Watch CBS News

Apple settles e-book antitrust suit

Apple (AAPL) has settled a long-running class action that alleged the company conspired to artificially raise e-book prices.

Terms of the out-of-court agreement are secret and must be approved by the court. Apple is also appealing a ruling that it had conspired to fix prices. The results could have an impact on the settlement. Apple denies that it had engaged in price fixing.

Apple faced $840 million in claims related to the e-book complaint. That would be pocket money to Apple, which has roughly $160 billion in cash. But paying to make the problem go away doesn't necessarily eliminate an underlying issue for the company. With its influence on a number of industries, market power and deep pockets, Apple has become a prime target for plaintiffs' attorneys and government regulators.

Apple: No new gadgets from tech giant 03:07
Apple bets big on Beats headphones 02:23

As far back as 2010, Apple began to set a ceiling on the price of e-books it resold. At the time, large publishers were concerned that Apple's actions would lead to lower e-book prices. Amazon (AMZN) had sold e-books at a loss, paying more than they brought in to the publishers to help develop the market.

The industry quickly changed its mind over the next two years as Amazon increasingly used its market power to push for advantage in terms with publishers. Companies were concerned that Amazon had such a head start in e-book sales that it could control the market. Ultimately, the retailer would then be able to demand low prices and stop its underwriting of e-book sales.

Eventually, Apple would be seen by the big publishing houses as a counterweight to Amazon that might hold the possibility of maintaining e-book prices in the future.

The lawsuit started in 2012, when the Department of Justice accused Apple and five publishers of e-book price fixing. The publishers had already settled.

In settling with the plaintiffs, Apple would likely have to include language that would address some of the Justice Department's concerns, like the so-called most favored nation clause in the contracts that ensured the company would get terms at least as good as any of its competitors.

However, the suit's resolution would not necessarily be the end of Apple's troubles. Given its monetary success and power, the company has become a target for lawsuits and regulatory attention. As Apple moves into music streaming with the acquisition of Beats Electronics, it could also reawaken concern on the part of the music industry, which might fear being pushed into lower royalty rates.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.