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E-book pricing

July 1, 2015

Apple conspired illegally with publishers to fix e-book prices, an appeals court in New York has confirmed. That means consumers may have paid too much for e-books since iBooks was launched in 2010.

Two young people reading tablets, Copyright: Fotolia/Karin & Uwe Annas
Image: Fotolia/Karin & Uwe Annas

When Apple launched its iBookstore in 2010, the e-book market was already dominated by online retail giant Amazon.

According to the 2nd US Circuit Court of Appeals in Manhattan, New York, Apple sought to claim an edge on the market by illegally colluding with publishers to raise the prices of e-books. The three-judge panel ruled 2-1 against Apple on Tuesday (30.06.2015), but upheld a 2013 decision saying that the California-based tech company did not violate any additional antitrust laws.

In a statement responding to the ruling, Apple said, "We are disappointed the court does not recognize the innovation and choice the iBookstore brought for consumers. (…) We know we did nothing wrong back in 2010 and are assessing next steps."

The three judges on the panel arrived at a majority decision, but maintained different opinions on the case. In a majority opinion paper, Judge Debra Ann Livingston wrote that the evidence brought forth in the 2013 case against Apple was "amply supported and well-reasoned" and that her remedy was "lawful and consistent with preventing future anti-competitive harms."

Also writing for the majority, Judge Raymond J. Lohier, Jr. added that some of the conspiring publishing houses may be more culpable than Apple after using the company as "powerful leverage against Amazon and to keep each other in collusive check."

The one dissenting judge, Dennis Jacobs, concluded that Apple was involved in price agreements, but that it was acceptable for the company to stand up to Amazon: "Apple took steps to compete with a monopolist and open the market to more entrants, generating only minor competitive restraints in the process."

The US Justice Department and 33 states and territories originally sued Apple and five publishing houses, though the publishers signed an agreement that restricts retailers' ability to fix e-book prices.

In related settlements with individual states, Apple has agreed to pay $400 million in refunds to consumers, unless it wins a future appeal.

Different book market in Germany

A similar lawsuit could not have occurred in Germany, where book price fixing has been practiced unofficially since the late 19th century and has been a law since 2002. In Germany, the price of a book or e-book is set by its publisher and then applies to every retailer. However, the law does not apply to foreign publishers - a point of contention in the ongoing negotiations for the Transatlantic Trade and Investment Partnership (TTIP).

In the US, one in three books sold is an e-book, while in Germany e-books make up less than 10 percent of the market.

While Amazon sells more than half of all e-books in Germany, Apple sells one in 10 e-books. In the US, Apple maintains a 10-20 percent share of the e-book market. Amazon's share, on the other hand, has dropped from 90 percent in 2010 - when Apple launched its iBookstore - to currently above 60 percent.

Watch "Gutenberg in the Cyberstorm," DW's feature film on value of the book in the digital age.

kbm/rf (AFP/AP)