Apple Should Settle E-Book Antitrust Case, Expert Says
Former FTC policy director says the DOJ's evidence against Apple and several book publishers is the kind that prosecutors "fantasize about."
New iPad Teardown: Inside Apple's New Tablet
(click image for larger view and for slideshow)
Hachette, HarperCollins, and Simon & Schuster have all agreed to enter a consent decree with the government.
Under the terms of the settlement, they must terminate any deals they had with Apple that restrict pricing in the e-book market. The companies must also notify the DOJ of any e-book related joint ventures they form with any other publisher. They must also submit quarterly reports to the DOJ that describe the terms of any e-book agreements they strike with retailers.
The defendants also agreed not to interfere with retailers' promotion of e-books, including discount programs, for a two-year period and other business restrictions. Balto thinks that if Apple doesn't settle it risks harsher penalties. "The one thing about refusing to settle is that you can expect the government to be a lot tougher."
The DOJ claimed that the alleged conspiracy came together in 2009, as Apple was preparing to launch the first iPad, which the company saw as a platform for lucrative sales of electronic books and other media.
The government alleges that Apple and the publishers teamed up in a campaign to move the publishing industry from a wholesale model under which retailers, like Amazon, buy books from publishers and charge whatever they like, to a so-called agency model under which publishers set prices and give the sellers a fixed commission.
The DOJ contends that, by moving publishing to an agency model, the defendants could limit Amazon's ability to sell e-books for the Kindle and other e-readers at steep discounts.
All of this comes as demand for e-books is growing. Some 17% of U.S. book buyers purchased e-books in December of last year, compared to 9% in December 2010, according to RR Bowker. Overall book revenues, including print and electronics, increased 27.1% last year, to $503.5 million, according to the American Association of Publishers.
Demand for e-books is expected to continue growing as more low-cost e-readers, including Amazon's $199 Kindle Fire, hit the market.
Apple, Penguin, and Macmillan, have yet to formally answer the government's charges.
The Enterprise 2.0 Conference brings together industry thought leaders to explore the latest innovations in enterprise social software, analytics, and big data tools and technologies. Learn how your business can harness these tools to improve internal business processes and create operational efficiencies. It happens in Boston, June 18-21. Register today!
Building A Mobile Business MindsetAmong 688 respondents, 46% have deployed mobile apps, with an additional 24% planning to in the next year. Soon all apps will look like mobile apps Ė and it's past time for those with no plans to get cracking.