A federal judge has found Apple to be guilty of raising the price of e-books from major publishers on its iBookstore. Apple plans to appeal this decision.
Apple was accused of price fixing in 2012 along with 5 other book publishers, Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. The anti-trust complaint was filed against Apple in 2012, in which it was claimed that Apple was making publishers increase the prices of bestsellers and new releases from the standard $9.99 that Amazon was following to $12.99 and $14.99.
At the time, Amazon controlled the e-book market and publishers were wary of the low margins being generated by the $9.99 prices. In a bid to erode Amazon’s market share in the segment, Eddy Cue, the senior Apple executive credited for building iTunes, negotiated with publishers in January 2010 to raise prices not only on its iBookstore, but also on other stores like the Kindle Store and other book stores.
While the publishers were quick to settle with the Department of Justice and individual states over the antitrust complaints, Apple said that the claims were fundamentally flawed and went to court.
In a statement, Denise Cote said, “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.”
“Apple did not want to compete with Amazon (or any other e-book retailer) on price; and the Publisher Defendants wanted to end Amazon’s $9.99 pricing and increase significantly the prevailing price point for e-books. Apple decided to offer the Publisher Defendants the opportunity to move from a wholesale model — where a publisher receives its designated wholesale price for each e-book and the retailer sets the retail price — to an agency model, where a publisher sets the retail price and the retailer sells the e-book as its agent.”
An Apple spokesperson said that they intend to appeal this decision, citing that, “Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations. 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. We’ve done nothing wrong and we will appeal the judge’s decision.”
It should be interesting to see where this goes.