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What could happen if Apple, DoJ go to trial over e-books
As of last Friday, Apple is the last remaining defendant in the US Department of Justice e-book antitrust case. On Friday, Macmillan settled with the government, the last of the original five publishers named in the case to do so. Now Apple is standing alone against the DoJ and is expected to end up in court on June 3, 2013. So, what are the possible ramifications if Apple doesn't settle prior to that court date? According to a Reuters story published today, the case alleges that Apple conspired with the five publishers to keep e-book prices in the iBookstore and other retailers higher than those available from Amazon.com. If the case goes to trial, US District Judge Denise Cote will seek a judicial decree stating that Apple violated antitrust law. If Apple loses, a number of plaintiffs could use the judgment as evidence against Apple in separate actions seeking monetary damages. Those plaintiffs could seek compensation for higher prices paid for e-books plus damages. Antitrust laws allow plaintiffs to recover triple the actual damages, and in 2012 alone, those damages were estimated to be at more than $200 million. If Apple went to trial and lost, the company could lose big. But the company may want to go to trial to establish an antitrust principle that could help it forge future deals with entertainment companies. Apple could still choose to settle with the DoJ, but at this time it is showing no signs that it plans to do so.
Apple is last holdout in DOJ e-book case
It must feel pretty lonely in the Apple legal department today. Media and wire service reports say that Apple is the only company that has not made an out-of-court settlement with the US Department of Justice in a price-fixing investigation over the price of e-books. Macmillan has just settled with government investigators, so now book retailers, including Amazon, will be able to discount books from all the major publishers. Penguin, Hachette, Simon and Schuster and HarperCollins have already settled. The publishers, and Apple, were accused of collusion in e-book pricing. The government charged that consumers were left with books that were more expensive than if there was competition. Apple has denied all the charges, and it isn't known whether Apple will settle or fight the case in federal court. The charges were brought last April.
DOJ declines to reveal policy memos on GPS tracking
The US Supreme Court might have ruled last year that GPS tracking is equivalent to a search, but that doesn't mean the government's practices are transparent. If anything, they may be more opaque than ever. The Department of Justice has responded to an ACLU Freedom of Information Act request for a pair of GPS tracking policy memos by providing almost completely redacted versions that, effectively, say nothing. Not surprisingly, the ACLU isn't satisfied -- it's worried that the government is playing fast and loose with definitions of where GPS tracking is usable, and when it requires a warrant under the Fourth Amendment. Whether or not the allegations are true, the civil liberty advocates are going through the courts to push for more access; we may know the truth before too long. [Image credit: Frédéric Bisson, Flickr]
Penguin joins publishers settling with the DOJ over e-book prices
The US Department of Justice may have only reached settlements with three of the five major publishers it had sued for allegedly fixing e-book prices, but it's improving its track record through a new deal with Penguin. Like its peers, the firm has agreed to end any pacts that prevent it from lowering e-book prices, whether the arrangements are with Apple or any other store operator. While Penguin hasn't immediately commented on its change of heart, a company spokesperson made clear to The Guardian that an EU settlement was for "clearing the decks" ahead of a joint venture with Random House -- Penguin didn't want government scrutiny looming over its union. The truce leaves Macmillan as the last book giant still slated to go to court in the US, and it may not get much support when Apple was part of the European agreement.
Department of Justice asks MetroPCS for more info regarding T-Mobile merger
We can't say we're exactly surprised, but it's still worth noting that the United States DOJ has contacted MetroPCS to ask for additional information about the company's recently announced merger with T-Mobile. The adequately-named "Second Request" will be essential before an actual consolidation approval can be made, and MetroPCS has stated it plans on being fully cooperative so that it can "obtain the approval of the transaction as soon as possible." Additionally, the Wireless for All carrier says it's pretty confident on the Department of Justice's ability to see the proposed merger is "both pro-competitive and pro-consumer." In the end, it's nothing more than a required hurdle before the two telcos can move on with their original plans. Official word from MetroPCS can be found inside the presser below.
Editorial: Bring on the digital overthrow of publishing
Last week's release of the Amazon Kindle Paperwhite offered an opportunity to look back on the rapid growth of e-reading, and look forward to what the digitization of publishing will mean to four major market forces: publishers, bookstores, authors and readers. As during any technological disruption, winners and losers trade fates until the upheaval settles and a new cycle of status quo begins. Amazon is not the only bookstore represented in the scramble for new-era survival, but its major role has multiple dimensions: seller, publisher, enabler, inventor and primary instigator of disruption. Amazon is banking on being a winner, and was recently handed an advantage by the U.S. government in its uneasy relationship with publishers. While industrial forces work their way through the dislocation of new paradigms, individuals -- both book consumers and book authors -- stand to be the biggest winners, and that is a good thing.
