$450 Millions Fine for Apple, Here is why?

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apple $450 million fine

Apple $450 Millions Fine

Apple launched its iBooks store way back in 2010, and at the time it was very controversial. The company was looking to dethrone Amazon in the world of ebooks, but the way it went about it led to some serious legal headaches. Now with all its avenues exhausted, Apple is being forced to pay out $450 million to book buyers.According to the Justice Department, Apple violated the Sherman Antitrust Act when it worked with five major publishers to inflate the price consumers paid for books. When Apple launched iBooks, Amazon sold the vast majority of ebooks, and the de facto price was $9.99 for new releases. With Apple’s backing, publishers demanded the right to set prices for their ebooks higher than Amazon would prefer. They also agreed not to sell books cheaper than the iBooks price. apple fine

Publishers

The publishers — HarperCollins, Hachette Book Group, Macmillan, Penguin Group Inc., and Simon & Schuster — teamed up with Apple because they were terrified of Amazon’s low price approach to books. Amazon wanted to gain market share for the Kindle, so it was happy to sell some books at a loss. When the major publishers started pushing back, the price of ebooks went up to $10-15 per book from the traditional $9.99. Amazon wasn’t happy about it, but they didn’t have much recourse. The Kindle store did start noting when a price was set by the publisher, and it was usually higher. apple fine

Apple Appealed

Apple appealed a lower court ruling on the case to the Supreme Court last year, but the court has just denied to hear the case. That leaves intact the lower court ruling that found Apple colluded with publishers and harmed competition. Apple still maintains that it has done nothing wrong, but it has no choice to pay the piper now. $400 million of the judgement will go to ebook buyers who were forced to pay inflated prices. $50 million will go to the law firms that brought the class action. apple fine

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