Supreme Court Rejects Apple eBooks Price-Fixing Appeal (reuters.com)

chasm22 writes: The Supreme Court on Monday declined to hear Apple Inc's challenge to an appellate court decision that it conspired with five publishers to increase e-book prices, meaning it will have to pay $450 million as part of a settlement. The court's decision not to hear the case leaves in place a June 2015 ruling by the New York-based 2nd U.S. Circuit Court of Appeals that found Apple liable for engaging in a conspiracy that violated federal antitrust laws. Apple, in asking the high court to hear the case, said the June appeals court decision that the company had conspired with the publishers contradicted Supreme Court precedent and would "chill innovation and risk-taking." The 2nd Circuit's ruling followed a 2013 decision by U.S. District Judge Denise Cote that Apple played a "central role" in a conspiracy with publishers to raise e-book prices. The Justice Department said the scheme caused some e-book prices to rise to $12.99 or $14.99 from the $9.99 price previously charged by market leader Amazon.com Inc. "Apple liability for knowingly conspiring with book publishers to raise the prices of e-books is settled once and for all," said Bill Baer, head of the U.S. Justice Department's antitrust division.
Perhaps Congress should change the price fixing laws... What about Amazon? Just trying to anticipate the response from Apple.

Comments

Anyone know how the voting went?

[rsilvergun]

I'm wondering if Scalia's death caused them to lose. Apple was probably counting on his vote when they first agreed to pursue the litigation instead of settling for $70 mil. It's amazing how much of affect SCOTUS has. Probably too much...

Re:Anyone know how the voting went?

[Etherwalk]

I'm wondering if Scalia's death caused them to lose. Apple was probably counting on his vote when they first agreed to pursue the litigation instead of settling for $70 mil. It's amazing how much of affect SCOTUS has. Probably too much...

No. It take four justices to agree to hear a case, which means that if Justice's Scalia's death made a difference in terms of whether they would hear the case, then they would have only had four justices on their side and would not have been able to win at the Supreme Court anyway.

Realistically, the Supreme Court very rarely takes cases to begin with. Big name parties like Apple makes them more likely to be heard, because the justices may be more interested and they will hire good experts to write the briefs and get amici on-board and the like, but it is still very unlikely. But complicated cases like in-depth patent or anti-trust cases are usually bad cases for making new case law, and they take up a lot of time, so the Supreme Court usually doesn't hear them anyway.

Re:Anyone know how the voting went?

[Etherwalk]

Justices never change their minds? then why do they even present the case. Just let them decide.

They do. Rarely. But let us pretend for a moment that we are not programmers who look for the exception to every rule.

It is a rare enough occurrence that when the Supreme Court votes in their first round, there is no discussion--they just go around the table saying how they are going to come out, IIRC in order of seniority, and the Chief Justice assigns the opinions. There can be some changed minds during opinion drafting.

Re:Anyone know how the voting went?

[Robotech_Master]

No one will ever know "how the voting went." SCOTUS doesn't elaborate on its certiorari decisions. All we know is that they couldn't scrape together four judges who were interested enough to want to hear it.

Taking a wild-assed guess, the reason for this is probably that it was basically a bog-standard antitrust case, with no new and interesting issues for the court to resolve, and no obvious mistakes made by a lower court for SCOTUS to resolve. (Apple and its advocates threw up a lot of fuss, but every antitrust defendant thinks they're a special case—and it usually turns out that they aren't.) The Court has better uses for its time than rehashing decisions the lower courts got right.

What price-fixing laws?

[Etherwalk]

Perhaps Congress should change the price fixing laws...

There aren't really "price-fixing laws." The Sherman Anti-Trust act prohibits "restraint of trade," which is written by Congress to allow courts to develop antitrust law however they want. Technically every contract made could be "restraint of trade," but the courts generally only apply it to certain pretty explicit anti-competitive behavior, such as explicit price-fixing with competitors. You are still allowed to do other things which discourage competition, like integrating vertically within an industry.

Maybe now ebooks will be cheaper then paper?

