A US District judge recently ruled that Apple conspired to raise e-book retail prices in an effort to keep rivals from using e-book prices as a loss leader. Apple is currently planning on appealing the ruling, but it will be months before it comes before the Circuit Court of Appeals, if the appeal gets approved at all.
It was a complex suit that thanks to the appeals process is still ongoing, but what exactly was it all about? Adam C. Engst at TidBITS.com has written a comprehensive examination of Judge Denise Cote’s 160 page opinion explaining why Apple lost the suit.
At the heart of the suit is Amazon’s loss-leader pricing on ebooks, regularly selling titles for $9.99 regardless of if that was less than they paid publishers to sell that ebook. Apple and book companies worried that this sort of pricing would create a false perception of the value of an ebook. In 2009, before Apple opened their own ebookstore, Amazon controlled 90% of the ebook market. When Apple entered in 2010 they agreed to an “agency” model for their ebook publishing, meaning the publishers set the price for books and in exchange are paid a set percentage of sales.
The rest of Engst piece goes into the problems with the agency model, explains how exactly this deal was ruled as an antitrust violation, what happened legally to the publishers, and answers basically every question you could have about this suit. It’s a long read, but it’s a great analysis of a complicated situation.
A comprehensive look at Apple’s ebook price fixing suit originally appeared on TUAW – The Unofficial Apple Weblog on Fri, 12 Jul 2013 12:00:00 EST. Please see our terms for use of feeds.