Court: Apple Gets Five Years Of Supervision Over E-Books

Apple's (NASDAQ:AAPL) e-books trial reached its real conclusion on Friday (Sept. 6), when U.S. District Judge Denise Cote laid out the restrictions that Apple now faces for selling digital books on its iTunes store. The big one: Apple's bookselling contracts for the next five years can't include terms that limit pricing.

What the judge didn't do was include restrictions on other things Apple can do when selling digital goods on iTunes, which the U.S. Department of Justice had asked the judge for. However, the judge said she will appoint a compliance monitor who will assess Apple's policies, procedures and training for the next two years to make sure Apple isn't violating antitrust law.

Apple and five publishing conglomerates—Penguin, Hachette, Macmillan, Simon & Schuster and HarperCollins—were accused by the Justice Department of conspiring to raise e-book prices. By the time the case came to trial, the five publishers had all settled, leaving Apple to make the case that while all the others may have been conspirators, it wasn't.

There are two interesting ironies about the final results here. One is that the court's restrictions only actually limit Apple's pricing choices in one direction: Apple can't enter agreements with publishers that prevent it from raising prices. Apple can still apparently match e-book prices with Amazon (NASDAQ:AMZN) all the way down to the bottom.

That's not happy news for the publishers who admitted they signed onto Apple's "agency" pricing in hopes of pushing e-book prices higher than the $10 ceiling Amazon was using to boost e-book demand, but at least it doesn't limit Apple's ability to compete as a retailer.

The other irony: Despite the fact that Apple's ability to control its pricing has been handicapped all through the trial, Amazon hasn't hesitated to raise its own prices. That $10 ceiling essentially disappeared as soon as the publishers started benefiting from competition to Amazon—and Amazon started benefiting, too.

Apple said it will appeal the judge's order.

For more:

- See this Associated Press story
- See this VentureBeat story

Related stories:

Publishers Say Apple's Price-Fixing Punishment Hurts Them More Than Apple
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Judge's Apple Price-Fixing Ruling Likely To Impact All Retail