Cartel Ringmaster or Competition Creator? The Ebooks Case Against Apple (2013)
Forthcoming, John E. Kwoka, Jr. & Lawrence J. White, eds., The Antitrust Revolution: Economics, Competition, and Policy (7th ed. 2019)
18 Pages Posted: 28 Jul 2017 Last revised: 21 Aug 2017
Date Written: July 26, 2017
In 2013, a federal district court found that Apple had orchestrated a cartel agreement involving it and five major book publishers three years earlier, when Apple opened the iBookstore in conjunction with the introduction of its iPad tablet computer. According to the court, Apple organized collective action by the publishers to take away ebook pricing authority from Amazon, an aggressive discounter, and to raise the retail prices of ebooks.
This chapter describes the case from an economic point of view. It examines the competing views of the government and Apple over the competitive impact of various provisions in the iBookstore’s distribution agreements with the publishers, evaluates possible economic reasons why competition may not have been harmed even if Apple’s conduct led to higher ebook prices, and considers what Apple could have done differently to enter without harming competition.
Keywords: Antitrust, ebooks, Apple, Cartels
JEL Classification: K21, L41
Suggested Citation: Suggested Citation