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July 10, 2013

Court Finds Apple Did Indeed Conspire to Fix Prices of Ebooks

Here's the background on the federal case against Apple -- Apple conspired with the Big 5 publishing houses to change the pricing model of ebooks to inflate the prices from an average of about $9 per book to something they liked better, from $12 to $14.

The matter was decided by a judge (I assume Apple chose to be judged by a judge rather than a jury, thinking the law would be on their side but the populist temperament of common citizens might not be).

“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

Apple's strategy was to say "Amazon price-fixed before us and we were only price-fixing in order to overcome their original price-fixing" or, alternately, "Amazon proposed a similar price-fixing scheme."* But it's never really been a defense to say "These other guys did it too."


* Just speculating here, as I didn't watch the trial closely, but I think Amazon's "price-fixing" was different in two ways. First, Amazon used market leverage to push the price down; generally, the government doesn't go after people for offering the public lower prices (unless this is part of some sort of dumping scheme).

To the extent Amazon doesn't lower prices as aggressively on newer titles and thus may have "agreed to fix those prices higher:" I get the sense they did that to mollify publishers, who are reserved about/afraid of the digital model of book distribution. Agreeing to not cut the prices of new books too much might have been some kind of sop to wary publishers to keep the right to sell digital books in the first place. Publishers don't want digital prices to go down so much that their first business, selling physical copies of books, is damaged or destroyed entirely.



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posted by Ace at 12:10 PM

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