The Supreme Court ruled today to refuse to review an appeals court’s decision that Apple conspired with book publishers to raise the price of digital books.
In April 2010, Apple entered an ebook market dominated by Amazon and the Kindle. Publishers were hoping Apple’s iPad format would give them more options.
“Apple’s launch of the iBookstore as a platform for tens of millions of consumers to buy and read digital books on the iPad dramatically enhanced competition in the ebooks market,” Apple said in its petition to the Supreme Court. “Following Apple’s entry, output increased, overall prices decreased, and a major new retailer began to compete in a market formerly dominated by a single firm.”
However, a three-judge panel from the United States Court of Appeals for the Second Circuit in New York found last year that the terms Apple offered its partner publishers allowed them to fix prices. Whereas ebooks were once generally $9.99, Apple’s entry caused prices to rise to $12.99 or $14.99.
“Competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new ebook retailer at the expense of passing control over all ebook prices to a cartel of book publishers,” wrote Judge Debra Ann Livingston.
The original case, which began in 2012, led the five publishers (Hachette Book Group Inc., HarperCollins Publishers LLC, Penguin Group Inc., Simon & Schuster Inc., and Macmillan) all settled out of court, but Apple chose to pursue the case.
Apple will now be required to pay $450 million as part of a settlement. An Amazon spokesperson told Gizmodo that they will be offering refunds to the 23 million eligible customers as well, using the court-mandated settlement funds.