eBook Publishers Once Again Conspiring With Apple, Claims DOJ
August 9, 2013

eBook Publishers Once Again Conspiring With Apple, Claims DOJ

Michael Harper for redOrbit.com - Your Universe Online

Several weeks after the US Department of Justice (DOJ) ruled Apple played a “central role” in an e-book price fixing scheme, it is claiming Apple is conspiring with the publishers once more.

Earlier this week five major US book publishers issued a court filing to the DOJ challenging the penalties the DOJ has proposed for Apple. The department is now saying the publishers have “banded together once again” just as they were accused of doing last year. Apple and the DOJ are set to meet today to discuss the penalties stemming from this case. As they head into these meetings, Apple is asking for a stay on all court proceedings and are arguing that witnesses from Amazon and Google have “serious credibility issues” which weren’t fully considered.

HarperCollins, Hachette Book Group, Simon & Schuster, Holtzbrinck Publishers, Macmillan and Penguin Random House, otherwise known as the settling defendants, issued the court filing on Thursday to oppose the DOJ’s injunctive relief. As a part of Apple’s punishment, the DOJ wants to place a five-year ban on their use of an agency model in negotiating deals with other book publishers.

Apple currently uses this model in their iBook store and their App Store. In this model, developers and publishers can sell the book for any price, but they must give Apple a 30 percent cut from the sale. The DOJ takes issue with Apple’s insistence that book publishers agree to not sell these books at a lower price in other e-book stores, such as Amazon or Google’s bookstores.

In their court filings, the publishers write: “The proposed provisions would have that effect by preventing Apple from entering into any agreements that limit its ability to discount ebooks for five years.”

“In other words, the provisions do not impose any limitation on Apple’s pricing behavior at all; rather, under the guise of punishing Apple, they effectively punish the Settling Defendants by prohibiting agreements with Apple using an agency model.”

The DOJ has now responded to the Settling Defendants, saying their proposed punishment for Apple “in no way seeks to modify Publisher Defendants’ consent decrees or punish Publisher Defendants.”

Yet later on in the statement by DOJ lawyer Lawrence Buterman, he states that the publishers are planning to enter into the deals again when their two-year ban is lifted.

“[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,” writes Buterman in a letter posted on Gigaom.

“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 is still seeking a stay on all court proceedings until it can finish the paperwork required to appeal last month’s decision against it. The iPad makers are asking the DOJ to hold another trial in October 2014 as a part of the appeal, but the DOJ is pushing to hold the trial in April.