Judge Rules Apple Conspired to Set E-Book Prices

The Slatest
Your News Companion by Ben Mathis-Lilley
July 10 2013 11:39 AM

Judge Rules Apple Illegally Conspired to Set E-Book Prices

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Visitors are looking at e-books for children at the 64th Frankfurt Book Fair in Frankfurt, Germany, on October 10, 2012

File photo by Daniel Roland/AFP/GettyImages

A federal judge ruled Wednesday that Apple violated antitrust law by conspiring with publishers to raise retail prices of e-books and eliminate retail price competition. In her ruling, U.S. District Judge Denise Cote said that Apple "played a central role in facilitating and executing" the scheme, and that a trial for damages would follow.

It seems the conspiracy introduced a new "agency pricing" model where publishers — not retailers — would set the price of e-books, with Apple getting 30 percent of the sale, as Bloomberg notes. Basically, the alleged scheme was meant to undermine Amazon's dominance of the e-book market, since many publishers felt Amazon's uniform new e-book title pricing of $9.99 was too low. Many e-books were raised to $12.99 or $14.99 as a result of the conspiracy. (If the technical details of the scheme pique your curiosity, the New York Times has a great piece explaining the shady contractual dealings.)

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Originally, the U.S. government sued Apple along with the five other publishers — Lagardere SCA's Hachette Book Group Inc and Macmillan, News Corp's HarperCollins Publishers LLC, Pearson Plc's Penguin Group (USA) Inc and CBS Corp's Simon & Schuster Inc — back in April of last year. But while the publishers settled with the government, Apple insisted they had done nothing wrong—a stance that Apple continues to hold in the wake of today's ruling.

"When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry," company spokesman Tom Neumayr said in a statement. "We’ve done nothing wrong and we will appeal the judge’s decision."

Jennifer Lai is an associate editor at Slate.

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