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Government The Courts United States News Apple Technology

Supreme Court Rejects Apple eBooks Price-Fixing Appeal (reuters.com) 84

chasm22 writes: The Supreme Court on Monday declined to hear Apple Inc's challenge to an appellate court decision that it conspired with five publishers to increase e-book prices, meaning it will have to pay $450 million as part of a settlement. The court's decision not to hear the case leaves in place a June 2015 ruling by the New York-based 2nd U.S. Circuit Court of Appeals that found Apple liable for engaging in a conspiracy that violated federal antitrust laws. Apple, in asking the high court to hear the case, said the June appeals court decision that the company had conspired with the publishers contradicted Supreme Court precedent and would "chill innovation and risk-taking." The 2nd Circuit's ruling followed a 2013 decision by U.S. District Judge Denise Cote that Apple played a "central role" in a conspiracy with publishers to raise e-book prices. The Justice Department said the scheme caused some e-book prices to rise to $12.99 or $14.99 from the $9.99 price previously charged by market leader Amazon.com Inc. "Apple liability for knowingly conspiring with book publishers to raise the prices of e-books is settled once and for all," said Bill Baer, head of the U.S. Justice Department's antitrust division.
Perhaps Congress should change the price fixing laws... What about Amazon? Just trying to anticipate the response from Apple.
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Supreme Court Rejects Apple eBooks Price-Fixing Appeal

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  • by rsilvergun ( 571051 ) on Monday March 07, 2016 @08:04PM (#51656141)
    I'm wondering if Scalia's death caused them to lose. Apple was probably counting on his vote when they first agreed to pursue the litigation instead of settling for $70 mil. It's amazing how much of affect SCOTUS has. Probably too much...
    • by Etherwalk ( 681268 ) on Monday March 07, 2016 @08:10PM (#51656165)

      I'm wondering if Scalia's death caused them to lose. Apple was probably counting on his vote when they first agreed to pursue the litigation instead of settling for $70 mil. It's amazing how much of affect SCOTUS has. Probably too much...

      No. It take four justices to agree to hear a case, which means that if Justice's Scalia's death made a difference in terms of whether they would hear the case, then they would have only had four justices on their side and would not have been able to win at the Supreme Court anyway.

      Realistically, the Supreme Court very rarely takes cases to begin with. Big name parties like Apple makes them more likely to be heard, because the justices may be more interested and they will hire good experts to write the briefs and get amici on-board and the like, but it is still very unlikely. But complicated cases like in-depth patent or anti-trust cases are usually bad cases for making new case law, and they take up a lot of time, so the Supreme Court usually doesn't hear them anyway.

      • Justices never change their minds? then why do they even present the case. Just let them decide.

        • Justices never change their minds? then why do they even present the case. Just let them decide.

          They do. Rarely. But let us pretend for a moment that we are not programmers who look for the exception to every rule.

          It is a rare enough occurrence that when the Supreme Court votes in their first round, there is no discussion--they just go around the table saying how they are going to come out, IIRC in order of seniority, and the Chief Justice assigns the opinions. There can be some changed minds during opinion drafting.

      • I don't think it is a given if a justice agrees to hear a case, he/she will vote on the side that is bringing the case to SCOTUS.

        • It's not a given, but there is a reasonably high liklihood that if someone would vote on the side of the petitioner *and* thinks a majority of the court would also side with petitioner, then they would vote to approve the petition--so Scalia's absence is very unlikely to have made the difference. I'll grant it's not an absolute, though--sometimes they would side with petitioner if the case came before them, but don't think the case is important enough to spend their time on.

    • No one will ever know "how the voting went." SCOTUS doesn't elaborate on its certiorari decisions. All we know is that they couldn't scrape together four judges who were interested enough to want to hear it.

      Taking a wild-assed guess, the reason for this is probably that it was basically a bog-standard antitrust case, with no new and interesting issues for the court to resolve, and no obvious mistakes made by a lower court for SCOTUS to resolve. (Apple and its advocates threw up a lot of fuss, but every anti

  • by Etherwalk ( 681268 ) on Monday March 07, 2016 @08:05PM (#51656151)

    Perhaps Congress should change the price fixing laws...

    There aren't really "price-fixing laws." The Sherman Anti-Trust act prohibits "restraint of trade," which is written by Congress to allow courts to develop antitrust law however they want. Technically every contract made could be "restraint of trade," but the courts generally only apply it to certain pretty explicit anti-competitive behavior, such as explicit price-fixing with competitors. You are still allowed to do other things which discourage competition, like integrating vertically within an industry.

