Apple found guilty of orchestrating e-book pricing conspiracy

iPad 3 advert (flipping e-book page)

A court Wednesday found Apple had conspired to increase the prices of e-books, setting a separate trial for damages.

In a 159-page decision, U.S. District Court Judge Denise Cote wrote that “Apple played a central role” in the conspiracy, which the company flatly denied.

The government has charged Apple with working with five publishers together to undercut Amazon’s control of the market. In response to the verdict, some watchers opined that the government playing so openly into the hand of a monopolist like Amazon may reduce competition…

Reuters and Bloomberg have this quote from Cote’s ruling:

The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing the conspiracy.

She also wrote that “Apple seized the moment and brilliantly played its hand”.

As a result of the collusion, some e-book prices rose to $12.99 or $14.99 from the $9.99 charged by Amazon, the court said. Apple was the only remaining defendant in the case, after publishers settled with the U.S. government and various states.

A trial for damages will follow soon. Apple will of course appeal the ruling. “We will continue to fight against these false accusations,” Apple told AllThingsD.

Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations.

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.

We’ve done nothing wrong and we will appeal the judge’s decision.

In a statement, the U.S. Department of Justice called the ruling “a victory” for millions of consumers who choose to read books electronically.

Through today’s court decision and previous settlements with five major publishers, consumers are again benefitting from retail price competition and paying less for their e-books.

Apple executives hoped to ensure that its e-book business would be free from retail price competition, causing consumers throughout the country to pay higher prices for many e-books

Orin Snyder, Apple’s lawyer Orin Snyder said in a written statement in response to Judge Cote’s May statement that she believed the government would prove its case.:

We strongly disagree with the court’s preliminary statements about the case.

The court made clear that this was not a final ruling and that the evidence at trial will determine the verdict.

This is what a trial is for.

At the heart of the case was the launch of Apple’s iPad in 2010 and the iPad maker’s use of the so-called agency pricing model, which afforded publishers more flexibility in terms of pricing while Apple held on to its customary 30 percent cut.

“Without Apple’s orchestration of this conspiracy, it would not have succeed as it did in the spring of 2010,” Cote wrote.

Throughout the bench trial, which concluded June 20, Apple argued its innocence.

Apple CEO Tim Cook, Internet services guru Eddy Cue, and even a memo from the late Steve Jobs were part of the company’s testimony. In one statement, Jobs wrote this to HarperCollins’s James Murdoch:

Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.

Here’s Jobs touching on the subject in a brief chat with Walt Mossberg.

Tim Cook called litigation a “bizarre” case, arguing:

We’ve done nothing wrong there, and so we’re taking a very principled position. We’re not going to sign something that says we did something we didn’t do. So we’re going to fight.

Just days before the trial’s conclusion, Apple’s high-priced legal team virtually dismantled a witness from Google, making a direct eye-witness to the conspiracy admit the evidence was instead second- or third-hand.

As is customary, Apple had no immediate response to its court loss.