Judge Rules Apple Colluded With Publishers to Fix Ebook Prices

Despite many publishers themselves settling with the DOJ over allegations of price fixing ebooks, Apple held firm and recently went to trial. And now the verdict is in: Apple conspired with major publishers to control ebook prices in violation of anti-trust laws. A trial for damages has been ordered. Quoting Reuters: "The decision by U.S. District Judge Denise Cote in Manhattan is a victory for the U.S. government and various states, which the judge said are entitled to injunctive relief. ... Cote said the conspiracy resulted in prices for some e-books rising to $12.99 or $14.99, when Amazon had sold for $9.99. '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,' Cote said. 'Without Apple's orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010,' she added." Update: 07/10 16:36 GMT by U L : The ruling is now available (160 page PDF).

permanent sale not illegal in USA?

[gl4ss]

around here you can't have a product listed on "sale"(as in firesale or whatever) permanently.. why? because it's deceiving. if it's never at the normal price then there's never a special sale price... just the usual price. so if something is 10% or 20% off permanently, all the time, it's just a trick to fool the customer and therefore there are statuary limits on how long a sale can last..

Re:Abusing their monopoly power

[Anonymous Coward]

Apple is an entity many millions of people worship, it's a religion. Apple should not have been found guilty, Steve Jobs should have. But how do you prosecute and incarcerate dead people?

What's going to happen

[bobstreo]

Everybody who ever bought any number of books will get a single $1-5 credit toward buying another book. States and Federal government will collect
millions of dollars and fines.

Re:Abusing their monopoly power

[evilRhino]

I would argue that "monopoly power" is the ability of *one* player to reset the price above the what would normally be a market price. Since the deal Apple brokered among publishers raised the cost of ebooks across all platforms, the term should apply here.

The punishment should fit the crime

[macsimcon]

I love Apple's products (no really, I do), and I make my living supporting them, but anticompetitive behavior is a crime against capitalism itself. It hurts us all. As soon as Apple entered the market, E-book prices went UP. If Apple had truly represented more competition, as they claimed in court, prices should have gone down. The prices went up because Apple illegally colluded with others to fix a higher price (perhaps so they could get their 30% cut). The court should fine Apple something meaningful. How about the $140B they have in cash? Distribute that to everyone who bought E-books. Or put Tim Cook in jail for anticompetitive behavior. No CEO would ever do anything anticompetitive again if they knew they might personally go to jail. I would even support a corporate death penalty for Apple if it sets a precedent: engage in anticompetitive behavior, and the government will terminate your company for good. White collar criminals are different from blue collar criminals in that they usually consider the consequences of getting caught. Only with serious and meaningful punishment can we stop anticompetitive behavior going forward. Let's begin with Apple.

Re:Why shouldn't they be free to decide their pric

[Anonymous Coward]

Collusion was never shown. The publishers were never shown to get together on pricing.

Apple had conversations with each publisher individually. Reflected in the different agreements for each publisher.

So, what's the problem then?

Amazon should send Apple a gift basket

[Dixie_Flatline]

The way Amazon was doing business before this all went down was a sure-fire track to an anti-trust case. They priced books below their own wholesale costs to keep competitors out of the business (the margins on Kindles are pretty slim to nil; I don't think you can even call the cheap books a loss leader, since it just leads to more losses). They controlled (still control?) over 90% of the eBook business, and their DRM BS isn't even compatible with the DRM BS that other companies use. (I can buy books from the Kobo bookstore and use a Sony eReader, for instance. And vice versa. No such luck if I buy a Kindle book, though. I have to have a Kindle.)

Apple did Amazon a favour by stepping in and gathering the publishers together. Now Apple's lost a lawsuit, but as far as I know, the agency model will still persist. Amazon dodged a bullet there.

Another Flamewar . . .

[Anonymous Coward]

Summarized:

Apple got them to agree to sell the books to them at X percentage of the sale price.
They also negotiated that if someone else can sell the book for price N, they have to allow apple to do so, but with Apple's cost still being a percentage of a sale price.

Music Industry:
The music industry was dead-set against selling digital music, DRM or not. Period.
Apple made the heavy DRM concessions up front, but negotiated hard to get a profitable model. By the time digital music was mainstream (through Apple's active marketing/etc.), the music industry was so desperate that they had to turn to Amazon to shake stuff up, and they lost DRM in the process . . .

Amazon had the book industry by the book-bindng . . . don't you think it was just the industry trying to save itself?

Amazon is NOT lillywhite, nor are the book publishers; authors are NOT always compensated for Kindle/Nook editions, the same way that Music Artists don't get a 'fair' (meaning what they SEEMED to agree to previously) cut.

Re:one step in a series.

[cpt kangarooski]

There is one fundamental difference from books vs ebooks: ebooks can be cloned perfectly in a split of a millisecond. Books cannot. This was a limitation of the analog world. Now, in the digital age, this limitation has vanished.

Meh. There's no technology that favors pirates more than it does legitimate publishers. At most there is parity; a publisher can whip up millions of ebooks with minimal effort and cost just as easily as a pirate can. At worst the publisher will have an advantage if only due to being able to work openly.

Before ebooks, pirates could operate printing presses. Before presses, pirates could employ scribes. Before literacy, pirates could memorize the epic poems that were passed down orally.

I fail to see how the landscape has changed so radically. All that's changed is that the up front costs to publish a book quickly and easily -- legitimately or as a pirate -- have dropped a lot.

Re:Amazon should send Apple a gift basket

[Dixie_Flatline]

That's a false equivalence. If I want a widget that Wal-Mart sells, it's not necessarily the case I that I need only buy Brand-X widgets. Brand-Y widgets, which Target sells, are probably just as good.

If I want to buy Game of Thrones, I can't buy some off-label Game of Thrones and get the same thing. They're not equivalent. If Amazon is selling it at lower than their cost basically 100% of the time, how can a competitor hope to break into the market?

Basically, they can't. Not in a meaningful fashion. This is why Amazon still rules the roost when it comes to book sales.

Amazon's wrong doesn't absolve Apple in particular; the judge thinks what Apple was doing was shady, and so I'll accept that decision since they know more about the legality of such things than I do. I maintain, however, that given the course that Amazon was on, they would've been subject to an anti-trust trial at some point. They were using their near monopoly position to maintain that position and keep other entrants out of the marketplace. If sales are anything to go on, they were doing a good job.