Earlier today, the U.S. Department of Justice proposed serious remedies for Apple to abide by now that the company has been found guilty of conspiring to fix e-book prices. When the ruling was issued last month that Apple was guilty, the outcome of the suit was unknown. How would the government punish Apple (for something that Apple has always adamantly denied)? Now we know.
Not only does the DoJ want Apple to stop selling e-books through the iBookstore entirely, but allow rivals like Amazon and Barnes & Noble to sell e-books in their iOS apps. In a scathing response to the DoJ’s proposal, Apple has called the proposed remedies “draconian” and “punitive.”
An excerpt from Apple’s 31-page brief on the DoJ’s proposal:
“Plaintiffs’ proposed injunction is a draconian and punitive intrusion into Apple’s business, wildly out of proportion to any adjudicated wrongdoing or potential harm. Plaintiffs propose 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. Plaintiffs’ overreaching proposal would establish a vague new compliance regime—applicable only to Apple—with intrusive oversight lasting for ten years, going far beyond the legal issues in this case, injuring competition and consumers, and violating basic principles of fairness and due process. The resulting cost of this relief—not only in dollars but also lost opportunities for American businesses and consumers—would be vast.”
The App Store doesn’t allow an app like Kindle to offer paid e-books directly within the app itself, and if the DoJ wins, reversing the rule is going to be a very hard pill to swallow. “Apple 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,” notes the company’s brief. The DoJ wants other e-book publishers to let customers pay and download e-books in their respective iOS apps for the next two years.
What the DoJ is proposing would extend to how Apple makes pricing deals for not only e-books, but TV shows, movies, and music through the iTunes Store. It’s an incredibly broad, crippling list of remedies. Apple would be kept out of the e-book market for five years and be permanently refrained “from entering into agreements with other providers of music, movies, TV shows or books that might increase the prices at which rival retailers sell that content.”
Apple is obviously doing it everything it can to not let this happen, but the problem is that Tim Cook and co. don’t think they’ve done anything wrong. If some sort of common ground can’t be reached, the results of this ruling won’t be good.