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Judge: Apple helped fix e-book prices

Apple Inc. milked the popularity of its iTunes store to form an illegal cartel with publishers to raise electronic book prices, a federal judge ruled Wednesday, citing "compelling evidence" from the words of the late Steve Jobs.

The ruling by U.S. District Judge Denise Cote in Manhattan sided with government regulators' contention that Apple joined five major book publishers to gang up on Amazon.com in a price-fixing conspiracy that caused consumers to pay more for electronic books.

Apple has steadfastly denied it did anything wrong, even as the book publishers involved in the case settled to avoid a trial. The Cupertino, Calif., company vowed to appeal the decision.

It's unclear whether the ruling will have an impact on the pricing of e-books. The earlier settlements with book publishers were designed to encourage more discounting. But that hasn't happened, even at Amazon, which had unnerved publishers by selling e-book versions of popular hardcover titles for $9.99 before the April 2010 release of Apple's iPad.

It's a discounting practice that Apple and the publishers sought to eliminate leading up to the iPad's debut, according to the antitrust lawsuit filed last year by the U.S. Justice Department and 33 state attorneys general.

"Apple seized the moment and brilliantly played its hand," Cote said. She wrote that Apple's deals with publishers caused some e-book prices to rise 50 percent or more virtually overnight. As part of its standard commission, Apple received a 30 percent cut of each e-book sold.

Jobs' words played a pivotal role in the trial, even though the Apple co-founder and longtime chief executive died in October 2011 after a battle with cancer.

Government lawyers cited some of Jobs' email exchanges and thoughts that he shared with his biographer Walter Isaacson as proof of his willingness to collude with publishers.

Isaacson wrote that Jobs said Apple assured publishers, "We'll go to the agency model, where you set the price, and we get our 30 percent and yes, the customer pays a little more, but that's what you want anyway."

Amazon declined to comment Wednesday.

Bill Baer, an assistant attorney general for the Justice Department, hailed the ruling as "a victory for millions of consumers who choose to read books electronically."

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