Rebellion simmers over US government restrictions on Apple publishing

Rebellion simmers over US government restrictions on Apple publishing

Summary: Publishers are up in arms over tough new restrictions the U.S. government wants to impose on Apple following a ruling that the firm conspired to fix e-book prices.

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TOPICS: Apple, Government US
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Credit: Dave Carnoy/CNET

A Manhattan court ruled that Apple violated antitrust laws by conspiring to fix e-book prices -- but publishers believe they will pay the price.

On Wednesday, five large publishers who object to the restrictions proposed by government officials against Apple filed a motion with a U.S. district court in Manhattan, according to Reuters.

The U.S. Justice Department filed an antitrust suit against the tech giant and found the company guilty in July for conspiring to fix the price of e-books. The five publishers accused of conspiring with Apple to control the price of e-books all agreed to settle; earmarking approximately $164 million to be paid back to consumers as a result.

Despite Apple's continued claims that it did not "conspire to fix e-book pricing," the DOJ called the settlement a "victory for millions" of readers.

The publishers -- Hachette Book Group, News Corp's HarperCollins Publishers, Penguin Random House , CBS's Simon & Schuster Inc and Macmillan -- say that publishers would suffer rather than the iPad and iPhone maker. The DOJ wants to make sure Apple is unable to "conspire to thwart competition in the future," and so wishes to see all of the five-year contracts between the tech giant and publishers re-signed -- with the stipulation that Apple is barred from competing on price.

A victory, perhaps, for rival firms -- but the publishers argue that by preventing Apple from being able to enter agency agreements that allow the discounting of titles, they are "effectively being punished." This, in turn, contradicts their own settlements with the U.S. government which still allows them to enter agency agreements with retailers.

The "agency" model, the core issue within the antitrust suit, allows publishers to set the price of e-books instead of the authors. Apple uses this model in the iBookstore and requires 30 percent commission. In contrast, Amazon allows eBook authors to set their own price -- whether at a profit or a loss.

"Despite achieving their stated goal of returning price competition, plaintiffs now seek to improperly impose additional, unwarranted restrictions on the settling defendants, thereby depriving each publisher of the benefit of its bargain with plaintiffs," the publishers wrote within their complaint.

In addition to this stipulation, Apple would be forced to hire an internal antitrust compliance officer and a court-appointed external supervisor. The DOJ would also like to see links to other e-book providers -- such as Amazon -- included on store platforms to make it easier for consumers to make price comparisons.

Despite the settlement of publishers, Apple plans to appeal the guilty verdict. A hearing to discuss potential restrictions will be held on August 9.

Topics: Apple, Government US

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81 comments
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  • Where is the outrage?

    What is truly sad is the complete lack of outrage among the tech press about what the government is trying to do to Apple.

    First of all, what Apple did with e-book pricing was perfectly within their rights and should not be treated as a crime in a free society. The anti-trust laws need to be repealed. All manufacturers have the right to sell whatever products they choose at whatever prices they want, and if they feel like calling each other up to chat about pricing (not that there is evidence here that that even happened), that is within their rights. Apple has no power to force any other manufacturer to honor their prices, nor to force people to buy e-books from them.

    Secondly, this notion that "Ooh, we caught you on e-books, now we're taking over iTunes!", is just absolute power lust. Completely ridiculous.

    And what do we hear from tech bloggers on this? Where is the outrage at government intrusion into free enterprise? It is an absolute disgrace.
    FDanconia
    • You're not serious...

      your whole rant seemed sarcastic... I truly hope it was.
      kstap
    • The problem is not with Agency

      The problem was that Apple is alleged to have arranged with the publishers in a way that required them to collude to force Amazon into agency as well.

      We'll see if that holds up on appeal - these things often don't. Microsoft basically "won" its antitrust battle with the trial judge, Penfield Jackson, (though technically it was a settlement.)
      Mac_PC_FenceSitter
      • It didn't require them to collude

        The problem was Amazon did not want to pay the prices the publishers wanted to set. Apple didn't require any publishers to collude. Where do you get that from? The publishers were the ones setting the prices.
        ossoup
        • You know who disagrees with you?

          A judge.

          apple was convicted, found guilty of anti-trust violations. Now it is time to make things right and I'm all for these restrictions and more. I think apple should be split up into multiple companies so this doesn't happen again.
          toddbottom3
          • And...

            "You know who disagrees with you? A judge."

