On Friday, August 1, 2014, Judge Denise L. Cote of the Southern District of New York approved the e-books antitrust settlement between Apple, Inc. and the attorneys general and class plaintiffs for $400 million to be distributed to customers, with an additional $20 million going to the states. Apple’s payment is contingent on Judge Cote’s liability decision being affirmed on appeal to the Second Circuit; if the government loses the appeal, Apple will only have to pay $50 million to consumers.
The case arose from Apple’s conduct while launching its iBooks store in 2010 encouraging publishers to move from a flat-fee reimbursement arrangement (like the publishers then had with Amazon), to an agency model where the publisher is compensated a percentage of the sales price. The Department of Justice also sued Apple, but did not pursue damages and therefore was not party to the settlement. The DOJ instead sought and obtained conduct relief from the court in 2013, including: (1) a prohibition on Apple enforcing or entering into most-favored nations clauses with e-book publishers; (2) a prohibition on Apple communicating with publishers to raise e-book prices; (3) a requirement that Apple allow competing e-book sellers to provide links from their iPad e-book apps to their e-bookstores; and (4) the appointment of an external monitor to monitor Apple’s antitrust compliance and conduct an annual antitrust compliance audit.