  • by dczyz ( 239366 ) on Monday March 07, 2016 @08:06PM (#51656153)

    That would be a nice change. Its the biggest reason why I dont really read many ebooks. I can get the paperback version much - much cheaper then the ebook version.

    • I know where you can get e-books for $0.
    • by Anonymous Coward

      Agreed. Once you purchase something with your hard-earned money it should be "yours". You determine if you want to keep it forever or bequeath it to another. The e-books are higher priced and you have no control of it beyond the initial purchase. There is a reason that my Kindle (and my Ipad) have very few books on them...

      • Agreed. Once you purchase something with your hard-earned money it should be "yours". You determine if you want to keep it forever or bequeath it to another.

        Including slaves? (that was a joke BTW...)

      • by KGIII ( 973947 )

        You're not purchasing it. You're licensing it. Hopefully you can find someone to sell it to you (not license it to you) at a price you and they can agree on. Note the difference in verbiage. That's essential and important to understand.

        When you "buy" a track at iTunes then you're not buying it, you're licensing it. Your OS is probably licensed and not purchased. Even in Linux that is somewhat true. I do not own the code on my computer. If I did own it then I could close it up.

        Now, please don't hate me for b

        • Back on dead-tree, you owned the medium but licensed the content

          No, you're wrong.

          The way it works is that copies (i.e. tangible media in which a work can be fixed, such as paperbacks, hard drives, or flash memory) are ordinary personal property. Creative works (i.e. intangible stories or pictures, separate from the media that contain them) are not any kind of property at all. And in order to create an approximation of what it would be like if creative works were even capable of being property, we may grant copyrights pertaining to those works, which limit what people

        • You're not purchasing it. You're licensing it. Hopefully you can find someone to sell it to you (not license it to you) at a price you and they can agree on. Note the difference in verbiage. That's essential and important to understand.

          The US Supreme Court already heard a case where a publisher made that same claim, with the publisher even putting a note in the front of their book saying that it was licensed and not sold. The US Supreme court ruled that that claim was invalid, and the the book *was* sold

    • The funny thing is there is some price differentiation with eBooks, I'm not sure why. I think for the most part the price fixing thing concerned some top titles.

      I'm surprised nobody's noticed that movies seem to cost exactly the same price from Google, Amazon, and Vudu. (Presumably Apple too, but I don't ever check Apple.)

    • I don't understand how Apple fixed prices. It's not like two different book makers sell the same book. Apple just let the book owner set the price. Amazon dictates prices. Just because they sell for lower now is no indication they will sell lower later. One can see how they used their marketplace power to cow some publishers into selling at a lower price. This can be used for good or evil. It's not the same as competition which is what the apple model used.

      • Re:Um no (Score:5, Informative)

        by bws111 ( 1216812 ) on Monday March 07, 2016 @10:43PM (#51656817)

        Amazon does not dictate price. Amazons buys books from the publisher and resells them for whatever price Amazon wants. They can buy a book for $5 and sell it for $10, or they can buy it or $5 and sell it for $2. And all of their competitors can sell books for whatever price the competitors want. The pressure Amazon can exert is on the publishers, to get the best price. But the competitors are still free to set their own prices, even if it may be painful to compete with Amazon.

        Of course, this model is intolerable to Apple. There is no shiny to be sold with an ebook. A book purchased from Amazon is indistinguishable from one purchased from Apple! The only way for Apple to compete would be on price! The horror!

        So, what Apple did was go to the publishers and get them to change to the agency model. No longer would the publishers sell to the retailers with the retailers setting their own prices. The PUBLISHER would set the price to the CONSUMER, and the retailer would get a cut of that. Apple would get its 30%. So far, no real problem. Here is where the problem occurs - Apple made deals with the publishers that NOBODY could SELL a book for less than Apples price. Even if a competitor was willing to take a smaller cut the price to the consumer could not fall, the publisher just kept more. Prices were, wait for it, fixed.

        • That's called a most favored nation contract and I thought it was pretty typical. The USG demands it in several arenas.

          • Re:Um no (Score:5, Insightful)

            by bws111 ( 1216812 ) on Monday March 07, 2016 @11:24PM (#51657025)

            It is pretty typical to have a MFN clause for things you BUY. This tends to lower prices. Apple arranged for MFN on things it and its competitors SOLD. This raises prices because it is IMPOSSIBLE, not merely painful, for anyone to compete on price.

            • I don't understand. In a deal there is always a buyer and a seller.

              • by bws111 ( 1216812 )

                In a normal MFN deal between Apple and a publisher, the only two parties affected by the deal are Apple and the publisher. In this scheme, Apples MFN contract controlled the price that a consumer had to pay Amazon to buy a book, even though neither one of them was party to the contract.

