Tuesday, March 8, 2016

Apple to Pay $450 Million E-Book Settlement

Greg Stohr (Ars Technica, Hacker News):

Apple Inc. must pay $450 million to end an antitrust suit after the U.S. Supreme Court refused to question a finding that the company orchestrated a scheme to raise the prices for electronic books.

The justices, without comment, turned away an appeal by Apple, leaving intact a federal appeals court ruling favoring the U.S. Justice Department and more than 30 states that sued.


“Following Apple’s entry, output increased, overall prices decreased, and a major new retailer began to compete in a market formerly dominated by a single firm,” the company said in its appeal.

Mitchel Broussard:

Specifically, the amount will be broken down to have $400 million paid out to e-book customers, $20 million to the states, and $30 million in the form of legal fees. The case saw Apple fighting an accusation that in 2010 it colluded with five publishers -- HarperCollins, Simon and Schuster, Hachette Book Group, Macmillan, and Penguin -- to fix the prices of e-books in order to become a dominant presence in a market overshadowed by companies like Amazon.

Jason Snell:

I believe, based on my layman’s understanding of the case, that Apple and the publishers really did violate the law. The oddity is that the collusion seems to have been an attempt to create more competition in a market previously dominated by Amazon.

John Gruber:

I think they got the shaft.


Amazon uses MFN to be able to match the lowest price available. Apple uses MFN to fix prices so that nobody sells the same titles for less than they do.


MFN in combination with the five-publisher collusion orchestrated by Apple let them negotiate to increase prices.


If you look at emails and communication from people involved, it seems pretty clear to me that Apple knowingly and actively participated in a conspiracy to fix prices. They really took the leading role in organizing the publishers and proposing the illegal-price fixing model. I will give you an overwhelming amount of evidence just in one comment, and a link to explore further details.


This isn’t about Apple giving the same deal to all publishers. This was about Apple convincing all publishers to give all other retailers the same deal as Apple -- and all at the same time, as a single group across essentially the entire industry, thus resulting in price fixing and price increases.

Update (2016-03-08): Kirk McElhearn:

But even if there’s $400 million that will be spent on ebooks – and, while many people may never spend what they get, others will spend more than what they get, because their share won’t be enough to buy a book – this amount will inject a huge sum of money into the publishing industry.

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