Daily Update for August 16, 2012
It's the TUAW Daily Update, your source for Apple news in a convenient audio format. You'll get all the top Apple stories of the day in three to five minutes for a quick review of what's happening in the Apple world. You can listen to today's Apple stories by clicking the inline player (requires Flash) or the non-Flash link below. To subscribe to the podcast for daily listening through iTunes, click here. No Flash? Click here to listen. Subscribe via RSS
Apple calls Dept. of Justice settlement proposal unlawful
Apple is making it known that it will not accept the ebook settlement terms proposed by the Department of Justice, says a report in Paid Content. Under the DOJ's proposal, Apple would have to sever its current contracts and renegotiate new ones with three book publishers - HarperCollins, Hachette and Simon & Schuster. Apple says that this outcome is "fundamentally unfair, unlawful, and unprecedented" and denies the company its right to a fair trial. This settlement is the result of an investigation into Apple's agency model pricing agreement with book publishers. In this model, publishers are allowed to set ebook prices in the iBookstore and cannot sell the electronic books at a lower price through another retailer. This hurt Amazon, which was paying publishers the wholesale cost, but selling the books to customers at extremely low prices, often at a loss. Rather than accept the settlement, Apple asked the court to defer judgement on the settlement until the case made its way through the court. The trial is expected to begin in June 2013. [Via Apple Insider]
DOJ, FCC clear Verizon buyout of cable companies' spectrum, require giving up some airwaves (update: not quite for the FCC)
Verizon has been fighting hard to get its acquisition of cable companies' wireless frequencies past legal hurdles, and it just surged over the most important of the bunch: both the Department of Justice and the FCC have signed off on the agreement. To get the $3.9 billion deal through the door, Big Red will have to offload some of its spectrum to other companies, the FCC argues. The DOJ, meanwhile, is more concerned that Verizon is getting a little too cozy with Bright House, Comcast, Cox and Time Warner Cable in terms of marketing and reselling bundles that include cellular and cable access. Closing the deal also requires setting up a new joint venture in technology research. We're still working to learn the full details of the deal, but the spectrum handover will likely give a swift kick to Verizon's 4G capacity -- and anger a few rivals who wouldn't have wanted any handover to go through. Update: Since we posted, it's become clearer that FCC chairman Julius Genachowski has only recommended a vote in favor of the deal; the agency hasn't formally greenlit the deal just yet.
US Senator says DOJ should drop Apple ebook lawsuit
Senator Charles Schumer of New York (right) appealed to the U.S. Department of Justice yesterday in the Wall Street Journal to drop its lawsuit against Apple and a number of major publishers. The DOJ alleges that Apple and the publishers colluded to raise prices in the ebook market. Schumer states that "the suit will restore Amazon to the dominant position atop the e-books market it occupied for years before competition arrived in the form of Apple. If that happens, consumers will be forced to accept whatever prices Amazon sets." Schumer points out in his guest editorial that after Apple entered the market with iBooks, competition increased. Amazon's market share fell from 90 percent to 60 percent, and as a result the company had to "expand its catalog, invest in innovation, and reduce the prices of its Kindle reading devices" -- all things that are good for consumers. He notes that the average price for ebooks fell from US$9 to $7, while the DOJ looked at the fact that prices on a very few new releases have gone up. Whether Schumer's printed entreaty will make a difference to the Department of Justice is unknown, but it's interesting to see an influential member of the Senate come to the defense of Apple and the publishing industry in this case.
Senator Schumer calls on DOJ to drop e-book price-fixing suit
Believe it or not, but that whole e-book price fixing fiasco is still an ongoing issue for the Justice Department. New York's senior senator, Chuck Schumer wishes it wasn't however, he simply wants the DOJ to drop the case and walk away. In a lengthy (factually questionable) op-ed in the Wall Street Journal the distinguished gentleman from the great state of New York said that a successful suit against Apple (he didn't bother to call out the others involved) would set the e-book industry back several years and allow Amazon to dominate the market unchallenged. He also makes a broader call for the administration to develop more clear guidelines for deciding what non-merger cases to pursue. Unfortunately, we have to point out, that his argument is undercut by some questionable data referenced in the editorial. According to Schumer Amazon once owned 90 percent of the e-book market -- a number that, if true, most certainly predates the release of the Nook. This is followed by an insinuation that Apple all but single-handedly toppled the retail giant with the launch of iBooks, cutting Amazons market share to just 60 percent. While the latter number sounds about right we'd hesitate to lay responsibility for that 30 point drop entirely at Apple's feet. To dig into Schumers op-ed yourself hit up the source link.