[dczyz]

That would be a nice change. Its the biggest reason why I dont really read many ebooks. I can get the paperback version much - much cheaper then the ebook version.

Re:Maybe now ebooks will be cheaper then paper?

[110010001000]

I know where you can get e-books for $0.

Re:Maybe now ebooks will be cheaper then paper?

[squiggleslash]

The funny thing is there is some price differentiation with eBooks, I'm not sure why. I think for the most part the price fixing thing concerned some top titles.

I'm surprised nobody's noticed that movies seem to cost exactly the same price from Google, Amazon, and Vudu. (Presumably Apple too, but I don't ever check Apple.)

Re:Maybe now ebooks will be cheaper then paper?

[KGIII]

You're not purchasing it. You're licensing it. Hopefully you can find someone to sell it to you (not license it to you) at a price you and they can agree on. Note the difference in verbiage. That's essential and important to understand.

When you "buy" a track at iTunes then you're not buying it, you're licensing it. Your OS is probably licensed and not purchased. Even in Linux that is somewhat true. I do not own the code on my computer. If I did own it then I could close it up.

Now, please don't hate me for bringing you this news. I am not the person in charge. I am not the boss. That's just how it works and I would like to see it done differently, at least to some extent.

You don't buy a book. Even before, you didn't buy the contents of the book. You paid for the book. You never had ownership of the content. You had a license to use the content. You were free to trade or sell the contents. I suspect that one could transfer ownership of the device the e-books are loaded onto and win that battle in court. You can, almost certainly, loan it - irrespective of the EULA terminology.

But, even with a book, you've never owned it. If you did own it (it'd be a work-for-hire) then you'd be able to make as many copies of it as you want AND sell those copies. You were, even back in the day, licensing the content. Back on dead-tree, you owned the medium but licensed the content and I'm going to guess (I don't think it has been tried) that e-book readers have the same rights. In other words, you can probably transfer ownership of the device - including loaning it. If they change their username and whatnot, that's not really the same device.

Wow, that's clear as mud. I hope you can parse it better than I can write it. However, the important thing to realize is that you're licensing and not buying. You can make of that what you will but those are factual statements and are upheld by the highest courts in the land.

Again - I'm not saying that I agree with this situation, it's just that that's how the situation is. Most things are like a pendulum. At some point, it swings back. I have no idea how much more trouble they'll add on top of the current regulations/system before that pendulum swings back.

Re:Maybe now ebooks will be cheaper then paper?

[cpt kangarooski]

Back on dead-tree, you owned the medium but licensed the content

No, you're wrong.

The way it works is that copies (i.e. tangible media in which a work can be fixed, such as paperbacks, hard drives, or flash memory) are ordinary personal property. Creative works (i.e. intangible stories or pictures, separate from the media that contain them) are not any kind of property at all. And in order to create an approximation of what it would be like if creative works were even capable of being property, we may grant copyrights pertaining to those works, which limit what people can do with them or copies containing them. However, copyrights are really quite limited themselves, and only prohibit a few (admittedly desirable) things that can be done with works or copies thereof. Mostly they prohibit people from fixing the works into more copies, from distributing copies containing the works, from preparing new works derived from preexisting works, and from publicly performing or displaying certain works.

The other important thing to understand is that a license is fundamentally just a promise not to sue someone. If Alice and Bob are neighbors, Alice doesn't need a license from Bob in order to go into her own home, eat her own food for dinner, and sleep in her own bed. However, Alice needs some form of permission from Bob (or an applicable exception) to go into Bob's home, eat Bob's food, or sleep in Bob's bed.

So the way this all works is, copyright does not apply to the mere ownership of a work or a copy, or to the mere use of a work or a copy. If you legitimately own a copy of a work (i.e. the paperback), the copyright does not prohibit you from owning it just because it has a work in it, and does not prohibit you from using that work, e.g. by reading it. Since the copyright holder can't stop you, he has no ability to grant you a license; he might as well grant you a license to breathe air.

