Following US District Judge Denise Cote's decision that Apple conspired with book publishers to raise the price of e-books, the DOJ last week announced a sweeping proposal aimed at remedying the fallout from Apple's allegedly "illegal" activities.
The proposal, which you can read about here, is extremely broad and curiously heavy-handed.
The proposal reads in part:
The department's proposal, if approved by the court, will require Apple to terminate its existing agreements with the five major publishers with which it conspired – Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck Publishers LLC, which does business as Macmillan, Penguin Group (USA) Inc. and Simon & Schuster Inc. – and to refrain for five years from entering new e-book distribution contracts which would restrain Apple from competing on price.Apple was quick to file a brief in opposition to the proposal, characterizing the DOJ's proposal as "punitive" and "draconian." Also not happy with the DOJ's far-reaching proposal are the book publishers themselves. The Wall Street Journal reports that the aforementioned publishers aren't too keen on the DOJ's proposal to the extent that it adversely affects them as well. In a motion filed on Wednesday, the book publishers argue:
Under the department's proposed remedy, Apple will be prohibited from again serving as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms. Apple will also be prohibited from entering into agreements with suppliers of e-books, music, movies, television shows or other content that are likely to increase the prices at which Apple's competitor retailers may sell that content. To reset competition to the conditions that existed before the conspiracy, Apple must also for two years allow other e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their e-bookstores, allowing consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple's prices with those of its competitors.
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.
It really seems like the only winner in all of this is Amazon.