The Justice Department's warning to Apple about the company's apparent collusion with publishers on e-book pricing couldn't have been better timed. With the news breaking the day after CEO Tim Cook unveiled Apple's new iPad, the idea that Apple's breakneck speed of innovation has produced a wake of legal consequences is sure to get maximum play in the tech press. According to The Wall Street Journal's sources -- "people familiar with the matter" seem to know everything -- the DOJ has also warned five U.S. publishers about their pricing: Simon & Schuster, Hachette, Penguin, Macmillan and HarperCollins.
This is not a new situation. Apple has been flirting with antitrust violations for years, and whispers of a damaging suit involving the company's negotiations with publishers over the prices of e-books in iTunes have been circulating since last year. In December, the European Commission announced an almost identical investigation that involved the same publishers. Perhaps buoyed by complaints from Amazon, the Europeans took aim at the publishers alleging that they'd "possibly with the help of Apple, engaged in anti-competitive practices affecting the sale of e-books… in breach of EU antitrust rules." This happened three months after a similar class action lawsuit was filed against Apple in the U.S. District Court of Northern California. Looking even further back, Apple raised suspicions within the DOJ in the spring of 2010 for anti-competitive behavior related to music sales in iTunes.
Three anti-trust investigations in as many years would be a troubling trend, but with the government's most recent warning, it might be time for Apple to deal with the consequences. It's not like the DOJ is going to shut Apple down or anything like that. However, as the company hustles to build tools not only to make it easier (and more expensive) for people to buy e-books— as well as to produce them—a round of settlements that would likely result from formal complaints filed by the Feds stand to pave the way for new regulations. Technology companies hate regulations, because they act as roadblocks on the path to innovation. In Walter Isaacson's biography of Steve Jobs -- published by potential Simon & Schuster, by the way -- it was revealed that Steve Jobs himself once warned Obama that he was "headed for a one-term presidency" due to his habit of imposing new regulations on businesses. Inevitably, new rules seem to be a much greater threat than Apple having to pay for a settlement. After all, they can afford it.
If you're sad to see the sacred Apple stumble in its so far very successful pursuit of dominance in all things media-related, there is a bright side for you, though. According to The Journal: "If successful, such a settlement could have wide-ranging repercussions for the industry, potentially leading to cheaper e-books for consumers." Cheaper books? That would really rock Amazon's boat.
This article is from the archive of our partner The Wire.