Judge Plans on Tough Apple Ebook Restrictions

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Judge Denise Cote is considering hitting Apple with some pretty stiff sanctions in the Department of Justice's ebook price fixing case against the company including restricting the types of contracts Apple can strike for five years and an additional five years of government oversight. She won't, however, grant the DOJ everything it wanted in its remedies proposal, and refused Apple's request to put the case on hold during the appeal process.

Judge considers stiff penalties in Apple ebook price fixing trialJudge considers stiff penalties in Apple ebook price fixing trial

Apple, along with Penguin, MacMillan Simon & Schuster, HarperCollins, and Hachette Book Group were all accused of conspiring with Apple to push book prices up above the rates Amazon was charging. The publishers all settled out of court to avoid the potentially high costs they would've otherwise incurred while Apple chose to go to trial.

Judge Cote sided with the DOJ and ruled that Apple did conspire with publishers to raise book prices. The DOJ asked for remedies that go beyond what Judge Cote is considering, and which Apple called "draconian."

The DOJ argued that Apple and the publishers were trying to force the price of ebooks above the US$9.99 Amazon was charging to make customers pay more. Apple argued that it was simply trying to strike reasonable deals to bring titles to the iBookstore, while the publishers said Amazon was forcing retailers to sell books below cost to drive them out of the market.

Along with the oversight Judge Cote wants to impose, she's considering limiting Apple to negotiating with only one publisher every six months as a way to limit the likelihood of colluding on future book deals. She said that would ensure that "at no one point in time will Apple be able to renegotiate with all the publisher defendants at once."

Apple made it very clear that it is appealing Judge Cote's ruling and even said she made errors during the trial be refusing to allow testimony that helped its case. The DOJ shot back with accusations that Apple and the publishers are already conspiring again.

Judge Cote is already working on scheduling future hearings in the case.

[Thanks to NDVT for the heads up]

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It's pretty clear that the DOJ isn't happy with the way Apple entered into the ebook market. By pushing forward with the trial the DOJ essentially endorsed Amazon's business model where it sells ebooks below cost, and ultimately pushes other retailers out of the market because they can't afford to sell at a loss. Apple is appealing the ruling, and if it wins, that would bring an end to the DOJ's proposed remedies in the case.



Does anything happen to judges or prosecutors when the remedies or sentences they propose / impose are overturned on appeal? Do they get dinged in performance reviews or public ratings? Does it have any adverse effect of their careers?

Lee Dronick

We need a Yelp category for Judges, and politicians.

Bosco (Brad Hutchings)

Apple, convicted monopolist…

Oh, Eddie Cue, the DOJ will sue… Eddie Cue


Surface-level view of the case is that Apple made deals with all those publishers at the same time which raised the cost of books. Yes, that is conspiring.  It just so happens that the free market in this case favors Amazon’s monopoly-establishing tactic. Did anyone ever say capitalism was perfect?

If we say Amazon is wrong to sell below cost, then we have to say the same for Microsoft who shoved it’s way into game systems with Xbox. Oh, and Internet Explorer, but that was bad especially due to the OEM bundling deals.

It does seem rather harsh to punish Apple so badly for trying something that was quite necessary to compete in the market. But it looks like what the judge is saying now would affect Apple’s deal-making only with respect to books, so the punishment does fit the crime.

It also might not be a bad situation. If Apple had made deals with one publisher at a time 6 months apart nobody would be able to accuse Apple of collusion; it would simply have looked like market forces swinging in a new direction. So, now Apple gets to do exactly that on try number two.


Apple didn’t need to make those deals to fix ebook prices for the entire market.


Why hasn’t the DOJ or Congress
taken Amazon to task for it’s pricing policies ?
Surely, selling below cost is harmful
to Amazon’s competitors ?


@ Furbies ~ It’s called “dumping,” and it is illegal.



Book stores sell books below cost all the time.


Bookstores selling paper books below cost to move old inventory and clear physical space is not the same as selling ebooks below cost. An ebook would still be there on the server, where it occupies a miniscule space.

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