Apple co-founder Steve Jobs’ words came back to haunt the electronics company today. Its attempt to have a judge dismiss charges of e-book price-fixing were refused, in part because of things Jobs said during his time with Apple.
Apple, along with the owners of MacMillan and Penguin, still face charges from the Justice Dept. that they conspired to institute so called “agency pricing,” in which the publisher — rather than the seller — determines the final retail price of an e-book.
Agency pricing began when Apple got into the e-book business following the launch of the iPad. The idea was to make prices even across the board between Apple, Amazon, Barnes & Noble and other sellers, which of course just meant higher prices for consumers.
In her ruling today, the judge Jobs’ own statement to publishers that, under agency pricing, “the customer pays a little more, but that’s what you want anyway.”
Apple and the publishers have been arguing that agency pricing wasn’t a deliberate attempt to hurt Amazon’s market share but was about improving efficiencies of distribution.
The judge disagreed, writing that, “It has everything to do with coordinating a horizontal agreement among publishers to raise prices, and eliminating horizontal price competition among Apple’s competitors at the retail level…
“With the fortuitous entry of Apple into the market for e-books, and the decision by Apple to join the price-fixing conspiracy, that horizontal conspiracy became a potent weapon for engineering a fundamental shift in an entire industry.”
The DOJ has already agreed to settlements with three publishers — HarperCollins, Simon & Schuster, and Hachette. In spite of the dismissal request, Apple has stated it is willing to stand trial on this issue.