Judge in Apple Case Cites Publishers’ “Frequently Coordinated” Efforts to Upend Amazon’s $9.99 Ebook Pricing

In her ruling against Apple today, Judge Denise Cote cites witness testimony as well as documentary evidence including emails and other records of communication considered during the three-week price-fixing trial. She says circumstantial evidence also “compellingly” supports the idea that Apple gave publishers the means to pull off  a pricing conspiracy they couldn’t accomplish on their own.

Here’s the sequence of events as detailed in Cote’s decision:

Late 2008-through 2009: Major publishers who would later be named as defendants along with Apple tried “frequently coordinated their efforts” to pressure Amazon to raise its $9.99 price point for digital books.

“They believed that this price point in the nascent but swiftly growing e-book market would, if left unchallenged, unalterably affect the consumer perception of the value of the book and severely undermine their more profitable physical book business.”

The publishers’ efforts were futile.

December, 2009: Apple met individually with the publishers, who each expressed
opposition to the $9.99 price point.

“Volunteering that it was willing to price e-books as high as $14.99 in an e-bookstore, Apple won their rapt attention. Apple then presented a strategy—the agency Agreements –that would allow the Publishers to take control of and raise e-book retail  prices in a matter of weeks.”

January 2010: Over a three-day period, each of the publishers reached an agency pricing agreement with the Apple, which led to similar deals with Amazon and other e-tailers in the following weeks.

April 2010: The iPad launched and the iBookstore opened.

“Each of the Publisher Defendants used their new pricing authority to raise the prices of their e-books overnight and substantially.”

In summing up this evidence, Cote also noted that the agency model protected Apple from price competition, that the publishers all acted against their short-term financial interests in adopting a model that deprived them of expected revenue, and that the publishers “acted in identical ways even though each was also afraid of retaliation by Amazon.”

Apple plans to appeal the decision.

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