                • All MFN contracts affect everyone who trades. That's what's great/awful about MFN contracts.

                  Example: the company that made the lead additive for gas added a MFN clause to all of it's contracts--looks like it's screwing itself, right? But no, then when someone tries to negotiate a lower price they say, "we would be we have all of these MFN contracts out there, you're stuck at the asking price."

                  • by bws111 ( 1216812 )

                    You are still not getting it. In the example you gave, everyone who purchased that additive was able to set their OWN price when selling the gas to their customers. Some retailers may have marked up the price of the additive 30%, some 50%, some 10%. The MFN contracts did not control what the retailers could do. Regardless of whether or not the retailers all paid the same price they could COMPETE with each other on price.

                    The Apple MFN contract did not do that. The Apple MFN contract fixed the price at

        • I agree with your assessment that Apple engaged in price-fixing (which, admittedly, contradicts some of my earlier stances on this subject, including ones I've posted here), but I wanted to touch on one point you glossed over.

          The pressure Amazon can exert is on the publishers, to get the best price.

          Antitrust laws are designed to cover and protect both the consumer and the producer. When there's a single seller of a good, we call it a monopoly, and we all have a quick reaction against that situation, since it immediately affects our ability to purchase goods at fair prices. When t

          • by bws111 ( 1216812 )

            Read the court documents. While Amazon may have WANTED the publishers to sell to them at a lower price, the publishers REFUSED to do so. The beef the publishers had with Amazon was that Amazon's ebook prices made it harder for the publishers to sell HARDCOVER books. Well, so what? What 'right' do the publishers have to sell a desired quantity of hardcover books? Amazon did not get people to switch to ebooks by doing something illegal or shady, they did it by offering a better product. Nothing wrong wi

            • While Amazon may have WANTED the publishers to sell to them at a lower price, the publishers REFUSED to do so.

              Once they began colluding with Apple, yes. I was speaking of prior to that.

              And I do agree with you that antitrust laws have nothing to do with protecting a business model. That said, just as Microsoft got slapped for using its dominance in the OS selling business to push its browser, so too do I believe that Amazon should have been slapped for using its dominance in the ebook buying business to push its publishing business that was in direct competition with the publishers it was buying from. It was using i

              • by bws111 ( 1216812 )

                Again I say, READ THE DOCUMENTS. The only reason the publishers met with Apple at all was because they hated Amazon's $9.99 price for ebooks, because it was a threat to their hardcover sales. That 'threat' is called competition. Far from LOWERING the price to Amazon, they RAISED the price above $9.99 in an effort to force Amazon to raise prices, which they did not do. This was BEFORE they ever talked to Apple.

                Microsoft did NOT get in trouble for using its dominance in OS to push its browser. It got in

    • No, they won't. Really, this case isn't going to change much of anything; it's been so long since the original circuit decision that the clock ran out on the cooling-off period and publishers were allowed to renegotiate their contracts. After some long and arduous negotiations (perhaps you remember hearing about the big Amazon/Hachette feud a year or so back?) they reimposed agency pricing, legally this time.

      Don't expect Big Pub to lower its e-book prices any, either. They're still too intent on trying to s

  • by Anonymous Coward

    Any how much of this will trickle down to the people whom bought books from Apple while prices were being fixed?

    Is it too much to dream that consumers who are victims of corporate mis-understandings of the law to be refunded for what should not have been charged for every purchase? In this universe, on this planet, at this time... sadly yes it is to much to ask for all ill gotten gains to be un-gained.

    • Given that the publisher settlement was a bit less than half as big as Apple's, expect to get back a little over twice the amount you got back from the publisher settlement. It depends how many e-books you bought. I got like $15 or so last time around, I think.

  • It's just like *Happily ever after*

  • Apple makes so much money yet has such an ugly history of mistreating the people with whom they do business in a variety of ways large and small: Mistreatment of workers who build their products [nytimes.com] (continuing in 2015 only changing due to activist and journalists compelling them to [alternet.org]), copyright infringement [digitalcitizen.info], ebooks that won't work on jailbroken iThings [arstechnica.com], turning a blind eye to environmental degradation [dw-world.de], making it needlessly hard for owners to take apart their products, teaching store staff twisted psychological manipulation [gizmodo.com], avoiding US corporate tax [nytimes.com] (which is already quite low), and more [stallman.org]. Now we can add conspiring to fix prices. Hardly surprising given how unethical, illegal, and pernicious Apple has been [stallman.org].

  • Apple did this for a reason. It's not the reason people are claiming.

    The problem is that the text to speech that's disabled by the DRM on eBooks means that blind people can't read eBooks. Or of they get an audio book for an eBook, it always comes a lot later, and at a much higher price, if at all.

