Apple finds itself in a legal pickle
U.S. District Judge Denise Cole has found Apple guilty of colluding with five major U.S. publishers to drive up prices of electronic books (e-books), saying that the company played a "central role" in the conspiracy. Damages will be determined at a new hearing in which Apple could end up owing millions of dollars, though in the meantime, the Cupertino company maintains its innocence and plans to appeal the ruling.
The Justice Department took issue with the way Apple maneuvered into the e-book business. As explained by The Wall Street Journal , Apple preyed on publishers' dissatisfaction with Amazon's e-book discounts to give itself an in. Apple then proposed that publishers would be able to set their own prices, which in turn led to Amazon being unable to price most e-book best sellers at $9.99, leading to higher prices all around.
"Understanding that no one publisher could risk acting alone in an attempt to take pricing power away from Amazon, Apple created a mechanism and environment that enabled them to act together in a matter of weeks to eliminate all retail price competition for their e-books," Cole wrote in her decision.
Apple disagrees with Cole's decision, saying that the introduction of its iBookstore led to customers having "more choice" and that it "inject[ed] much needed innovation and competition into the market, breaking Amazon's monopolistic grip on the publishing industry."