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Apple CEO Tim Cook has lost the first round of the e-book fight to Amazon boss Jeff Bezos.
A judge ruled yesterday that Apple — the world’s largest tech company — schemed with five big publishers to raise the price of digital books in an attempt to break Amazon’s grip on the market.
In her 160-page decision, Manhattan federal Judge Denise Cote said the government proved that Apple violated antitrust laws, ruling that the company “played a central role in facilitating and executing that conspiracy.”
The Justice Department argued that Apple’s entry into the e-book market effectively forced Amazon into different agreements with publishers, which made it hard for it to continue to offer the lowest price.
Apple, which vowed to appeal the ruling, faces financial damages and a number of restrictions that could impact its business and benefit its biggest rival.
Amazon remains the dominant player in the e-book market amid all the legal turmoil.
The decision yesterday loomed large not only over Silicon Valley but also Sun Valley, Idaho, where Cook and Bezos rubbed elbows with other media moguls at the annual Allen & Co. retreat. Eddy Cue, Apple’s media chief who was in charge of negotiating deals with the publishers, was also at the event.
“Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations,” the company said in a statement.
“When we introduced the iBookstore in 2010, we gave customers more choice, injecting much-needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry.
“We’ve done nothing wrong and we will appeal the judge’s decision.”
The DOJ alleged that Apple — to coincide with the release of the iPad in 2010 — colluded to drive up the price of e-books from the $9.99 price Amazon charged for most recent releases to $12.99 to $14.99.
Penguin, Simon & Schuster, Hachette, HarperCollins and Macmillan settled with the government but Apple chose to go to court, leading to a three-week trial in June. HarperCollins, like The Post, is owned by News Corp.
The battle isn’t over though. The judge will hold another trial to determine damages in the case, including possible injunctions against Apple.
Among other proposed restrictions, the DOJ wants to see so-called agency agreements prohibited between Apple and booksellers for two years.
Apple could also be forced to let third-party publishers reinstate links to their own online stores, potentially allowing them to skirt the 30 percent cut that Apple now demands to sell titles via its iBookstore.
In addition, more than 30 states, which brought the case along with the DOJ, can now pursue monetary damages.
“Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so,” said Bill Baer, the assistant attorney general for the DOJ’s antitrust division. “This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions.”