Shane Cole
The Department of Justice on Friday revised their proposal to punish Apple for iBook antitrust violations, alleging that the Cupertino company lied to the government about the manner in which the App Store operates and that changes to rules governing in-app purchases were designed to cripple Amazon's competitive Kindle app.
Notably, the updated proposal slices the injunction period from ten years to five years, while granting the government the ability to extend the injunction up to five times in one year increments, terms similar to the agreement the DOJ reached with Microsoft in their famous antitrust battle.
The DOJ has argued that while it wants to avoid a situation in which "changes in industry circumstances will cause the decree to outlive its usefulness and unnecessarily harm Apple," the government believes that "five years might not be enough time to restore competition to the e-books market and to ensure that Apple changes its troublesome business practices to prevent a recurrence of the illegal conduct."
Agreeing with a suggestion by Judge Denise Cote, the federal judge in charge of the case, the government also proposed forcing Apple to renegotiate its deals with publishers on a staggered basis, rather than all at once. The DOJ said this requirement will not allow the publishers to "'negotiate collectively' with Apple in order to effectuate contracts that will result in higher e-book prices."
Additionally, the injunction would require Apple to allow other e-book retailers in the App Store to sell e-books on the device through their own online stores for a period of two years, bypassing Apple's in-app purchase program. At a hearing earlier in August, Apple's counsel argued for the validity of forcing competitors' e-book apps to use the system by saying that the company receives 30 percent of the sale for any products purchased from within an iOS app, even physical goods like shoes.
The government seized on this statement as evidence that Apple "misrepresented the factual circumstances" surround in-app purchases, saying that it "simply is not true that Apple receives a 30 percent commission from all retailers for all goods." The DOJ has pointed to Amazon's existing Amazon.com iPad app as well as Amazon subsidiary Zappos.com's iPad app as examples of apps where purchases "do not go through Apple’s payment system, and Apple does not receive a 30 percent commission on these physical goods."
Citing an email from Steve Jobs in which the former Apple CEO suggested that Apple should "force them [Amazon] to use our far-superior payment system", the government has argued that changes to the App Store's policies in this area were "specifically to retaliate against Amazon for competitive conduct that Apple disapproved of."
The DOJ has also rebuked Apple for colluding with publishers and organizing "a blatant price-fixing conspiracy to raise e-book prices and end retail e-book price competition." The department has also accused the company's leadership of "willful and blatant violations of the law." Eddy Cue, Apple's senior vice president of Internet Software and Services, is specifically taken to task as the "ringmaster" behind the conspiracy.
-m.jpg)
Charles Martin
Malcolm Owen
William Gallagher
Christine McKee
Wesley Hilliard
161 Comments
Citizens claim DOJ wholly lawless.
I disagree completely with the DOJ's take on Steve Jobs' e-mail. Apple was clearly going ahead with its in-app purchase with its new payment system. Steve was saying that forcing Amazon to adopt it in their Kindle app would be a good thing for consumers since Apple's payment system is "far superior". Steve's other e-mail was interesting as well. It was in response to an angry e-mail from the developer of the iFlow reader app over the changes to the in-app purchase rules: Subject: Re: How Apple Killed the iFlow Reader From: Steve Jobs Received(Date): Tue, 15 Feb 2011 17:13:29 -0800 Cc: Eddy Cue , Ron Okamoto , Bruce Sewell To: Philip Schiller IS their app any good? Lots better than iBooks? Or is this guy just pissed? Bottom line %u2013 we didn%u2019t have a policy and now we do, and there will be some roadkill because of it. I don%u2019t feel guilty. They want to use our payment system, which we have invested a TON of money into creating and maintaining, for free and that%u2019s not going to be possible going forward. Steve
Am I the only person here who realizes that Amazon's old pricing model single handedly destroyed the market for big box bookstores in the US? If anything Apple's pricing would have saved that entire industry by setting ebook pricing more in line with their physical counterparts. Amazon's old strategy has worked to destroy something that I believe was essential to our culture. People don't go to bookstores anymore. Amazon put them all out of business. Only now the DOJ steps in. This is so very wrong. Where we're they then? Amazon's whole strategy has always been to destroy the competition by underpricing them to the point of being uncompetitive. This isn't how I want my tax money spent. I like physical books and physical book stores. What is the DOJ doing about that? I want to see the government forcing booksellers to sell ebook sat the same price as physical books and not a dime less. That is the only way we can get our book stores back. Who's with me?
Thanks to the DOJ for providing us a legal monopoly (Amazon).
It's not at all clear (and not the preponderance of the evidence) that Steve's intentions were to knock Amazon. The DOJ should get clarification from him before assuming such.
Remember, DOJ, to "assume" makes an ass out of u and me!