Judge: Apple Conspired To Price-Fix eBooks

[ReadWrite]

Apple has conspired with book publishers to fix prices on eBooks, a Federal judge ruled this morning.

U.S. District Judge Denise L. Cote's ruling in the non-jury trial sets back what Apple claimed all along: that their discussions with the five major book publishers was merely doing business in a new marketplace for Apple.

In his opening statements in the trial, Apple attorney Orrin Snyder argued that the government's case against Apple depended solely on out-of-context quotes from e-mails gathered by Federal investigators.

(See also: DoJ Whacks "Self-Serving" Apple in Response to E-Book Settlement Comments)

 The Federal lawsuit claimed that Apple, led by then-CEO Steve Jobs and senior vice president of Internet Software and Services Eddy Cue, conspired with HarperCollins, Hatchett, Macmillan, Penguin and Simon & Schuster to drive e-book prices up from the $9.99 price point Amazon had established.

This model of pricing is known as agency pricing, and allows a publisher set the prices of an ebook, with the retailer getting a cut of the price as a commission. This differs from the wholesale model that Amazon was using, where a book's price is suggested and retailers can discount it to their heart's content.

Agency pricing isn't necessarily a problem—it's a perfectly legitimate way of doing things. The government's issue is that Apple allegedly colluded with the five publishers to get them to all jump to agency pricing at the same time. This was a highly anti-competitive act, and Judge Cote's ruling this morning confirms it.

Apple was the last company defiantly standing in the eBook price-fixing trial—all five of the original publishers had already settled with the government.

No response from Apple has been made at this time.

ReadWrite