Apple Found Guilty On Fixing E-book Prices
Posted: July 14, 2013 by Maja Johnson
A New York City district judge found Silicone Valley tech giant, Apple, guilty in the conspiracy of fixing e-book prices. The company was found guilty for conspiring with book publishers regarding e-book prices, and also guilty for violating antitrust and other state laws.
Before the launch if the iPad and iBookstore in 2010, Apple was accused of working together with five book publishers – Penguin, Simon & Schuster, Hachette, HarperCollins and Macmillan. According to the prosecution, the company conspired with the publishers to raise the prices of e-books. Amazon, the largest book seller company during this period, had established a price limit of $9.99 whereas Apple allegedly conspired to raise the prices between $12.99 and $14.99.
According to the U.S. District Judge Denise Cote, Apple and the publishers wanted to eliminate the retail pricing of e-books that Amazon offered. Cole even stated that Apple had a key role in the entire conspiracy. The company offered the publishers benefits to move from the old wholesale model to a new agency model. In the old wholesale model, the publisher receives the wholesale price of the e-book, and the retailer sets the retailer price. In the new agency model, the publisher sets the retail price, and the retailer sells the book as an agent. The new agency model keeps books prices high to force the consumer to spend more per book.
Apple was the only company that went to trial. All five book publishers involved in the scandal settled with the Department of Justice and 33 individual states. After being found guilty, Apple will be awaiting a further trial regarding damages. Whether or not this trial will have an effect on the price of e-books is not yet known.