Five major publishers have vocally protested the proposed ebook antitrust remedy the Department of Justice hopes Apple will abide by, arguing that the punishing settlement would impose “additional, unwarranted restrictions” and damage the ebook industry as a whole. Apple had described the DoJ guidelines as a “draconian and punitive intrusion”, taking issue with the suggestion that it should allow third-party retailers like Amazon and B&N to link to their own download stores within apps like Kindle for iOS, and that its freedom to enter into deals with publishers be curtailed. Unsurprisingly, despite settling with the DoJ previously, five of the big publishing houses are voicing their disapproval of the remedies as well.
Hachette, HarperCollins, Penguin, Simon & Schuster, and Macmillan submitted a motion to the New York court protesting the suggestions, which they claim would in fact hurt the publishing industry rather than Apple. Although the DoJ represents the limits on negotiations as being to curtail any potential further anti-competitive behaviors by the Cupertino firm, the five publishers argue, in fact they would “effectively punish” ebook rights-holders.
At the root of the argument is the freedom the publishers – and vendors like Apple – have to adopt the so-called agency model. From the publisher’s perspective, their earlier settlements with the DoJ, made voluntarily but with no admission of guilt, still allow them to make agency model agreements with vendors in certain cases. The model gives publishers the final control over what price ebooks are offered at, rather than allowing retailers to discount them, as Amazon was commonly doing prior to the iBookstore launch through its Kindle store.
However, by limiting Apple’s powers to negotiate new deals which could potentially raise media pricing, the publishers point out, that effectively bars them from agency model deals for distribution on the iPad and iPhone.
“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” Publishers motion
The Department of Justice disagrees, arguing that “the proposed relief does not modify the terms of the settlements we reached with the publisher defendants.” In fact, the spokesperson insisted, the remedies suggested would only affect Apple. “The proposed settlement with Apple, if approved by the court, would prohibit Apple from entering agreements that limit retail price competition during a reset period” they reiterated.
Apple has said it intends to appeal the original antitrust ruling, and has separately described the DoJ’s proposals as “wildly out of proportion to any adjudicated wrongdoing or potential harm.” A hearing will begin on Friday, August 9, to decide on what court-mandated remedies will be imposed.