DOJ looking into whether Comcast, other TV giants are unfairly (knee)capping Hulu, Netflix
The Department of Justice may have taken Netflix chief Reed Hastings' net neutrality complaints about Comcast as a lot more than just sour grapes. It's reportedly conducting an investigation into whether Comcast, AT&T and other TV providers are anti-competitive in their data restrictions. The Wall Street Journal cites primary concerns that Comcast's Xfinity TV cap exemption might unfairly punish competing services, but also claims that officials are worried the caps themselves steer viewers away from internet video, helping the incumbents cling to legacy TV for just a little while longer. On top of its cap anxiety, the DOJ may be looking into policies requiring traditional TV subscriptions just to watch online. None of the involved parties have commented on or confirmed the investigations, so there's no guarantee of any full-fledged lawsuit. Still, while TV operators insist they're being fair and need to keep data use in check, that might not deter legal action when the DOJ has supposedly questioned Hulu, Netflix and other relative newcomers who feel they're being squeezed. When Sony postpones its IPTV goals after fretting over US data caps, it's hard to imagine that there aren't at least a few raised eyebrows in Washington.
Alliance for Broadband Competition forms to sway opinion against Verizon's AWS acquisition
The effort to prevent Verizon Wireless from its purchase of AWS licenses from SpectrumCo and Cox just became a bit more intense, as several opponents to the deal have now banded together to form the Alliance for Broadband Competition. The coalition includes T-Mobile and Sprint, along with advocacy groups such as Public Knowledge, the American Antitrust Institute, the Rural Cellular Association and the Rural Telecommunications Group. Today, the newly formed alliance held a press conference in which it called on the FCC and Department of Justice to block the transfer, which it said would lead to an "excessive concentration of spectrum" held by Verizon Wireless. While it's not much of an olive branch, the group similarly suggested that it would support the deal if Verizon were to divest some of its spectrum holdings, establish roaming agreements and agree to a backhaul pricing structure. As you may recall, Verizon Wireless estimates that it'll exhaust its network capacity by 2014. Regardless of how this $3.9 billion proposal shakes out, it's rather clear that something's gotta give.
Justice Department clears Google of WiFi wiretapping violations
Two years ago, Google drove its way into a fair amount of hot water when it accidentally (as was claimed) scooped up private data over WiFi while collecting Street View and location data. Now, the Justice Department has cleared the prolific mapsters of the wiretapping violations. The DOJ made its decision not to push for prosecution based on reports from employees and investigating key documents reports Wired. The Wiretap Act (which is the relevant one here) was argued to only pertain to "traditional radio services," by US District Judge James Ware, but neither the DOJ or FCC said they could find any evidence that Google accessed the date it snared. In an extra move of openness, the search giant has also released the entire FCC report on the Street View investigation (redacted to protect identities) which can be found in the more coverage link. So, next time you see the famous camera-topped wagons roll around, you can leave your tin hat in the closet.
Antitrust suit carries on against Intel, Apple, Google and others
They can hope and pray all that they want, but Google, Intel, Apple, Adobe, Intuit, Pixar and Lucasfilm will soon be facing some serious accusations in a courtroom under the Sherman Antitrust Act and California's Cartwright Act. After years of trying to dodge legal action over an "informal agreement" to not pinch each others employees, and an effort to have the case dismissed, the seven defendants will have to stand trial as ordered by District Judge Lucy Koh in San Jose, California. In her decision Koh said, not only was there evidence that these agreements were made at the highest levels of the company but, that six such deals were struck in secret in such a short time frame "suggests that these agreements resulted from collusion." There's still time for yet another deal to be struck, however, this time between the defendants and the DOJ. Otherwise it looks like all seven will have to stand trial in June of 2013.
Apple says e-book price fixing charges 'simply not true,' Macmillan also responds
Not that we were expecting Apple and Macmillan to simply fess up and say, "you're right, totally tried to circumvent the free market," but both companies have come out swinging pretty hard against the allegations of price fixing. Apple has rejected the charges, calling them "simply not true." A company spokesman, Tom Neumayr, went so far as to tell Reuters that Cupertino was actually fostering competition by "breaking Amazon's monopolistic grip on the publishing industry." John Sargent, the CEO of Macmillan, defended his company's behavior in blog post, saying the publisher had done nothing illegal and that the concessions sought by the DOJ in settlement negotiations were "too onerous." It looks like the next step for both is to face off with the US government in court -- a daunting task, no matter how large your war chest.
