Apple's fight to clear its name in the 2010 case where it was accused of conspiring to raise ebook prices just came to an end because the U.S. Supreme Court refused to hear its appeal. That means the Federal Appeals Court ruling against Apple stands, and the iPhone and iPad maker must pay out a US$450 million settlement.
Apple hits dead end in ebook price fixing case
Without any other options available, Apple will have to hand over $400 million that goes back to ebook purchasers, $20 million to the states that sued the company, and another $30 million in legal expenses.
Apple and several publishers where accused by the Department of Justice of orchestrating a scheme to artificially raise the price of books ahead of the original iPad launch. Penguin, MacMillan Simon & Schuster, HarperCollins, and Hachette Book Group all settled out of court over fears the case could destroy their businesses, but Apple continued on maintaining there was no conspiracy and it did nothing wrong.
Publishers worked with Apple ahead of the original iPad launch to create an agency model where retailers charged set prices for books instead of using the traditional wholesale model where stores charged whatever price they wanted. Amazon used the wholesale model to its advantage to undercut retailers and become the largest book seller by selling titles at a loss.
By switching retailers to the agency model, book prices did go up in some cases, but the heavy losses everyone was battling weren't an issue.
Apple was looking for a way to compete in the book market with its iBookstore without losing money on every sale. Publishers said if Apple hadn't been able to find a way to make that work, the company would've abandoned its iBookstore plans.
Federal Judge Denise Cote ruled Apple was part of a price fixing conspiracy and took the unprecedented move of assigning a court appointed monitor to ensure the company didn't engage in future antitrust activities. Apple never agreed to the monitor, and they aren't considered necessary unless there's an ongoing history of criminal activity.
Apple agreed to a $450 million settlement in 2014 that hinged on the outcome of its appeal to the U.S. Supreme Court. Since the Court refused to hear the case, Apple must now pay up and accept the ruling that says it engaged in a price fixing conspiracy.
That doesn't, however, mean Apple must admit guilt. Apple has maintained steadfastly through the legal process that it never engaged in a conspiracy, that there wasn't any plan to price fix books, and that it's efforts were only to gain a foothold in a market where Amazon had monopoly control—and that position isn't going to change even with a $450 million settlement going out.
[Thanks to Bloomberg for the heads up]