U.S. Seeks Limits on Apple Pricing Deals for iTunes Media
Following a federal judge's ruling that Apple conspired with publishers to raise the price of their e-books, the U.S. Department of Justice has proposed preventing Apple from arranging pricing deals not just for e-books, but music, movies, TV shows and other iTunes media.
The plan, which was approved by 33 U.S. states and territories, will now have to be given the green light by U.S. District Judge Denise Cole in Manhattan. Cole ruled July 10 that Apple had played a "central role" in a conspiracy to raise e-book prices.
The Justice Department is using the price-fixing ruling as an opportunity to take aim at all other media businesses Apple is involved in. Although this came as a surprise to some, the Justice Department's proposal only states that Apple cannot do things which are already illegal.
Sharing the Cash
Along with preventing any price-fixing deals, the Department of Justice also wants Apple to allow rivals such as Amazon and Barnes & Noble to include links to buy media from their Web sites from within iOS apps.
Apple's competitors had been able to include in-app purchases for media from within their respective applications, but in 2011 Apple demanded that it receive a portion of all in-app , resulting in links to buy books being removed from applications. This proposal would allow those links to be put back in to apps, which would then direct users to online stores for Amazon and Barnes & Noble.
Between having to allow purchase links, and being unable to make deals with publishers, analyst Rob Enderle of the Enderle Group said he believes the proposed penalty will end up hurting Apple.
"It will make it harder for Apple to compete against Amazon and [will] weaken their consumer products," Enderle said.
However, Enderle also believes it will end up being beneficial to consumers, who should receive fair prices moving forward.
Providing an external monitor to review all of Apple's efforts has also been proposed. The monitor would ensure that Apple does not enter into any e-book contracts during the next five years.
Paying Off Damages
The antitrust lawsuit is not the only problem that Apple is dealing with as a result of fixing e-book prices. Attorneys general from the 33 states involved in the suit have come forward requesting that money be returned to consumers who had to pay higher prices for their books as a result of Apple's deals with publishers.
Outside of the government lawsuit, Apple is facing a similar class-action lawsuit brought by customers for the alleged price-fixing. Since Apple has already been found guilty of the charge on a federal level, the class-action suit would likely end up going against Apple as well.
Once the judge decides whether to accept this deal, Apple may have to forfeit all its agreements with HarperCollins Publishers, Hachette Book Group, Simon & Schuster, Penguin Group and Macmillan.