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Apple slams government’s proposed punishment in ebook pricing case

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As expected, Apple(s AAPL) has expressed its strong disagreement with the federal government’s proposed remedies in the ebook pricing case, which the government outlined in a court filing released Friday morning.

In July, a federal judge found Apple guilty of conspiring with publishers to fix ebook prices.

Apple’s full court filing is embedded below and is available here as a PDF. Apple calls the proposed injunction “a draconian and punitive intrusion into Apple’s business, wildly out of proportion to any adjudicated wrongdoing or potential harm,” and claimed it is “a sweeping and unprecedented injunction as a tool to empower the Government to regulate Apple’s businesses and potentially affect Apple’s business relationships with thousands of partners across several markets.”

The government’s injunction seemingly forces Apple to abandon its in-app purchasing restrictions, at least for digital bookstores, by “allowing Amazon, Barnes & Noble, and other ebook app providers to offer a simple, costless means for readers to purchase e-books directly from the third party.” As Publishers Marketplace notes, it also “essentially [asks] the court to make Apple reconstruct its contracts across all of its iTunes businesses to disallow agency-style pricing.”

Apple, of course, disagrees with this, arguing that the government’s injunction is far too broad to fit the circumstances. It says that it “is under no duty to allow other retailers to offer apps on the iPad in the first place, much less on terms that subsidize their operations,” and adds that “Without any basis in the evidence or the Court’s findings, the proposed regulation of the App Store is simply outrageous and cannot be included in an injunction.”

As for the government’s desire to regulate other forms of digital content in iTunes, Apple says that is an “absurdly broad proposal is not only disconnected from any evidence adduced at trial or findings made by this Court, but would open Apple up to liability in virtually every content market for the actions of content producers, over which it has no control.”

At the end of the filing, Apple spends a little time (two paragraphs) discussing what it thinks a reasonable injunction would be. Not surprisingly, it doesn’t think that much is needed, but it suggests that if there has to be a punishment, this could be it:

“A potentially valid injunction could include: (1) reasonable limitations on Apple’s ability to share information (akin to the publishers’ consent decrees.)…(2) a prohibition, tracking the publishers’ consent decrees, on retail price MFNs in agreements with the publisher defendants; and (3) reasonable antitrust training obligations for Apple, lasting a reasonable term. No further relief can be justified under the legal standard governing antitrust injunctions or the Constitution.”


Apple’s response to DOJ proposed injunction
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10 Responses to “Apple slams government’s proposed punishment in ebook pricing case”

  1. All Apple wanted was to get the best pricing available from publishers and offered no guarantee that they would not discount bookcase below cost like Amazon has done. The book publishers are the ones who wanted to stop Amazon from undercutting the price of their paper books, not Apple. The whole government case is ridiculous. What do you think will happen to book prices once Amazon decides it can start to raise prices?

    • Tim Wilhoit

      “All Apple wanted” was not to need to compete on ebook prices. Agency + MSN accomplished that for them. Apple knew they had the BPHs hooked with their solution for the “$9.99 problem.” The government case is far from ridiculous…this is a classic antitrust case. To answer your question, it won’t happen. One, Amazon has a far smaller marketshare than they in 2009 (they have lots of competition) and two, you don’t need an inventory to sell ebooks. If Amazon suddenly found themselves the only ebook vendor and decided to drastically raise prices, in 24 hours there would be a half-dozen new ebook vendors in business to oppose them.

  2. SixSixSix

    Nothing like gratitude. Apple gets bailed out (of course) by the US government in its snark war with Samsungs. Then turns all narly on the government. I guess they figure when you buy and pay for a government you should get the whole thing. American Capitalism’s idea of fair trade. The public be damned.

  3. fredhstein

    The DoJ’s “remedy” is commensurate with a dominant, and dangerous, economic predator that is damaging if not destroying other businesses.

    It is as though they found a smoking gun, the famous email from Jobs to Cue and assume there’s mass murdered.

    But where are the victims? The markets – ebooks/app stores, ebook readers and tablets, ebook authoring tools, the number of ebook authors,- all are far more open today, far larger, encompass more options and prices than when Amazon held 90%.

    • Not true-I am a victim. I now have to pay $3-$4 more on average per book. And when you read 200-250 book a year as I do-that adds up. Everything was great from my perspective when Amazon set their own pricing. And in a free market, the retailer should be allowed to set their own profit margin.
      I don’t know how you can say the markets are more open-they are just more expensive.
      More prices (ie higher prices) are good? Before Apple a new release was $9.99 on Amazon. Also funny how the majority of ‘options and prices’ are on..AMAZON!
      At least Amazon cares about their customers. Unlike Apple who schemes to find ways to cost their customers more.

  4. TheNextSteveJobs

    Apple should turn around and kick out all Amazon apps. Let Amazon sue for that!

    We’ll see how Amazon feels about its supposedly 60% ebook market share according to Bloomberg.

    • Tim Wilhoit

      Assuming Judge Cote decides to accept the DoJ’s recommendation and orders Apple to restore Amazon’s store link, I wonder how long it would take her to issue a “Contempt of Court” charge for that particular reaction? I hope Apple does it…I’d like to see it.