This doesn't mean that you own the copyright. Nor does it mean that you own the work, since no one can own that. It just means that owning a copy automatically brought along the right to read that copy more as a consequence of personal property law and the right of free speech.

If you wanted to make a new copy, however, that would infringe on the copyright, if there is one. Ownership of a copy does not automatically confer the copyright.

The basis for claiming that e-books are licensed really has to do with a way in which they are unlike printed books. Basically, it's that in order to get one, you have to download it, which involves fixing it into some storage medium, and therefore making a new copy, which is something that copyright does prohibit, and therefore requires a license or exception in the law. OTOH, if you went to the bookstore and could buy a pre-written flash card with the book on it, and slot that into your reader, you wouldn't need a license, and it would work fine as a simple sale transaction.

The idea of end-user licensing really didn't start at all until the late 1970's with software, and it has been totally unnecessary there for over 30 years. But it's quite favorable for the developers and publishers, so they keep pushing that model and sadly it's spreading.

Re:Maybe now ebooks will be cheaper then paper?

[Robotech_Master]

No, they won't. Really, this case isn't going to change much of anything; it's been so long since the original circuit decision that the clock ran out on the cooling-off period and publishers were allowed to renegotiate their contracts. After some long and arduous negotiations (perhaps you remember hearing about the big Amazon/Hachette feud a year or so back?) they reimposed agency pricing, legally this time.

Don't expect Big Pub to lower its e-book prices any, either. They're still too intent on trying to strangle the e-book market in its crib, for the sake of protecting the remaining paper bookstores.

Yet another reason not to do business with Apple

[jbn-o]

Apple makes so much money yet has such an ugly history of mistreating the people with whom they do business in a variety of ways large and small: Mistreatment of workers who build their products (continuing in 2015 only changing due to activist and journalists compelling them to), copyright infringement, ebooks that won't work on jailbroken iThings, turning a blind eye to environmental degradation, making it needlessly hard for owners to take apart their products, teaching store staff twisted psychological manipulation, avoiding US corporate tax (which is already quite low), and more. Now we can add conspiring to fix prices. Hardly surprising given how unethical, illegal, and pernicious Apple has been.

Apple did this for a reason.

[tlambert]

Apple did this for a reason. It's not the reason people are claiming.

The problem is that the text to speech that's disabled by the DRM on eBooks means that blind people can't read eBooks. Or of they get an audio book for an eBook, it always comes a lot later, and at a much higher price, if at all.

There's no reason for this, but in order to get the DRM removed, they kind of need to be able to cut the same kind of deal with the eBook publishers that they cut with the music labels to get the DRM the hell off of music.

What this is about is that Amazon, Barnes and Noble, and the now-defunct Borders, make a large amount of money on the margins on the audio books. Mostly on the backs of people who listen to them while they drive or exercise -- or on the backs of the disabled.

Re:Apple did this for a reason.

[bws111]

Ha ha! Good one! Apple did it so they didn't have to compete on price, and for no other reason.

Can we just let the market work?

[trout007]

Reminds me of the Walter Block joke.

There are three prisoners in the U.S. They were all in jail for economic crimes of violating monopoly laws. First guy said that he charged higher prices than anyone else and the government then accused him of price gouging and profiteering. Second guy charged lower prices than anyone else and they accused him of predatory and cutthroat pricing. And the third guy said that he charged the same prices as everyone else and they accused him of collusion and price fixing.

Re:Um no

[bws111]

Amazon does not dictate price. Amazons buys books from the publisher and resells them for whatever price Amazon wants. They can buy a book for $5 and sell it for $10, or they can buy it or $5 and sell it for $2. And all of their competitors can sell books for whatever price the competitors want. The pressure Amazon can exert is on the publishers, to get the best price. But the competitors are still free to set their own prices, even if it may be painful to compete with Amazon.

Of course, this model is intolerable to Apple. There is no shiny to be sold with an ebook. A book purchased from Amazon is indistinguishable from one purchased from Apple! The only way for Apple to compete would be on price! The horror!

