A federal judge ruled today that book publishers and Apple violated antitrust laws to set prices for ebooks.
Back in 2010, Amazon dominated sales of ebooks, and Amazon made it clear that it thought ebooks should sell for less than physical books did, a position that publishers didn’t agree with. When Apple launched the first-generation iPad, the company went to the top five book publishers and offered them an alternative for distributing their products — Apple was new to the business and, according to today’s court ruling, was willing attract the attention of publishers by conspiring to make iPad users pay more for ebooks.
A year or so later, there were accusations of this collusion. The U.S Department of Justice then went to the top five book publishers — Hachette, Harper Collins, Macmillan, Penguin, and Simon & Schuster – with these allegations, and all five of them agreed to settle. Only Apple decided to fight it out in court.
The court case started several weeks ago, and the judge today ruled that the acusations were true.
“Apple played a central role in facilitating and executing that conspiracy. Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did,” wrote U.S. District Judge Denise Cote in her ruling.
At its heart, the ruling is that ebook publishers and Apple conspired to set prices for books and prevented book sellers from making that decision.
According to the justification for this ruling, Apple was willing to go along because it took in 30% of every ebook sale made by the publishers. The higher the price of the ebook, the more Apple made.
Apple’s spokesperson Tom Neumayr said in response, “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.”