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Apple reaches ebook settlement with 23 million consumers worth $400 million after a price-raising scandal
U.S. District Judge Denise Cote noted that the settlement was arrived at ‘on the eve of trial.’ She said she could see why the plaintiffs went with the settlement, considering Apple’s delay tactics. Had they refused the settlement and handed the case back to Cote, only $20m would be owed to lawyers and $50m to consumers, according to Reuters. An Apple spokesperson did not respond to a request for comment.
Of course, if Apple won the repeat-case (if it were to happen), then it would owe nothing.
The case involved price changes made by Apple from 2012 which did not just affect its iBooks service, as publishers raised prices of their books on Amazon’s Kindle service as well. This undermined Kindle’s pricing strategy of selling discounted ebooks, as publishers worried this gave it too much market control. The higher price benefits Apple, who end up getting more money for the same percentage of the profit. The cost to consumers as said to have been in the hundreds of millions of dollars in total.
Apple was eventually accused by the U.S. Department of Justice of meeting with book publishers to discuss the discounting of their ebooks by Amazon. The five publishers and Apple then imposed a $12.99 or $14.99 price point, gaining them hundreds of millions of dollars in profit. This is a breach of antitrust laws, formed to protect the consumer from adverse pricing practices and cartels.
The publishers involved were HarperCollins, Hachette, Simon & Schuster, Macmillan and Penguin. During the initial trial, their instructions to ‘double-delete’ email were discovered – showing they knew what they were doing was wrong. However, they have since paid $166m between them on the matter, which went to ebook purchasers.