The Washington Post

Apple e-books: Highlights from the judge’s ruling

An Apple Inc. logo hangs above the entrance at the Fifth Avenue store in New York, U.S., on Friday, March 11, 2011. (Jin LKee/BLOOMBERG)

U.S. District Court Judge Denise Cote‘s ruling in the Apple e-book price-fixing case is harsh in its assessment of Apple’s role in coordinating a scheme to raise the price of digital books by teaming up with other publishers.

“There is, at the end of the day, very little dispute about many of the most material facts in this case,” Cote said in her ruling on Wednesday, which Apple has said it will appeal.

Here's how Cote deconstructed Apple’s argument that its actions on e-book pricing were legal:

Questioning motives: In the course of the trial, Apple said that it was not looking to raise prices on anything but simply wanted to provide a better e-reading solution for consumers.

Cote said that while that may be true, it doesn’t change or excuse the fact that Apple’s pricing structure also raised prices.

“[There] was more to Apple’s entry into the trade e-book market than the presentation of innovative software on a remarkable device,” she wrote. “Apple’s entirely appropriate or even admirable motives do not preclude a finding that Apple also intentionally engaged with the Publisher Defendants in a scheme to raise e-book prices.”

Amazon’s dominance: Apple and publishers have said that they created their pricing model to challenge Amazon’s dominance in the market — about 90 percent of all e-book sales through 2009.

“If Apple is suggesting that Amazon was engaging in illegal, monopolistic practices, and that Apple’s combination with the Publisher Defendants to deprive a monopolist of some of its market power is pro-competitive and healthy for our economy, it is wrong,” Cote said.

She also noted that even if Amazon was engaging in unfair behavior, that two wrongs don’t make a right. “Another company’s alleged violation of antitrust laws is not an excuse for engaging in your own violations of law. Nor is suspicion that that may be occurring a defense to the claims litigated at this trial”

Publishers raise prices, not Apple: Taking on the tech giant’s assertion that publishers — not Apple — were ultimately responsible for raising digital book prices, Cote says that it’s clear from the testimony that Apple was willing to make the possibility of higher prices a main selling point in its negotiations.

“Apple is correct that the conspiracy required the full participation of the Publisher Defendants if it were to achieve its goals,” she said. “It is also correct that the Publishers wanted to change Amazon’s pricing policies and to raise e-book prices, and that they had wanted to do that for many months before Apple arrived on the scene. But, those facts do not erase Apple’s own intentions in entering into this scheme.”

And, she said, the publishers could not have acted without using the tech firm as an intermediary. “Apple was an essential member of the charged conspiracy and was fully complicit in the scheme to raise e-book prices even though the Publisher Defendants also had their own roles to play,” she said.

On the chilling effect on the industry: Cote is careful to acknowledge the argument Apple made in court -- that essentially punishing the company for trying to break into a new market will discourage others from doing so in the future. But, ultimately, she said, Apple’s actions when it entered the market were anticompetitive.

“While a Court must take seriously a prediction that its decision will harm our nation’s economy, particularly when made by skilled counsel on behalf of an esteemed company, it is difficult to see how competition will be stifled by the ruling in this Opinion.” Cote wrote.

“This Opinion’s findings arise from the specific events that unfolded in the trade e-book market as 2009 became 2010. It does not seek to paint with a broader brush.”

Related stories:

Judge rules Apple conspired to raise e-book prices

Apple e-book antitrust trial to wrap up Thursday

Apple antitrust trial ends; ruling could be broad

Sign up today to receive #thecircuit, a daily roundup of the latest tech policy news from Washington and how it is shaping business, entertainment and science.

Hayley Tsukayama covers consumer technology for The Washington Post.



Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Show Comments
Most Read



Success! Check your inbox for details.

See all newsletters

Your Three. Videos curated for you.
Play Videos
How to make Sean Brock's 'Heritage' cornbread
New limbs for Pakistani soldiers
The signature dish of Charleston, S.C.
Play Videos
Why seasonal allergies make you miserable
John Lewis, 'Marv the Barb' and the politics of barber shops
What you need to know about filming the police
Play Videos
The Post taste tests Pizza Hut's new hot dog pizza
5 tips for using your thermostat
Michael Bolton's cinematic serenade to Detroit
Play Videos
Full disclosure: 3 bedrooms, 2 baths, 1 ghoul
Pandas, from birth to milk to mom
The signature drink of New Orleans

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.