The Supreme Court smacked down Apple today
Apple's long and controversial ebook case has reached its final chapter -- and it's not the happy ending the company wanted.
The Supreme Court on Monday rejected an appeal filed by Apple to overturn a stinging ruling that it led a broad conspiracy with several major publishers to fix the price of e-books sold through its online bookstore.
The court's decision means Apple now has no choice but to pay out $400 million to consumers and an additional $50 million in legal fees, according to the original settlement in 2014.
You May Also Like
For Apple, the final verdict is more damaging to its reputation as a consumer-friendly brand, not to mention the legacy of its beloved founder Steve Jobs, than to its actual bottom line.
To put the fine in context, the total $450 million payout is equal to about a little more than half the sales Apple generates on average each day, based on the $75.9 billion in revenue it reported in the most recent quarter.
The price-fixing episode dates back to late 2009, just ahead of the original iPad launch. Apple and its founder, recognizing that books would likely be a big selling point of the tablet, began courting what were then the big five book publishers.
In a series of e-mails, later released by the U.S. government, Jobs personally persuaded publishing industry executives to re-think the flat $9.99 e-book pricing previously imposed by Amazon, then (and now) the giant of the e-book world.
"All the major publishers tell us that Amazon’s $9.99 price for new releases is eroding the value perception of their products in customer’s minds, and they do not want this practice to continue for new releases." Jobs wrote in one email to James Murdoch, an executive at News Corp, which owns Harper Collins.
The major publishers, unhappy about the unfavorable terms they'd agreed to with Amazon, signed on to Apple's plan and later used the new competition to pressure Amazon into changing its own pricing structure.
While some in the publishing industry argued this move helped break up Amazon's potential monopoly on the market, the U.S. government accused Apple and the five publishers of colluding to keep prices high.
The publishers -- Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster -- all settled with the Department of Justice before going to trial.
Only Apple, armed with the unwavering belief in its own rightness, argued the case in the courts.
"We are ready to distribute the court-mandated settlement funds to Kindle customers as soon as we’re instructed to move forward," a spokesperson for Amazon said in a statement provided to Mashable.
Reps for Apple did not immediately respond to our request for comment on the Supreme Court decision. However, a company statement after its big loss in court in 2013 says it all.
"When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon's monopolistic grip on the publishing industry," Apple said in a statement at the time. "We've done nothing wrong."
The U.S. courts have once again determined otherwise.
Have something to add to this story? Share it in the comments.
Seth Fiegerman was a Senior Business Reporter at Mashable, where he covered startups, marketing and the latest consumer tech trends. He joined Mashable in August 2012 and is based in New York.Before joining Mashable, Seth covered all things Apple as a reporter at Silicon Alley Insider, the tech section of Business Insider. He has also worked as a staff writer at TheStreet.com and as an editor at Playboy Magazine. His work has appeared in Newsweek, NPR, Kiplinger, Portfolio and The Huffington Post.Seth received his Bachelor of Arts from New York University, where he majored in journalism and philosophy.In his spare time, Seth enjoys bike riding around Brooklyn and writing really bad folk songs.
