Apple dismisses DOJ's proposed e-book penalties as 'a draconian and punitive intrusion'

Posted:
in General Discussion edited January 2014
Apple quickly responded to a proposed e-book price fixing settlement from the U.S. Department of Justice on Friday, declaring the suggested penalties "wildly out of proportion to any adjudicated wrongdoing or potential harm."

Summation
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court


The company behind the iBookstore lashed out at the proposed injunction as a "draconian and punitive intrusion" into its business, asserting that the penalties imposed would 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," Apple wrote in a court filing. "The resulting cost of this relief ??not only in dollars but also lost opportunities for American businesses and consumers ? would be vast."

The comments were made in reaction to a proposed settlement published by the DOJ earlier Friday, suggesting that Apple be forced to allow competitors such as Amazon and Barnes & Noble to link to their own e-book stores within their own iOS App Store software. Apple currently takes a 30 percent cut of all content sold in native iOS apps, and bars developers from circumventing that policy by linking to external websites for content sales.The DOJ has proposed a series of sanctions against Apple after it was found guilty of conspiring to fix e-book prices. Apple has slammed the DOJ proposals as "draconian," "invasive," and "wildly out of proportion."

But the DOJ proposal, made after Apple was found guilty of price fixing e-book titles, would go well beyond the company's iBookstore for iPhone and iPad. The DOJ also suggested that Apple be prohibited from entering agreements with suppliers of "music, movies, television shows or other content that are likely to increase the prices at which Apple's competitors may sell that content."

Apple blasted the proposal for containing, in the company's view, "broad, invasive, and vague provisions that are untethered to the actual findings of antitrust liability in this case." The filing reminds the court that it was of the view that U.S. antitrust laws "should be applied with care," respecting the unique features of any market.

If the court is unwilling to reject the injunction outright, Apple's attorneys suggested that "a narrower and more modest injunction" that is "carefully tailored" to the court's findings be proposed.



The DOJ argued that requiring Apple to link to Amazon, Barnes & Noble and other e-book sellers would allow customers to "easily compare Apple's prices with those of its competitors." The Justice Department also suggested requiring Apple to terminate its existing e-book agreements with the five major book publishers it was found to have conspired with to fix prices.

The proposed sanctions would also prevent Apple from entering new e-book distribution contracts with the five biggest publishers for five years. The proposal is pending court approval.

Apple has already appealed the ruling made by U.S. District Judge Denise Cote. The book publishers were also originally targeted by the DOJ, but unlike Apple, they opted to settle out of court.

The U.S. government took issue with Apple after the iPad maker led the charge in convincing publishers to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform.

iBooks


In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so.

Publishers agreed to the agency model with Apple because it gave them the ability to set book prices as they saw fit. Those companies were dissatisfied with Amazon's low-margin model, which has made it difficult for other booksellers to compete with the online retailer.

Though Amazon has been the dominant e-book seller for years, Apple's agreements with the publishers led to an industry-wide change that increase e-book prices. The Department of Justice saw that as unfair to consumers, which led to the antitrust suit.
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Comments

  • Reply 1 of 128
    quevarquevar Posts: 101member
    Interesting to compare this to the punishment (nearly nothing) that Microsoft got about ten years ago when they were declared an abusive monopoly for IE. Allowing links to non-book content is way beyond what should be appropriate. However, they are probably bluffing and making it huge so that Apple will be more willing to negotiate something smaller without as much of a fight.
  • Reply 2 of 128
    phone-ui-guyphone-ui-guy Posts: 1,018member
    Department of Justice my ass. Department of Injustice is more like it. Glad to see Apple didn't waste any time responding to this trash.
  • Reply 3 of 128
    nagrommenagromme Posts: 2,834member
    Repeat after me, Apple: money greases the wheels of government. Every other corporation knows the law is for sale, so you'd better learn to pay up!
  • Reply 4 of 128
    isteelersisteelers Posts: 738member
    One again the US government is flexing its muscles, from that sham trial to these I proposed punishments. The US government will stop at nothing to get a hold of those overseas profits and will put the screws to them in numerous ways to do so. Apple should have contributed more to political campaigns and lobbied more and they would not be in this mess. This is nothing more than a shakedown disguised as "justice". The government is broke and are looking to the private sector for more revenue using the power of the courts as their "enforcers".
  • Reply 5 of 128
    crowleycrowley Posts: 5,738member


    Doesn't seem like such a vitriolic response is going to do them many favours.  You've already been found guilty Apple, acting like you're the poor little multinational being wronged is pretty pathetic.