    There's no reason for this, but in order to get the DRM removed, they kind of need to be able to cut the same kind of deal with the eBook publishers that they cut with the music labels to get the DRM the hell off

    • by bws111 ( 1216812 ) on Monday March 07, 2016 @09:45PM (#51656589)

      Ha ha! Good one! Apple did it so they didn't have to compete on price, and for no other reason.

      • Nonsense. Apple doesn't give a crap about ebooks. They did it because they were worried about the Kindle harming iPad sales. The rest follows from that.

    • BTW... if you don't think that, for example, Amazon, would be perfectly happy to load other people's eBooks on the Kindle, and then make them look not as nicely formatted as the ones you buy from Amazon, if that meant selling a Kindle, and enabling future Amazon sales as a result -- think again.

      And don't think that B&N wouldn't do exactly the same thing to a Nook: it's more important to them that your library be portable *to* a Nook, than it is that they themselves might accident have book sales that w

    • Oh please. Apple started doing this in 2009 - before the iPad was even released. They didn't even know if their ebook reader was going to be a success. They did this for one and only one reason - to ingratiate themselves with the publishers so the publishers would line up to provide iPad versions of their books and magazines so it would have a large library for people to buy when released.. As a side effect, once the publishers were making the "best" version of their publications for the iPad, the fixed
  • by trout007 ( 975317 ) on Monday March 07, 2016 @10:17PM (#51656687)

    Reminds me of the Walter Block joke.

    There are three prisoners in the U.S. They were all in jail for economic crimes of violating monopoly laws. First guy said that he charged higher prices than anyone else and the government then accused him of price gouging and profiteering. Second guy charged lower prices than anyone else and they accused him of predatory and cutthroat pricing. And the third guy said that he charged the same prices as everyone else and they accused him of collusion and price fixing.

    • The only one I know of that people get in trouble for is the third one and the standard is that there has to be evidence that there was communication along the lines of, "hey, let's jack up the price of A to $B."

      In this case Apple had written communication about the deals it was cutting.

    • by Anonymous Coward

      Copyright prevents the formation of a free market. The holder has every legal right to set the price to whatever they want. It's difficult to introduce market effects to an industry where products are both unique, but easily reproduceable.

  • The fact is, Apple broke up Amazon's monopoly in that market. The charge was bullshit from the get-go.

    -jcr

    • Prior to Apple getting involved, I was buying ebooks from several sources - and had never bought one from Amazon. Today, its Amazon or Apple - and both are more expensive than the old services.

      So no, Apple didn't break Amazons monopoly, they bullied their way into the market and made it so everyone else had to get more expensive - that killed off a lot of smaller providers which were doing fine alongside Amazon.

      Oh, and with Amazon I can read my ebooks on Windows, Linux, OSX, iOS, Android, Windows Phone and

    • Now let's be fair. Amazon earned its monopoly (or near-monopoly) legitimately. They didn't muscle anyone else out of the market; they built an amazing product—the proverbial "better mousetrap." No one before or since has managed to make buying and downloading e-books as pushbutton-simple as the Kindle. You push a button, you get an e-book on your device—no fiddling around with sideloading or copying files necessary. That moved e-books from being a super-geek early adopter's toy into something Gr

      • by Anonymous Coward

        Amazon was not earning it's monopoly legitimately though - they were consistently selling ebooks below cost. This case brought Amazon's data to light: the wholesale cost of the books they were selling at $9.99 was typically $12.99. That's predatory pricing meant to knock others out of the market (or make it difficult for newcomers to come in). The most ridiculous part was that the courts cited this $9.99 price as the proper market value for ebooks when determining that the "price fixing" had raised prices a

        • by bws111 ( 1216812 )

          Selling below cost is not predatory pricing. Predatory pricing is setting the price below cost to force others out of business so that you can RAISE prices in the future. Amazon's low prices may indeed keep competitors out of the business NOW, but that is not in any way illegal, it is just competition. Since there is almost no barrier to entry at all in the ebook retailing business, the moment Amazon tries to raise prices competitors will appear. Since they are effectively prevented from significantly

        • by bws111 ( 1216812 )

          If someone is willing to buy a book for $9.99, and someone else is willing to sell it for $9.99, then by definition the market price is $9.99. There is no requirement at all that the seller makes money (or even breaks even) on the deal.

      • Amazon actually sold very few of its books below cost. Even of the $9.99 titles, most were at or slightly above cost. And all the backlist titles were definitely above cost. Amazon representatives testified to that under oath, and the DoJ investigated them and found no wrongdoing. Amazon wasn't losing money to force competitors out of business; its ebook business was "consistently profitable" overall.

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