Apple’s Bad eBook Behavior May Result in Ordered Changes, But No Financial Penalty

rottenappleThe U.S. Department of Justice (DOJ) has submitted a Proposed Final Judgment (PFJ) in the case in which Apple has been found guilty of leading a price-fixing conspiracy on eBooks. The PFJ does not envision any financial penalty but it does require Apple to alter its business practices.

Highlights of the proposed order would require Apple to:

  • allow, for just two years, in-app eBook purchases from competitors’ bookstore apps without charging the stores the 30% markup it had been adding as a deterrent;
  • refrain from participating in any information sharing, price fixing or other behavior with publishers that could lead to any group collective action;
  • cancel all of its so-called “most favored nation” contracts with publishers that were central to the price-fixing scheme;
  • hire a full-time, in-house compliance expert appointed by the court to ensure that its behavior complies with the order

.All of the provisions except the first would be in effect for 10 years, with some provision for earlier release from the obligations in certain circumstances.

There will be those who will complain that Apple wasn’t fined. But, really, when you have billions in liquid reserves, how much impact would a find have had, really? I think the DOJ did the right thing by trying to cure the behavior rather than looking to the past. Besides,publishers Penguin, HarperCollins, Hachette, Simon & Schuster, and Macmillan had already agreed to repay $164 million to consumers who were overcharged in the conspiracy.

In addition, the tarnish to Apple’s image from this sordid business practice will be long-lasting and is sure to discourage many of its staunchest backers and buyers, who may stop being such Apple fans and look elsewhere for technology solutions.

Or not. Microsoft was judged a monopolist at the turn of the 21st Century and I’m not sure it’s possible to trace much if any of its decline in the market to that determination.

I can say that, as a writer who relies on royalties and book-sale fees for part of my living, Apple’s behavior bothers me more than a little. Whether it will affect future technology buying decisions remains to be seen.

 

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