Apple Inc. (NASDAQ:AAPL) is seeking to settle the ebook price fixing suit against it with a payment of $450 million, a lower sum than the $840 million sought but still a hefty sum by any measure. If this amount is finalized in the legal processes that follow, consumers will receive approximately $400 million of the total payout, according to Reuters. However, the 2nd U.S. Circuit Court of Appeals in New York has the option to slash this amount to a much lower figure, or even dispense with it altogether, depending on the result of the Cupertino company’s appeal.
Apple Inc. is accused of violating antitrust laws by conspiring with five major publishers to fix prices through introduction of the agency pricing model. This model forces content owners to offer the same prices through Apple’s ebook programs as they do elsewhere, unlike the wholesale model, under which the reseller sets the price regardless of the wholesale price set by the content owner. The result of agency pricing was to push up ebook prices available through other platforms as well as those sold on the iBookstore.
Others, however, have vigorously defended both Amazon and the Department of Justice. Two high profile and extremely successful ebook authors, Joseph Konrath and Barry Eisler, argued in a detailed blog post that the anti-Amazon and anti-DoJ statements are, in their own words, “bullshit.” The pair lays out a number of arguments supporting the idea that “Amazon was using free enterprise to gain market share, something that worries inferior competition” and that pro-Apple statements in the case amounted to nothing more substantial than “newcomer’s innovation forces legacy player to adapt … bad newcomer! Bad!”
The appeals process could see the settlement left at $450 million, cut to $70 million (of which approximately $50 million would find its way into the pockets of ebook consumers), or reduced to zero. Attorney General Eric T. Schneiderman of New York state declared in a press release that the settlement shows “even the biggest, most powerful companies in the world must play by the same rules as everyone else.” The press release also noted that the five major publishers found guilty of colluding with Apple have already paid $166 million to consumers.