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SCOTUS Kills Apple's E-Book Challenge by Denying Cert.

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By Jonathan R. Tung, Esq. on March 11, 2016 11:58 AM

It looks like at least one of Apple's legal issues is finally put to rest. The Supreme Court of the United States declined this last Monday to hear Apple's challenge to the Second Circuit's ruling that it and four other companies tacitly conspired to drive up e-book prices in violation of federal anti-trust laws -- specifically the Sherman Antitrust Act.

The Supreme Court's decision not to disturb the lower circuit's ruling (or refuse to review the case) means that Apple will have to pay approximately $400 million as part of the settlement put in place earlier.

Amazon's Pricing Mechanism

Up till about 2010, Amazon had tried to cap the price of its ebook titles to the very attractive number of $9.99. This price was actually lower (realizing a loss for Amazon) than what Amazon paid publishers to buy the titles. The publishers were upset because they were worried about super cheap e-books would do to their hardcover titles and also worried about market perception of what titles ought to cost.

When Apple later entered the ebook marketplace with its iPad and iBookstore, the courts found that it had colluded with the major publishers to help give them power to set prices. An excellent explanation of the economics of the pricing scheme was written by Adam c. Engst for Tidbits.

Will Amazon Face the Music?

Judge Cote's original district court opinion (all 160 pages of it) is staggering. The opinion has seen three different courts (if you count it being rejected by SCOTUS), and yet Amazon's "predatory pricing" practice isn't really the focus. Since those facts were not alleged in the original complaint, a whole new suit would have to be brought in order to settle if Amazon too should face legal consequences for giving us all such wonderfully low prices on ebooks.

But for now, Apple had to sit in the hot seat. According to a lawyer representing ebook buyers, "Apple was caught red handed" manipulating prices. Who knows if Amazon will face similar accusations. That's unlikely, however, as the facts are substantially different.

Are You a Winner?

More like, "Were you taken for a ride by Apple?" The settlement terms hold that damages will be paid out to persons who were injured by the now judicially noticed scheme to float e-book prices. This means that you bought an e-book from HarperCollins, Macmillan, Penguin, Hachette, or Simon & Schuster between April 10, 2010 and May 21, 2012 you most likely are entitled to remuneration.

Don't plan on buying anything more than a pizza with your funds, though. If you bought NY Times bestsellers, you'll get about $6.00 per book, and about a $1.50 for other titles. So unless you're reading at a frenzied rate, the sum will be small.

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