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Apple Settles E-Book Dispute Pending Appeal on the Merits

By William Peacock, Esq. on July 17, 2014 | Last updated on March 21, 2019

More than a year later, Apple has finally taken a judge's advice and settled its long-running e-books price-fixing antitrust case -- pending further appeals. On the eve of the damages trial, Apple settled with the government for $450 million, $400 million of which goes to consumers. However, the settlement is conditioned on Apple not losing its appeals, appeals which could reduce the settlement to $70 million or, if Apple gets truly lucky, nothing at all.

That last part seems unlikely, however. If you recall, the government had a ton of evidence, including emails from the late Steve Jobs. The evidence was so compelling that the trial judge warned Apple, on the eve of the merits trial, that it would be best to settle.

Recapping the Merits

Apple ran its iBooks store like its App Store: publishers and developers set their own prices, with Apple taking a cut (the agency model). Apple also included a Most Favored Nation clause in its e-book contracts with publishers, ensuring that other outlets couldn't buy books at a lesser rate. At one point, Random House protested -- Apple took their app out of the App Store in retaliation.

Eventually, the agency model was forced upon Amazon and other e-book outlets.

The threads of an Apple conspiracy were backed by statements and emails from Steve Jobs and the heads of the publishing companies, much like the anti-poaching class action lawsuit that is also plaguing Silicon Valley at the moment.

How Big is the Settlement?

Apple's chipping in $450 million, assuming that the appeals don't end in their favor. Take the $400 million earmarked for consumers, add the $166 million in settlements from the five publishers who settled long ago, and you have $566 million that is headed back to customers. A lawyer involved in the case noted that the settlement is "double the amount of their estimated damages," reports Reuters.

Reuters also notes that the full $450 million is barely 1 percent of the $37.04 billion the company made in its last fiscal year. (That'll teach 'em!)

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