In ebook case, Apple wants a stay, and DOJ argues publishers are conspiring again


In advance of a Friday afternoon conference where a federal judge, Apple (s AAPL) and the DOJ will meet to discuss Apple’s punishment in the ebook pricing case, both sides submitted new filings and Kobo and the Consumer Federation of America jumped in as well.

DOJ says publishers have “banded together once again”

The five settling publishers in the case oppose the DOJ’s proposed injunction for Apple, arguing that it hurts them by requiring them to allow Apple to discount their ebooks for five years, instead of the two years agreed on in the settlements they have already reached.

DOJ attorney Lawrence Buterman responds to this (PDF) by claiming that the injunction “in no way seeks to modify Publisher Defendants’ consent decrees or punish Publisher Defendants” — but it’s clear that the DOJ actually does want repercussions for the publishers beyond the existing settlements. Buterman concludes in his letter:

“A necessary component of this Court’s decision finding Apple liable for horizontal price-fixing is that the publishers themselves were engaged in a horizontal price-fixing conspiracy…[There] is reason to believe the Publisher Defendants may be positioning themselves to pick things back up where they left off as soon as their two-year clocks run. Indeed, the very fact that the Publisher Defendants have banded together once again, this time to jointly oppose two provisions in the Proposed Final Judgment that they believe could result in lower ebook prices for consumers, only highlights why it is necessary to ensure that Apple (and hopefully other retailers) can discount ebooks and compete on retail price for as long as possible.”

Apple says Google and Amazon witnesses weren’t credible

Judge Denise Cote, who is overseeing the case, had asked Apple for a list of evidence that it believes was “improperly admitted, excluded, or disregarded” before or during the trial. Apple submitted that list (PDF); most of the items on it involve testimony that was excluded or disregarded. Apple also says that the court “disregarded serious credibility issues with the Google (s GOOG) and Amazon (s AMZN) witnesses” and argues that more evidence on Amazon’s internal business workings was needed — including “evidence of Amazon’s pricing algorithms.”

Big surprise: Apple wants a stay; the DOJ doesn’t

Apple requested a stay (PDF) on all court proceedings until it appeals the court’s finding last month that it was guilty of conspiring with book publishers to set ebook prices. For that appeal, it proposed a jury trial over a year from now, in October 2014. The DOJ had proposed that this trial take place in April 2014.

The DOJ, not surprisingly, disagrees (PDF) with the stay.

Kobo and the Consumer Federation of America jump in

Ebook company Kobo and Washington, D.C.-based lobbying firm Consumer Federation of America both requested permission to file amicus, or friend-of-the-court, briefs in support of the government. The Consumer Federation of America had previously weighed in on the case by using some very suspect math to claim that agency pricing cost consumers $200 million a year.


Michael W. Perry

Translated into honest language, the DOJ is saying that its goal of giving Amazon dominance of the book and ebook isn’t yet complete. Amazon must still suffer with competition from Apple and the major publishers can still stand up to it.

The facts: Amazon controls 70% of the ebook market and has a long history of bullying authors and publishers, removing buy buttons and the like. Apple has a mere 20% of the market and has always treated authors nicely.

Until the the DOJ takes on Amazon, taking that retailing giant to court, there’s little reason to take seriously anything its lawyers say. They’re behaving like Amazon were their client, bending and twisting this way and that to help it. That’s classic Chicago machine politics.


Ironies abound:
The Consumer Federation of America had previously weighed in on the case by using some very suspect math to claim that agency pricing cost consumers $200 million a year.
…. That’s $.66 per person – less than a candy bar
…. or 1% of the price of the cheapest e-reader

Of course Amazon’s ebook sales still dwarf Apple’s; And Amazon’s pre- 2010 policies restrained the market. And they were ‘tying’ – same charge that Intel was hauled into court. Amazon refused to sell hard cover books for one publisher who demanded an agency contract.

AOur laws on Monopoly arose from Rockefeller / Standard Oil controlling the access to market in order force prices on the oil suppliers. Wasn’t Amazon doing just that?


I’m guessing that some of the terms and conditions in the i-books contracts may also be present in other contracts with non-ibooks content makers. So, losing the books case could well mean they are in for a cascading change of contract terms that will ripple through the app and music and movie contracts as well. Distortion field or not, they may be fighting for much more than meets the eye.

Setting all that aside, it’s really too bad they are under the magnifying glass – for other reasons. They pretty much started the model of paying for content, as opposed to having the public post stolen content to file sharing sites, then hide behind the DMCA laws – ala YouTube/Google, and many others. Apple seems to be the first to pay individuals and companies in this huge self-publishing boom that is called the internet. Now the others want to pile into this model… but don’t forget where it started. Apple’s recognition of IP, and paying for it, set them ahead of the others. Their real moral compass is aligned with spreading the wealth.


Apple is stupid not to be negotiating a settlement. It lost the case. It won’t get a stay. The DOJ argument for remedy is just an opening bargaining position for settlement, but Apple still thinks it owns the world and fails to see the judge might sock it to Apple again. Apple should negotiate away the judgment risk, as it should have before it dug a litigation hole for itself in the first place.


Why is no one questioning the premise of charging a 30% cut for purchases? On desktop/notebook running Windows/Mac – these companies do not take a 30% commission.

Seriously, we are asking the wrong questions here. Imagine if Microsoft asked for 30% cut for all paid apps on their desktop. None of us would tolerate that. Why is it right for Apple to claim that?

Please don’t say it’s the service charge for maintaining Apple Store or managing payments, they need Apple IDs for more reasons than just that.

What we need is for a cap on cut – 5% or lower for all players – Microsoft, Google, Apple, everyone.

Onaplioa Thanh

I thought that it’s a sure symptom of paranoid schizophrenia. It feels really good to know that, oil companies ever did do that, that the Department of Justice is there to protect on ap

Harvey Lubin

After reading the list that Apple sent Judge Cote outlining the evidence that was “improperly admitted, excluded, or disregarded” before or during the trial, one can only conclude that the judge was either incompetent or she was conducting a “Kangaroo court”.

There is absolutely no rational excuse for why this evidence (which would have changed the court’s final decision) was suppressed by the judge.

George Varghese

“For that appeal, it proposed a jury trial over a year from now”

Apple figured its reality distortion field has its limits and its easier to fool a jury than a judge who knows the law.

Harvey Lubin

“DOJ says publishers have “banded together once again””

When everything looks like a “conspiracy”, it’s a sure symptom of paranoid schizophrenia.

Hammond Cheeseborough

I sure am glad that oil companies don’t conspire like this. Otherwise, we would have really insane gas prices. It feels really good to know that, oil companies ever did do that, that the Department of Justice is there to protect us.

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