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Apple: Feds aim to “give Amazon a significant competitive advantage” in ebooks case

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In court filings posted Monday morning, Apple (s AAPL) attorney Orin Snyder responded to the Department of Justice’s revised proposed punishment for the tech company in the ebooks case. Snyder criticized the government for filing “a 12-page broadside masquerading as a brief,” and accused them of “seeking a remedy that would give Amazon a significant competitive advantage over Apple.” (The filings are embedded below.)

U.S. district judge Dense Cote found Apple guilty of conspiring with publishers to set ebook prices last month, and Apple is appealing that verdict. Nonetheless, it responded directly to various parts of the DOJ’s proposed injunction. The DOJ is arguing for a number of things: Changes in the way that Apple sells content in the App Store, including allowing ebook retailers to sell ebooks directly through their apps without Apple taking a cut; staggered negotiations with book publishers; and the creation of a third party monitor to ensure Apple does not conspire again.

Not surprisingly, Apple doesn’t want any changes in the way it does business in the App Store, arguing in its brief that the proposal “introduces needless regulation and complexity to an evolving marketplace.”

Apple did promise, however, that it would “apply the same terms and conditions to the sale or distribution of an E-book App through Apple’s App Store as Apple applies to all other apps.” Since Apple already maintains that it doesn’t discriminate against app publishers of any sort, it’s unclear how this clause would change the way the company does business, if at all.

Apple has already agreed to staggered negotiations with book publishers; it just wants to choose the order in which it negotiates with them, rather than adhering to the DOJ’s proposed schedule. All of the book publishers in the case have already settled and entered new contracts with retailers, but this clause would significantly extend the amount of time that they’re required to allow discounting of their books. Thus “the settling publishers are getting thrown under the bus one way or the other,” Michael Cader writes at Publishers Lunch (paywall).

Finally, Apple still doesn’t want an external monitor overseeing it, and promises it “will devote even greater resources to antitrust compliance going forward.”

Apple and the DOJ are scheduled to meet with Judge Cote in court on Tuesday.

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11 Responses to “Apple: Feds aim to “give Amazon a significant competitive advantage” in ebooks case”

  1. I like how no one cares to mention how almost all the publishers caved in microseconds once the DOJ took issue with the situation. They are in the business and obviously know what collusion is and decided to suck it up and pay the price for their poor judgement and evil intent.

    Apple, on the other hand, (is never wrong in their own eyes,) felt they as always should be able to do as they please. Well, not this time. As a consumer, everytime I now buy an e-book I will smile at Apples loss!

  2. I guess that when you’re trying trying to spin lies in the media and claim you did nothing wrong that facts and evidence are considered a “broadside”

  3. Apple is trying to weasel out of meaningful restrictions to their unlawful actions. Apple violated the law, not Amazon. Apple and the book publishers were stupid enough to openly collude.

    • I’m not convinced that they did. I will be watching the appeal with great interest. The DOJ is working overtime to protect the 800 lb gorilla in e-book sales, Amazon. It is evident that Judge Cote was determined to ignore evidence that the publishers had reasons for attempting to move to an agency model independent of Apple. In the long run the DOJ’s moves do not, in my opinion, serve the public interest. A short term price reduction forced upon all players at the behest of Amazon, the defacto monopolist retailer, does not improve the chances of a competitive landscape. There is something fishy about this aggressive and punitive attack on Apple and publishers that only benefits Amazon (in corporate terms), and the visit by the President a few weeks back to an Amazon distribution center to laud that company. It’s plain that this administration is using the power of the Federal Government to promote one company at the expense of any that get in their way. It smells. There may be collusion going on, but the spotlight is being misdirected onto the wrong parties.

      • Scott Gerber

        Why is it that when individuals make disparaging comments about Apple, it sounds like they ever know the full scope of what they’re commenting on? More than not, these posts are from the anti-Apple crowd that just likes to find something negative to crow about. The same was true with the Samsung lawsuit.

        When Apple actually does something wrong, such as appropriating the use of the clock icon from the Federal Swiss Railway, I’ll be the first to call them out on it. And it’s nice to know that Apple did the right thing and licensed the use of the trademark clock design, reportedly to the tune of 21 million.

        In this case, there’s no clear evidence that Apple violated the law. At best, you have circumstantial evidence in the form of an email from Jobs. However, there is clear evidence that Judge Cote had made up her mind in the pre-trial hearing, recommending that Apple settle because “the case will likely show that Apple knowingly participated in a conspiracy to raise e-book prices with four other publishers.” And even if Apple did violate the law, the punishment does not fir the crime and does not have the outcome the law intended – to create competition, rather than monopolies.

  4. Headline: “Apple: Feds aim to “give Amazon a significant competitive advantage” in ebooks case”

    That’s been my POV since this lawsuit was filed.

    Keep in mind that the office of the Seattle law firm that prompted the DOJ to file this lawsuit is located in Seattle a mere five minute walk from Amazon’s corporate headquarters.

    You can, of course, believe that that’s simply a coincidence, but it’s certainly a remarkable one.

    It’s also hard to see how the public interest can benefit from giving the company that controls 70% of the ebook market a competitive market over one with just 20%, particularly when every other competitor probably has a single-digit market share and some, such as B&N are in financial trouble and likely to be more hurt by the DOJ’s moves than Amazon.

    Personally, if I were Tim Cook, I’d go along with the DOJ, abandon agency pricing, and start a price war with Amazon. Apple’s greatest advantage is that ebooks from the iBookstore only display on Apple products. Cutting prices will sell more iPads.

    With Amazon, that’s not so. Kindle books display on almost every platform. If Amazon matches Apple’s price cuts, it’s as likely to sell more iPad rather than more Kindle Fires.

    In an eBook price war, Apple has a tactical advantage. Buy an iPad, and you benefit from the low prices of both Amazon and Apple. Buy a Kindle Fire, and you only benefit from Amazon price cuts.

    And if Apple really wants to tick off those pro-Amazon lawyers at the DOJ, that would do it. Soon, they’d be screaming that Apple is pricing books too low.

    • Keith Porter

      I agree with the strategy of Apple practically giving away ebooks to punish Amazon. Apple loves high profit margins though. I don’t see them doing that.

  5. “[S]eeking a remedy that would give Amazon a significant competitive advantage over Apple.”

    Of course they are. That was the stated goal of the government’s entire case: to re-establish Amazon’t monopoly over ebook sales. (That is, to re-establish market conditions prior to the iPad’s release.)

    When the government says it wants to re-establish a monopoly, it probably means it. (How empowering Amazon’s monopoly aids competition is a real puzzler, though.)