Apple was the big loser in federal court today, having been found guilty of conspiring to gouge consumers and kick Amazon in the (digital) gut by fixing e-book prices. This seems like a victory for consumers, who would obviously prefer Amazon's $9.99 e-book prices—and a loss for the five publishers who colluded with Apple to raise that price, in what turned out to be a losing gamble.
On Wednesday, Manhattan Federal Judge Denise Cote found Apple guilty of getting together with publishers (Hachette, Macmillan, HarperCollins, Penguin, Simon & Schuster) and working together to raise the price of e-books, Reuters reported:
According to the plaintiffs, the conspiracy was designed to undercut online retailer Amazon.com Inc's dominance of the fast-growing e-book market.
Amazon at one time held a 90 percent share of the market, buying e-books at wholesale and then selling them at below cost to promote its Kindle reading device.
Apple, in contrast, entered into so-called "agency agreements" in which publishers were able to set higher prices and pay commissions to the Cupertino, California-based company.
Apple was actually the only company that showed up in court. The five publishers settled. As The New York Times noted, they find themselves in an especially perilous position:
The antitrust battle underscores the turmoil in the book industry as readers shift from ink and paper to electronic devices like tablets and smartphones, where they can buy content with the push of a button. While the publishers want to embrace new media, they are also trying to protect their profits and retain control of their businesses.
They'll have to find another way to bolster their bottom lines.