Apple recently lost an appeal in a lawsuit that claimed the company conspired with publishers to raise e-book prices. The tech giant is being forced to pay a total of $450 million in damages.
Apple’s big loss
Federal courts upheld the 2013 decision that initially found Apple guilty of conspiring with publishers. Tuesday’s two to one ruling ends the three-year litigation. The entire case included millions of dollars in legal fees. Apple even challenged the Dept. of Justice in a retrial, but that failed to work in its favor. All of the publishers Apple reportedly conspired with settled their cases.
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The majority of the $450 million in damages Apple is being forced to pay will go to e-book consumers. It is part of the November agreement involving 33 states and private plaintiffs that joined the lawsuit. The deal hinged on the appeal’s outcome, however, the penalty amounted to just 3% of the profits from the last quarter of 2014.
The court sides with the original decision
Debra Ann Livingston, Second Circuit Judge, said they concluded that the district courts made the right decision the first time. She said the conspiracy violated the Sherman Act.
Apple has been attempting to garner e-book customers as Amazon dominates the market. Some publishers were also disheartened by Amazon’s discounts. Apple’s agreements put the ball in the publisher’s court, and publishers liked that. There was one important exception to that price model though: publishers would have to match their e-book price if it was found to be lower at another store. The new outlet gave publishers a chance to reclaim pricing power from Amazon.
However, change was in the air because publishers could not afford to sell their e-books on iTunes when Amazon discounted its book prices to $9.99. Overall e-book prices increased significantly. Apple’s lawyers claimed the iPhone maker accidently started the push against Amazon through publishers.