Apple ran an illegal ebook price cartel

Apple messiah Steve Jobs was guilty of setting up an illegal ebook cartel which raised the prices for his own customers, a court has ruled.

US District judge Denise Cote in Manhattan ruled that the company conspired with five major publishers to raise e-book prices. She said that there was “compelling evidence” that Apple violated federal antitrust law by playing a “central role” in a conspiracy with the publishers to eliminate retail price competition and raise e-book prices.

The move could result in Apple being sued into a coma by angry users who had to pay more because of the company’s anti-trust antics. Apple not only chose to join forces with the publisher defendants to raise e-book prices, but it also equipped them with the means to do so.

Cote said that without Apple’s orchestration of this conspiracy, it would not have succeeded.

The ruling is not surprising. Apple’s co-conspirators had seen the writing on the wall and settled. But Apple believed that it was absolutely right.

Before he died, then CEO Steve Jobs even bragged about it in his biography.

What appears to have sunk Apple’s case were emails from Jobs to News Corp executive James Murdoch which prosecutors said reflected Jobs’ desire to boost prices and “create a real mainstream e-books market at $12.99 and $14.99”.

The decision was not a total surprise as Cote had indicated before the 2-1/2 week non-jury trial began on 3 June that Apple’s defences might fail. Cote also warned Apple that “Steve Jobs said it was ok” is not really a valid defence in the courts.

Bill Baer, head of the Justice Department’s antitrust division, told Reuters the result was a victory for millions of consumers who choose to read books electronically.

Of course, Apple is not giving up and said it will appeal. However, it has backed down in a similar case in the EU, and settled without admitting liability. If the appeal is upheld then it exposes Apple to hundreds of millions of dollars in damages. Not that that will bother Apple much. It has $145 billion in the bank.