Rebellion simmers over US government restrictions on Apple publishing

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.
Written by Charlie Osborne, Contributing Writer
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.

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