Apple Could Get Harshly Punished for E-Book Price-Fixing
After being found guilty of conspiring to raise e-book prices, Apple could face punishment from the Department of Justice that would strike at its typically secretive and self-contained company.
The troubles for Apple over its e-book price-fixing just keep coming. A month ago, a federal judge ruled that Apple and five book publishers conspired to raise prices on e-books in an attempt to deal a blow to Amazon's massive market share. Now, federal regulators and officials from more than two dozen states are striking at Apple's core in an attempt to further constrain the insular company with a series of court-mandated proposals.
As Reuters reports, the U.S. Department of Justice's proposals for remedy will hurt Apple's reputation in the market more than it will its financial bottom line, which, with just a single-digit percentage of the e-book market, is already quite low:
The government's plan, which still needs court approval, would require that Apple end its contracts with the five publishers and be banned for five years from entering contracts that would effectively the raise prices of e-books sold by rivals.
Apple would also be blocked from cutting deals with providers of movies, music and TV programs for its iPad tablets and iPhones that would likely increase the prices at which rivals might sell such content. It would also require providers to lower prices for Apple if they lower them for rivals.
One proposal would force Apple to provide hyperlinks to its competitors' e-book stores within apps. The Justice Department argues that this change would make comparisons of company-to-company prices much simpler and restrict any future instances of potential price-fixing. As it stands now, Apple does not allow links to external stores on any of its apps.
"The proposal strikes at the heart of Apple's power over its platform," writes Thomas Claburn of Information Week. Not surprisingly, Apple does plan to contest what it calls "draconian" measures — and they must still be approved by a court on August 9.
It hasn't been a great day for Apple, as this news comes on top of declining sales that suggest the Apple Store's demise is near. We'll let you come up with your own "rotten Apple" jokes, though it's certainly too early to count out the tech behemoth just yet.