Justice Wants To Force Apple To Let Other Retailers Sell Within Apple Devices

It's good to know that the U.S. Department of Justice hasn't lost its touch for subtlety. After last month's federal court ruling that Apple had engaged in monopolistic behavior when pushing e-book sales, Justice was asked to propose a solution. On Friday (Aug. 2), they did: Apple, stop doing it.

"Under the department's proposed order, Apple's illegal conduct will cease and Apple and its senior executives will be prevented from conspiring to thwart competition in the future," said a statement attributed to Bill Baer, Assistant Attorney General in charge of the Department of Justice's Antitrust Division.

The proposal, done in conjunction with 33 state attorneys general, would force Apple (NASDAQ:AAPL) "to terminate its existing agreements with the five major publishers with which it conspired and to refrain for five years from entering new e-book distribution contracts" that restrict book prices. That was the initial problem, with Justice arguing that Apple's price clauses forced higher book prices for all e-book customers, including when they were purchased from rivals such as Amazon.

Apple would also "be prohibited from again serving as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms."

But Justice's proposal would go beyond ebooks, applying similar restrictions to Apple regarding music, movies, television shows and "other content that are likely to increase the prices at which Apple's competitor retailers may sell that content." Then came the zinger: "To reset competition to the conditions that existed before the conspiracy, Apple must also for two years allow other e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their e-bookstores, allowing consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple's prices with those of its competitors."

And as if that isn't going to make Apple unhappy enough, the government added that the court should appoint an Apple overseer, an "external monitor to ensure that Apple's internal antitrust compliance policies are sufficient to catch anticompetitive activities before they result in harm to consumers." Apple's internal antitrust compliance policies? Are those like Walmart's internal be-nice-to-suppliers policies?

To tweak Apple further, Justice wants the monitor's salary and expenses to be paid by Apple. Presumably, the court would have sole hiring and firing and setting-salary authority over the monitor.

Given that Apple's proposal would likely be far more Apple-friendly, Justice had to push its proposal over the edge, so that the judge could find a middle ground that was still strong enough to function. But given the harsh words the judge had for Apple the first time, this Justice proposal might just get through intact.

For more:
- See Wall Street Journal story
- See New York Times story
- See U.S. Justice Department statement

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