            And as we all know, judges, politicians, and bureaucrats , all always right, and incorruptible.

            In the USA no one is ever falsely accused or goes to jail even though they are innocent of the crimes they are accused of.

            What a wonderful fantasy world we all live in. ;-)
            Harvey Lubin
          • So just to clarify

            If a company is found, by a judge, to have violated anti-trust regulations, even though we consumers knew that we could always use competing products, it means that the company didn't actually do anything wrong?

            Huh. We were always told that if a company was convicted by a judge, that was PROOF that the company was wrong. No matter what arguments one ever came up with, no matter what proof one showed that competing products were available, nope, the conviction itself was irrefutable PROOF that the company was wrong.

            Now we find out this isn't the case?

            Huh. Good to know. A certain company has been called a monopolist for far too long on ZDNet. Today we discover that this isn't actually true.

            Huh.
            toddbottom3
          • I was almost going to reply to your comment

            then I realized you are just being you.
            CowLauncher
          • So being convicted by a judge isn't proof of guilt?

            Simple question with a simple answer.
            toddbottom3
          • Tell that to the West Memphis Three

            I guess you really are living in a fantasy world.
            Harvey Lubin
          • I will

            Right after I tell Microsoft that they aren't monopolists, regardless of what a judge determined.
            toddbottom3
          • debatable

            Not according to Microsoft. Wasn't there a judge who DID want to break them up into smaller companies? Whatever happened with that?
            observer1959
          • What if it were you?

            What if you were convicted of a crime you didn't commit? The judge then gives you the death sentence. From what you're saying, you'd happily agree with him and give him the thumbs up on the way to your cell.
            Judges are human and not infaliable.
            toddbottom3
          • One more time.

            Try to understand, all Fords are cars, but not all cars are Fords. Apple COLLUDING WITH PUBLISHERS TO SELL AT THE PRICE THEY CHOSE IS NOT THE SAME THING AS THEM FORCING PUBLISHERS TO COLLUDE?
            Do you get it? So they helped publishers hold to the price THEY WANTED. Do you have room in your mind to understand, this is different than forcing publishers to do anything, and do you realize how wrong it is to say they can't compete on price now?
            ossoup
          • evidence suggests

            If microsoft are not guilty.. why have they had to pay so much money to Novel and others and are still in court now over things they did in the mid nineties where they used owning windows to copy and then crush the opposition. Like netscape, like Novel etc etc.
            frankieh
          • They paid them off most likely

            I really can't believe the self-serving arrogance of Todd?
            It's like if someone gets convicted of jaywalking, it's proof to him they kill babies. An anti-trust violation doesn't make Apple guilty of everything he seems to think, but I'm not sure he A, wants to understand, and B, can through his foaming froth.
            ossoup
          • Nope

            It is only an opinion. If it were proof there would never be a need for an appeal court. As opinions can differ, there is need for an arbitrator to decide if the opinion is supported by the facts as applied to the statutes and laws.
            BrianLevyEsq
          • Good to know

            So it is only an opinion that MS is a monopoly.

            Good to know. I disagree with that opinion and if anyone says "but a judge convicted them" then I can say:
            And judge's opinion, order, judgement or, decision os not proof what so ever. Proof are facts presented to the court by the sides and the analysis of how the facts support or refute that the elements of a law can be applied to the facts. If, in a civil case such as this, there is by a preponderance of the evidence the facts fit the elements then the Plaintiff can prevail or the Defendant, if a counter-claim. This standard is roughly defined as some amount greater than 1/2 that the actual occurred, then the moving party may prevail. A judge or jury has the job of taking the facts, understanding the elements of the law and the purpose of the law, applying the facts and determining if the standard has been achieved.

            A judge is the conductor of the trial if a jury trial and if not is the conductor and finder of fact in that he weighs the evidence presented, determines the relevance of each fact, and other things a she acts in place of the jury but he is passive and does not not does the result publish become nor establish proof. It is limited only to that case and exactly the same case could be presented in another court with an opposite result. If between courts there are different outcomes, it can lead to the Supreme Court as that is one criteria where a party can apply to it for an appeal.
            toddbottom3
          • OK, are you really this ignorant or just pretending.

            Apple being guilty of anti-trust violations does not mean they FORCED PUBLISHERS TO DO ANYTHING.
            Do you have any room left for reality in there?
            ossoup
          • Amen to that

            ;-)
            Harvey Lubin