Apple To Appeal Ruling It Fixed E-Book Prices

A federal judge this week ruled that Apple conspired to raise prices of e-books, handing a victory to the Justice Department. Another winner in the fallout from this case was Amazon, the dominant seller of e-books.

Copyright © 2013 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

RENEE MONTAGNE, HOST:

Apple has its own woes. The company has vowed to appeal a ruling this week that found it guilty of conspiring with publishers to fix the price of eBooks. Many legal experts say the verdict will open a floodgate of civil lawsuits and invite deeper scrutiny of Apple's other retail businesses.

And as NPR's Laura Sydell reports, it's not clear that the verdict is a win for consumers.

LAURA SYDELL, BYLINE: First, some basic facts. About three years ago, when Apple was getting ready to introduce the first iPad, it wanted to have an eBook store, so it heavily courted the major publishers.

At the time, publishers were not happy with Amazon - which was and still is the biggest eBook retailer. Amazon was courting consumers by pricing eBooks at $9.99 - that's below what it cost to buy the books from the publishers. Publishers feared this was making consumers think eBooks should be cheap.

Apple knew about the discontent, so it lured publishers with the agency model, which lets publishers set the sale price. The Justice Department charged that Apple knew this would drive up the cost to consumers.

Michael Bobelian an author, attorney, and columnist at Forbes, says that's why the Justice Department had to go after Apple.

MICHAEL BOBELIAN: That's sort of an automatic sign that there's something wrong from an antitrust perspective when you have competitors meeting together, working together to raise prices.

SYDELL: A federal judge found Apple guilty of price fixing. In a statement, Apple said it will appeal.

Chris Compton, an antitrust attorney in Silicon Valley, says if the verdict stands, Apple is likely to face more scrutiny from the Justice Department as it makes new deals with movie, and TV studios and record labels.

CHRIS COMPTON: Having gone through this process, there is no question that they'll be looking carefully at Apple.

SYDELL: Compton believes the DOJ is likely to get some help scrutinizing the internal workings of Apple. Apple is likely to face civil cases, seeking damages for consumers; those lawyers will seek more information.

COMPTON: That discovery may take them into other areas. They may see emails or they may see market studies and what not.

SYDELL: All of that information could draw more scrutiny to Apple. The Justice Department has called this week's ruling a victory for millions of consumers. But, the DOJ is facing criticism for the case from some surprising quarters.

MARK COKER: If all of the large New York publishers collapsed tomorrow, it would be a massive boon to my business.

SYDELL: Mark Coker is the founder of Smashwords, a site that helps authors publish and distribute their own books through sites like Amazon, iTunes, Barnes and Nobel. He thinks Amazon's low pricing has really hurt traditional publishers as they learn to market digital books.

COKER: The authors of the future should have the choice to work with either a traditional publisher or self publish. I think that leads to a, a more dynamic, more diverse, higher quality book culture than if all the major publishers were eventually to just whither away and collapse.

Coker notes the demise of traditional publishers might be good for Amazon's own self publishing business. And that's one detail that has some observers wondering why the DOJ isn't looking into Amazon.

SYDELL: Antitrust attorney Chris Compton thinks that the Justice Department may have learned a lot more about eBook publishing in the process of its case against Apple and it may start to scrutinize the dominant player - Amazon.

Laura Sydell, NPR News.

Copyright © 2013 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.