The major publishers who colluded with Apple to raise ebook prices and force Amazon to do likewise with its own Kindle books, all in an effort to raise the average retail price of ebooks to a level significantly higher than Amazon’s standard $9.99 pricetag for new, major-release Kindle books, were all found guilty by the U.S. Department of Justice last year. Well, they were about to be found guilty when they settled with the Fed in exchange for various penalties that more or less amounted to an admission of guilt. This enabled the publishers to avoid going to trial, where all the details of what they’d been up to would become public and the Fed’s case against them was more or less a lock.
Still, ever-proud Apple refused to see the writing on the wall from that settlement, continued to maintain its innocence, and proceeded to trial.
A U.S. federal judge handed down the ruling against Apple this week, and while Apple has been found just as guilty as the co-conspirator publishers in the case, that’s hardly the most shocking thing to come out of the ruling.
Rather, it’s the details of exactly how and why major, respected publishers and Apple schemed not only against Amazon, but the American book-buying public, all in the name of greed.
More surprising still is that the major publishers involved in the conspiracy were being used as pawns in a larger Apple scheme to become the dominant ebook retailer; if the publishers entered into this scheme for fear of their business being dominated by Amazon, then all they were doing was trading one Caesar for another.
On Wednesday, a federal judge issued a damning finding that Apple conspired with five major book publishers to fix the price of e-books. The ruling is a chronicle of these firms’ incredible stupidity. In 2009 and 2010, the judge says, Apple and the publishers conspired more or less in the open, telegraphing their moves to the press, memorializing their discussions over email, hinting at their anti-competitive agreements in public statements, and strategizing in swanky restaurants. For a short while, they succeeded in their goal of raising book prices: Overnight, the average price of e-books rose by nearly 20 percent, with some best-sellers shooting up by close to 50 percent. Books that used to sell for $9.99 were now $12.99 or $14.99, prices that Apple and the publishers believed would threaten Amazon.com, the undisputed king of e-books…
But Apple’s gambit failed… The iBookstore, whose success the publishers were banking on, never really became a big hit. Then the government intervened and pressed antitrust charges. …Altogether, then, the price-fixing effort was a resounding failure. In one of his last efforts to shake up the media world, Jobs went after Bezos with everything he had. And he lost.
[Apple] certainly had the cash reserves to take a …loss on e-books, to sell them at $9.99 or less in order to become a leader in the business. But Apple had no desire to do that…at Apple, profits are inviolable—the only real point of doing anything.
Click here to read the full article on Slate, which includes a link to the federal judge’s actual ruling. The details of the price-fixing scheme that are enumerated in that ruling are both shocking and sickening.
More shocking and sickening still, Apple has stated it intends to appeal the ruling. Heaven knows, Apple’s sitting on more than enough capital (thanks to all of our purchases of Apple hardware, software and media) to keep this legal battle going indefinitely.