Australia pondering joining e-book lawsuit bandwagon
If Apple and the Big Five thought they only had to contend with a federal e-book lawsuit in the US, they'd better think again. Australia's Competition and Consumer Commission is inviting local businesses to raise formal concerns as it weighs up launching its own judicial broadside against the alleged cartel. The Commission refused to comment publicly on its plans beyond saying that it was "aware of the latest developments" and would listen to local resellers who had concerns about the Australian market. While Simon & Schuster, Hachette and HarperCollins made back-room deals with the DoJ yesterday, they'd still be involved (at least initially) with the second front of this conflict. Meanwhile, the threat remains of the European Union joining in: turning it from a spot of local trouble into a global courtroom battle for the future of e-book pricing.
US DOJ sues AT&T for improper IP Relay billing, alleges millions in false claims to FCC
AT&T has violated the United States False Claims Act to the tune of "millions of dollars," according to a Department of Justice lawsuit filed this week. The DOJ alleges that the carrier intentionally neglected to authenticate users of the IP Relay service -- a tool utilized by hearing-impaired persons to type messages that communications assistants then read to callers. The service is also abused by individuals overseas to defraud U.S. businesses (think infamous Nigerian scams), which prompted the FCC to establish a law requiring telecom providers, including AT&T, to confirm the identity of registered users, which it apparently failed to do. This resulted in thousands of fraudulent users, representing some 95 percent of all calls, which AT&T received FCC payments for to the tune of $1.30 per minute. An AT&T spokesman was somewhat dismissive when speaking to the Associated Press, saying "as the FCC is aware, it is always possible for an individual to misuse IP Relay services, just as someone can misuse the postal system or an email account, but FCC rules require that we complete all calls by customers who identify themselves as disabled." But if the allegations are proven, there could be some pretty serious repercussions for Big Blue. DOJ PR is just past the break.
Apple begins defense against possible ebook antitrust case
Apple is wasting no time beginning to defend itself against the possibility of a U.S. Department of Justice (DOJ) antitrust action alleging that the company conspired with publishers to fix ebook prices. Last week, Apple requested that a class action suit alleging price-fixing on ebooks be thrown out. Part of the suit hinges on a comment that Steve Jobs made to the Wall Street Journal's Walt Mossberg in January of 2010, saying that unhappy publishers might decide to withhold ebooks from Amazon. Lawyers in the class action suit think that Jobs's comment meant that Apple and publishers were conspiring to force Amazon to raise ebook prices. Apple's retort last week says that the lawyers "mischaracterized" the exchange, and that Jobs only meant that Apple had a different strategy in the ebook business than Amazon. Apple says that it wants to sell as many ebooks as possible, which is totally believable since the company is still a relative bit player in the ebook market. As a result, the company would not have an incentive to raise prices on ebooks. But Apple's argument fails to address accusations that Jobs schemed with publishers to slow Amazon's eventual move into the tablet market with the Kindle Fire. Apple's lawyers responded in their court filing last week by downplaying the threat of the Kindle Fire: But this allegation just strings together antitrust buzzwords.. Nor does this "Kindle theory" make sense on its own terms. For example, if Amazon was a "threat" that needed to be squelched by means of an illegal conspiracy, why would Apple offer Amazon's Kindle app on the iPad? Why would Apple conclude that conspiring to force Amazon to no longer lose money on eBooks would cripple Amazon's competitive fortunes? And why would Apple perceive the need for an illegal solution to the "Kindle threat" when it had an obvious and lawful one which it implemented – namely, introducing a multipurpose device (the iPad) whose marketing and sales success was not centered on eBook sales? There are rumors that some publishers are currently in settlement talks with the DOJ. These publishers might be exchanging damning information for a lesser settlement, which could spell trouble for both Apple and other publishers.
Justice Department preparing Apple iBooks antitrust lawsuit
The Justice Department is reportedly preparing to go after Apple, Simon & Schuster, Hachette, Penguin, Macmillan and HarperCollins following its investigation into alleged e-book price-rigging. The case centers around a deal to switch to agency pricing, where the vendor takes a 30 percent cut of each sale, rather than the wholesale model that gives publishers more flexibility to reduce prices or even sell e-books at a loss. Some publishers are now trying to agree on a new policy in an effort to stave off the kind of federal suit that nobody wants to wear.
