Apple's iBooks court monitor stays in place, but there's a catch

Apple's iBooks court monitor stays in place, but there's a catch

Apple's been trying to stop court-appointed antitrust monitor Michael Bromwich, put in place last summer to oversee the company's efforts to comply with a ruling against it in the e-book price fixing case. Looks like they're going to have to get used to him, according to the Wall Street Journal.

The order Monday by the Second U.S. Circuit Court of Appeals favored the Justice Department, which had pushed for the monitor, but Apple didn’t walk away empty handed.

The panel of judges defined Mr. Bromwich’s duties in narrow terms: The former Justice Department inspector general is authorized to request interviews and documents from the company only to ensure that Apple has policies in place to prevent future antitrust violations and that senior executives and board members understand them.

So while Apple doesn't shake Bromwich entirely, he doesn't have the latitude that he had going into this process. Apple's lawyers claimed that Bromwich had been exceeding his authority.

What do you think? Is Apple guilty, as Judge Denise Kote ruled? Or was the fix in against Apple from the start because of Amazon's dominance in e-books? Let me know in the comments.

Peter Cohen

Managing Editor of iMore, Mac and gaming specialist and all-around technologist. Follow him on Twitter @flargh

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Apple's iBooks court monitor stays in place, but there's a catch

24 Comments

Are you implying that Amazon bribed the judge? Or that Amazon is simply so popular that public opinion swayed the judge to find in their favor?

Beamed via my Moto X from the iMore Android app.

Apple's products are just plain better -- they're trying to maintain this quality and sometimes their actions are misunderstood -- the court appointed monitor is just getting in the way of us having better versions of our existing gizmos :-(

This has to do with the price fixing e-book incident not much to do with their products per say as you are implying, i don't understand what you mean by misunderstanding? they were caught and measures were put in place to make sure it does not happen again thats all. Yes it sucks cause Apple does make incredible products from there MacBooks, iMac to the Mac Pro. but you do something like this your going to have to face the consequences, it is what it is i guess.

...they didn't really do an adequate job at proving anything wrong was done -- the judge seemed prejudiced going into it :-(

They violated 2 of the 5 big tenants of antitrust law, and there were reams of documentation to prove it. Apple was not even contesting the guilty finding here, just the latitude granted the monitor. They were guilty, brazenly so, and as sting7k points out, your last sentence only makes any kind of sense if you are seriously asserting Anazon paid off a federal judge.

To be fair, they are appealing the decision, and actually wanted to have the monitor suspended until they are done appealing, IIRC

That is my understanding as well, which is why I said they were not contesting it *here*

If they win on appeal despite the evidence, we might as well just stop trying to enforce anti-competitive law, because Apple was so blatant with their violations. I don't necessarily agree with the severity of the sanctions, however...

Sent from the iMore App

Ok, so sounds like we are on the same page. I read your post that they weren't appealing overall.

This seems not only more reasonable that what was allegedly occurring, but actually in line with what was ordered.

Sent from the iMore App

Sounds like a win for Apple. It's easy to put a process in place and document it. That's really all they need to do to keep this guy out of the way.

How did apple win something? They still owe the lawyer fee, they argued there was no need for a monitor and the court rejected that. And the original court order is still in place. All the court did was in no uncertain terms define the scope. They did not change the scope. It's not narrower. It's what it always was.

I hate the whole case. It's based on an outdated brick &and mortar retail model of supply of physical books, where a publisher sets a retail price of say $20 for a book then charges stores 60% of that price ($12) for the book. The retailer was then free to sell the book for whatever price they want, even less than cost as a loss leader. Ebooks aren't sold buy that model. A retailer like Amazon or Apple doesn't pay up front for an ebook. They list the book at the price the publisher (or increasingly the independent author) chooses. When a book sells the etailer keeps their 70% and gives the publisher their 30%. Prior to ibooks Amazon fixed the price of ebooks at $9.99 by decreasing the royalty take a publisher or author gets when a title went over Amazon's target $9.99 price. They had no competition giving publishers & authors a better rate until ibooks came along. Publishers and authors could finally list their books for what they are worth and still be better off because they were selling more books outside of Amazon.

I don't think the case will hold up on appeal. The DOJ's main argument that it was bad for consumers doesn't hold water when the sales data is poured into it. The average cost of ebooks have gone down steadily since Apple entered the market. The courts have traditionally held up businesses rights to enter into exclusivity agreements with their partners also. If Apple loses on appeal all other exclusive agreements are going to be subject to being declared illegal too. In that case a loss would be a gain to Apple because it would throw the door wide open to offering per channel subscriptions to cable networks. As well as sporting events and pay per view concerts.

"Prior to ibooks Amazon fixed the price of ebooks at $9.99 by decreasing the royalty take a publisher or author gets when a title went over Amazon's target $9.99 price"

Any source for this?