     


    By all means protest the suggestion if you feel it's disproportionate, but do it with some grace.

  • Reply 6 of 128
    Amazon is allowed to sell product at such a low price that it is losing money every quarter. And doing so if kills its competitors (good bye Broders, Barnes and Nobles being the next). Consumer may be happy to see lower prices in a short term. In the longer term wham only Amazon will have survived it will be another story.
  • Reply 7 of 128
    airbubbleairbubble Posts: 105member
    This just becomes corruption of the highest order!
    This is a governmental department trying to run Apples business strategy?
    All they want is to Break Apple since Steve Jobs passing, For they were to scared to try
    with him there.

    Yes Apple has faced an uphill battle all along and continues to-be a well run company
    even throughout this.
    Laws are made, Rules are laid and many others have broken, colluded and bribed
    without much punishment!

    So they really wish Apple to stop their business in Media Music, TV, Books etc to help
    those poor underwhelmed corporations Amazon among them from a Monopoly?
  • Reply 8 of 128

    Quote:

    Originally Posted by Crowley View Post


    Doesn't seem like such a vitriolic response is going to do them many favours.  You've already been found guilty Apple, acting like you're the poor little multinational being wronged is pretty pathetic.


     


    By all means protest the suggestion if you feel it's disproportionate, but do it with some grace.



    Your brilliant advice is noted.


     


    Now, go learn something about the way in which the adversarial system of US justice operates.

  • Reply 9 of 128
    brutus009brutus009 Posts: 356member

    Quote:

    Originally Posted by AppleInsider View Post



    The DOJ argued that requiring Apple to link to Amazon, Barnes & Noble and other e-book sellers would allow customers to "easily compare Apple's prices with those of its competitors." The Justice Department also suggested requiring Apple to terminate its existing e-book agreements with the five major book publishers it was found to have conspired with to fix prices.



    The proposed sanctions would also prevent Apple from entering new e-book distribution contracts with the five biggest publishers for five years. The proposal is pending court approval.


     


    If they have to terminate their current contract and cannot create a new one for 5 years, then wouldn't they be unable to sell any books from those publishers for those five years?  If I understand this correctly, wouldn't that effectively force Apple to call the entire e-book market a big loss?  Someone please correct me if I am wrong.


     


    What about my iBook collection?  How does this help consumers?  If I understand this correctly, the DOJ very nearly wants Apple to remove itself from the e-book market, and I don't understand how that can be in anyone's best interest... except for Amazon.

  • Reply 10 of 128


    There is flagrant price fixing in the oil markets, the industrial metals markets, the precious metals markets, LIBOR interest rate fixing, fixing in the ISDAfix part of the world ... and yet the DoJ found the time to go after ... ebook pricing?!


     


    Then they come out with this?  As one Yale professor put it, the telescopes of Planet Washington don't reach the surface of Planet Earth.

  • Reply 11 of 128
    rainrain Posts: 538member

    Quote:

    Originally Posted by iSteelers View Post



    One again the US government is flexing its muscles, from that sham trial to these I proposed punishments. The US government will stop at nothing to get a hold of those overseas profits and will put the screws to them in numerous ways to do so. Apple should have contributed more to political campaigns and lobbied more and they would not be in this mess. This is nothing more than a shakedown disguised as "justice". The government is broke and are looking to the private sector for more revenue using the power of the courts as their "enforcers".




    and your solution is for backdoor sleazy lobbying - bribing your democratically elected government to rule against the will of the people???


     


    So your basically saying your willing to trade your freedom for some cash.


     


    Good for you. I'm sure that's going to work out wonderful for your nation in the end.

  • Reply 12 of 128
    rob55rob55 Posts: 1,254member

    Quote:

    Originally Posted by rain View Post




    and your solution is for backdoor sleazy lobbying - bribing your democratically elected government to rule against the will of the people???


