m plus costs to settle the claims across 33 US states, along with a class-action lawsuit.

What this could mean for ebook prices from iBooks, Kindle, NOOK, and other stores also remains to be seen; Amazon is eager to return to the days where a new ebook would be $9.99, rather than the $12.99-15.99 that the agency model has settled on today.

Apple is yet to comment on the decision; we've reached out to the company, and will update when we have more. Update: Apple has commented on the ruling, and will fight it in appeal.


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