So, what Apple did was go to the publishers and get them to change to the agency model. No longer would the publishers sell to the retailers with the retailers setting their own prices. The PUBLISHER would set the price to the CONSUMER, and the retailer would get a cut of that. Apple would get its 30%. So far, no real problem. Here is where the problem occurs - Apple made deals with the publishers that NOBODY could SELL a book for less than Apples price. Even if a competitor was willing to take a smaller cut the price to the consumer could not fall, the publisher just kept more. Prices were, wait for it, fixed.

Re:Um no

[bws111]

It is pretty typical to have a MFN clause for things you BUY. This tends to lower prices. Apple arranged for MFN on things it and its competitors SOLD. This raises prices because it is IMPOSSIBLE, not merely painful, for anyone to compete on price.

Re:CHICKENSHIT MODERATOR ABUSING POWER

[KGIII]

A couple of things...

I do not moderate -- ever. Even though I can, I do not. I have my reasons.
Moderators can moderate however they see fit. You do not get to tell them how to spend their points.
Get an account if you don't want to be rate-limited.
While they both are about Apple, your comment is off-topic, at best. Trolling at worst. You were +1 at the time, that's overrated.

I do notice a trend. You seem to think others are obligated to behave in a manner that suits you - without regards for others feel on the subject. You seem to think you've got both power and insight. You seem to have an ego larger than its worth. You don't get to decide how someone moderates your post. You don't get to pick how often you're allowed to post. You don't get to change the subject to what you want to discuss as opposed to the topic.

In short, you're basically saying, "Don't tell me what to do." While, at the same time, saying, "Do what I say." Whatever makes you think you're entitled to be given consideration? I can assure you, you're not special nor are you in charge. You're a guest on someone else's hardware, act like it.

Well, act like it if you want to be heard. Just get a damned account if you want your posts seen.

Re:Um no

[bws111]

In a normal MFN deal between Apple and a publisher, the only two parties affected by the deal are Apple and the publisher. In this scheme, Apples MFN contract controlled the price that a consumer had to pay Amazon to buy a book, even though neither one of them was party to the contract.

Re:Yet another reason not to do business with Appl

[jbn-o]

Yes, the list of why not to do business with Apple comes from Richard Stallman's personal site stallman.org. There are other articles there too like why not to do business with Amazon, and an updated list of other pointers to political stories.

As to your question: it seems you failed to see that the /. story headline comment already predicted the sycophantic distraction of trying to dilute responsibility with 'what about other manufacturers' excuses. Other manufacturers aren't responsible for Apple's choices, Apple is.

Another failure by the court.

[jcr]

The fact is, Apple broke up Amazon's monopoly in that market. The charge was bullshit from the get-go.

-jcr

Re:Another failure by the court.

[Robotech_Master]

Now let's be fair. Amazon earned its monopoly (or near-monopoly) legitimately. They didn't muscle anyone else out of the market; they built an amazing product—the proverbial "better mousetrap." No one before or since has managed to make buying and downloading e-books as pushbutton-simple as the Kindle. You push a button, you get an e-book on your device—no fiddling around with sideloading or copying files necessary. That moved e-books from being a super-geek early adopter's toy into something Grandma and Grandpa could enjoy.

The late Justice Antonin Scalia wrote the decision in a landmark antitrust case that explains that companies may legally have monopolies if they earned them fair and square, through their own products or infrastructure—and they can't be compelled to share the fruits of their labor with anyone else.

But even then, I didn't buy from Amazon myself. As one of those super-geek early adopters, I was a member of Fictionwise's Buywise discount club that let me get some great deals on books. But agency pricing effectively killed that club dead, and then killed Fictionwise itself dead, and Barnes & Noble was nice enough to let me copy most, not all, of the e-books I'd bought and paid for over to its servers. (Thank goodness for Apprentice Alf!) And they weren't the only smaller competitors to get knocked out of the market, either.

All because Apple wanted to sell e-books for its iPad, but didn't want to have to wrestle in the low-margin dirt with Amazon. I only wish they'd had to suffer a harsher penalty for it in the end.