     


    So your basically saying your willing to trade your freedom for some cash.


     


    Good for you. I'm sure that's going to work out wonderful for your nation in the end.



     


    I think it's based on a presumption that Amazon did it, so they only way to fight that is to play dirty too. Not saying I agree, but that's what it feels like had happened.

  • Reply 13 of 128
    crowleycrowley Posts: 5,738member

    Quote:

    Originally Posted by anantksundaram View Post


    Your brilliant advice is noted.


     


    Now, go learn something about the way in which the adversarial system of US justice operates.



    So you think the court sides with whoever shouts loudest?  When a verdict has already been passed?


     


    Seems like you're taking the "advsersarial" part of the system and interpreting it as pugil sticks.  That's not how it works.  Reasoned negotiation in the eyes of the court is always seen more favourably by arbitrators.


     


     


    Thanks for the sarcasm and dismissiveness by the way, that's always a great sign that I'm talking to someone with a measured point of view.

  • Reply 14 of 128
    Doj s actions are beyond infuriating.
    This is not the ex soviet union... What the F is happening to this country!
    Oh ya.... Obama and his administration are happening to this country!
  • Reply 15 of 128


    I have read so many articles on this case and I still don't get it.  Can someone explain to me in plain English what Apple did wrong in the eyes of the DOJ?

  • Reply 16 of 128
    herbapouherbapou Posts: 2,218member

    Quote:

    Originally Posted by patrickwalker View Post


    There is flagrant price fixing in the oil markets, the industrial metals markets, the precious metals markets, LIBOR interest rate fixing, fixing in the ISDAfix part of the world ... and yet the DoJ found the time to go after ... ebook pricing?!


     


    Then they come out with this?  As one Yale professor put it, the telescopes of Planet Washington don't reach the surface of Planet Earth.



     


    More recently, the Potash market :-)


     


    I was under the impression the White house deadline is today to Veto the iphone ban on monday.  No news on that? 

  • Reply 17 of 128
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by Crowley View Post


    Doesn't seem like such a vitriolic response is going to do them many favours.  You've already been found guilty Apple, acting like you're the poor little multinational being wronged is pretty pathetic.


     


    By all means protest the suggestion if you feel it's disproportionate, but do it with some grace.



    So what part of


     


    "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," Apple wrote in a court filing. "The resulting cost of this relief ??not only in dollars but also lost opportunities for American businesses and consumers ? would be vast."


     


    is "graceless" or "vitriolic" (not counting all the question marks introduced by AI)?


     


    "vague new compliance regime" is accurate and measured.


    "applicable only to Apple" is true.


    "intrusive oversight" is accurate.


    etc. etc.

  • Reply 18 of 128
    SpamSandwichSpamSandwich Posts: 30,735member

    Quote:

    Originally Posted by Crowley View Post


    Doesn't seem like such a vitriolic response is going to do them many favours.  You've already been found guilty Apple, acting like you're the poor little multinational being wronged is pretty pathetic.


     


    By all means protest the suggestion if you feel it's disproportionate, but do it with some grace.



     


    Ha! Apple is appealing the ruling on that trial, as is their legal right and their responsibility to Apple's shareholders.

  • Reply 19 of 128
    SpamSandwichSpamSandwich Posts: 30,735member

    Quote:

    Originally Posted by Yojimbo007 View Post



    Doj s actions are beyond infuriating.

    This is not the ex soviet union... What the F is happening to this country!

    Oh ya.... Obama and his administration are happening to this country!


     


    Seems to me there is an unending string of large businesses on which various government entities are performing the old "Chicago shakedown". Surely the mob runs Washington now.

  • Reply 20 of 128
    I have read so many articles on this case and I still don't get it.  Can someone explain to me in plain English what Apple did wrong in the eyes of the DOJ?
    Yes... Doj became amazons crony....
    And obama turned this country into a draconian mess. ( govermnent everywhere... Now. Doj wants to.Monitor every business deal apple makes through itunes And choose if they like it or not ). Lol... Sounds like the ex soviet union to me..
    This country is in serious trouble.
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