"Publishers and authors could finally list their books for what they are worth and still be better off because they were selling more books outside of Amazon."

And they get LESS money with the agency model.

"I don't think the case will hold up on appeal. The DOJ's main argument that it was bad for consumers doesn't hold water when the sales data is poured into it The average cost of ebooks have gone down steadily since Apple entered the market

Irrelevant, the average cost of accused publishers went UP since Apple entered the market

I think you have to re read what the case is about before "hating" something

My source is Amazon's Terms and Conditions. Though I did goof and transpose the percentages. For anything under the 9.99 threshold Amazon the publisher gets a 70% royalty and Amazon keeps 30%. Go over 9.99 and it's cut in half to the 35% royalty rate for a publisher and Amazon keeps 65%.

The case is about Apple, or any business, being able to enter into exclusive agreements with a supplier/content provider that prohibits the supplier from selling the same product to a competitor at a lower cost. Cable Services and Networks have formed the same agreements for the past 30 years and the courts have allowed it.

Really, you should re read what the case is about.

What you have quoted is AGENCY model, publishers had WHOLESALE model, publishers SOLD the books at whole price.

"The case is about Apple, or any business, being able to enter into exclusive agreements with a supplier/content provider that prohibits the supplier from selling the same product to a competitor at a lower cost."

Do you know anything about the case? Because you can't be more wrong. But hey, feel free to hate what you want.

"I hate the whole case. It's based on an outdated brick &and mortar retail model "

No. It's "BASED" on The Sherman Anti-trust act which applies all companies regardless of whether they are engaged in web based or brick and mortar sales.

"Or was the fix in against Apple from the start because of Amazon's dominance in e-books? "

Trying to grasp what's implied here

That is NOT a catch. It's not even a change in the order. All this is is the Judge writing down the scope of his authority that was obvious. He never had the authority to go outside the scope of the court order. The inspector can still conduct interviews within the scope of the court order. That's all he could ever do. Apple didn't win anything. They still have to pay, the Inspector wasn't found to be exceeding his scope, the court doesn't believe or doesn't care that it's an intrusion for apple, it's not stopping, and they still have to pay the lawyer's fees. All Apple got was an order saying they'll get more of the same.

Peter,

BOOK prices have been and always will be set by the publishers; just do a survey of bookstores and you'll see books selling for the same price no matter where you go. Heck, they even have their prices printed on the covers to make sure of that. And if they're on sale at one store, another store either has the same sale, or will honor it.
So why should eBooks be any different? Truth be told, they haven't been. I've done my own surveys and eBooks are so closely priced between iTunes, Amazon, B&N and independent ePub sellers that the differences are largely indistinguishable. And why is that? Because the publishers negotiate those same prices with everyone. They're used to doing that, because it's the way they've been doing business for decades.
If the DoJ is going to punish Apple, then it should also be punishing the rest of the industry for colluding to fix eBook prices as well.

The funniest thing is eBooks are so much cheaper to produce and distribute; yet it doesn't seem those savings are passed on to us as eBooks are ususally only $1-2 dollars cheaper than their printed versions.

pete

Apple is being unfairly punished. Book prices are mostly the same across the board, because retailers compete with each other. The only entity that benefits by this case is Amazon. Here's a brief list of ebooks I was going to buy this week with the kindle price on the left and the ibooks on the right.
John Grisham Kindle Price-ibooks Price
Sycamore Road 6.49 -6.99
The Client 8.54 – 9.99
Theodore Boone: Kid Lawyer 5.59- 7.99
Theodore Boone: The Accused 6.15 -7.99
Theodore Boone: The Activist 9.78 -10.99
Theodore Boone:The abduction 6.20 -7.99
Dave Eggers:
The Circle: 11.49-11.99
Heartbreaking Work of Staggering Genius 9.41 -11.99
Jonathan Franzen
The Kraus Project 11.04-12.99
How to Be Alone 8.89-9.99
Janet Evanovich
Takedown Twenty 6.49-6.99
Notorius Nineteen 5.38-5.99

Prior to DOJ stepping when a book dropped one place it dropped at Apple too. Now, the consumer either buys from Amazon, or pay penalty for using what they feel is a better ereader. Consumers should file a Class action case against DOJ to recoup our losses.

"Prior to DOJ stepping when a book dropped one place it dropped at Apple too"

You really don't know about the case, do you?

"Now, the consumer either buys from Amazon, or pay penalty for using what they feel is a better ereader. Consumers should file a Class action case against DOJ to recoup our losses."

Ah, no, is just that you're joking, no one with just a little knowledge of the case can write such nonsense

Yes, ebooks are only a couple dollars cheaper than the physical print editions. The same thing is true of all digital media. Full album downloads and movie downloads are only a few dollars cheaper than cd's (when they still make them) and dvds/blue-rays.