Apple Escapes $840 Million / €619 Million Fine in E-Book Price Fixing Case Bloomberg

Cupertino settles with U.S. states, consumers in widely debated class action

  iBooks
Apple has reached a settlement with the United States government and consumers in the widely reported e-book price-fixing lawsuit that would have ended with the Cupertino giant paying $840 million / €619 million in fines and / or compensation.

Apple has reached a settlement with the United States government and consumers in the widely reported e-book price-fixing lawsuit that would have ended with the Cupertino giant paying $840 million / €619 million in fines and / or compensation.

As a result of the settlement, Apple will be absolved from paying the $840 million / €619 million fine, but it will still reimburse the affected parties in accordance with the settlement terms, which were not disclosed, reports Bloomberg.

“Steve Berman, a lawyer representing the plaintiffs, said by phone that all the U.S. attorneys general and consumers settled the case. Berman said he filed a memorandum of understanding with the court under seal, which prevents him from describing the agreement.”

Apple refused to comment on the settlement reached in Re Electronic Books Antitrust Litigation, 11-md-2293, U.S. District Court, Southern District of New York (Manhattan). According to the report, the Cupertino giant will continue its appeal of the ruling.

The suit was initially filed in April of 2012, when Apple and several book publishers were suspected of having conspired against Amazon to force the country’s #1 e-book seller to change its pricing model.

Apple had reportedly convinced partnering publishers to lower the pricing bar so much that Amazon’s prices would suddenly seem too high. All this while Amazon was already selling electronic versions of best-sellers at ridiculously low prices.

Potential evidence that Apple was indeed conspiring to give Amazon a blow was found in an email written by Steve Jobs to one of the book publishers. The content of the message clearly showed a willingness to disrupt the e-book market using pricing as the weapon (reproduced below).

“James,

Our proposal does set the upper limit for ebook retail pricing based on the hardcover price of each book. The reason we are doing this is that, with our experience selling a lot of content online, we simply don’t think the ebook market can be successful with pricing higher than $12.99 [€9.58] or $14.99 [€11.04]. Heck, Amazon is selling these books at $9.99 [€7.37], and who knows, maybe they are right and we will fail even at $12.99 [€9.58]. But we’re willing to try at the prices we’ve proposed. We are not willing to try at higher prices because we are pretty sure we’ll all fail.

As I see it, HC has the following choices:

1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 [€9.58] and $14.99 [€11.04].

2. Keep going with Amazon at $9.99 [€7.37]. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99 [€7.37]. They have shareholders too.

3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.

Maybe I’m missing something, but I don’t see any other alternatives. Do you?

Regards,
Steve”

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