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The US Department of Justice has called for further and extended penalties for Apple in the wake of its successful case against the company for e-book price-fixing, indicating that it believes publishers "may be positioning themselves to pick things back up where they left off as soon as their two-year clocks run".
In papers filed on Friday (2nd August), the DoJ has demanded that Apple agree to five years with no agency model, rather than two as previously stated, submit to ten years of monitoring, and allow other e-book retailers such as Amazon and Barnes & Noble to enable direct purchases through their iOS apps for "two years" without paying Apple a commission on those sales.
The DOJ submission also appears to call into question Apple's existing contracts with other media businesses, demanding that it shall not "enter into or maintain any agreement with any e-book publisher or supplier of any other form of content (e.g., music, other audio, movies, television shows, or apps) where such agreement likely will increase, fix, or set the price at which other e-book Retailers or retailers of other forms of content can acquire or sell e-books or other forms of content".
Apple called the measures "draconian and punitive" in a response, saying the measures are "an intrusion into Apple's business, wildly out of proportion to any adjudicated wrongdoing or potential harm".
The company said the the DoJ's demand that other retailers be able to sell e-books throughout their apps without paying a commission to Apple was "outrageous". It said: "Apple is under no duty to allow other retailers to offer apps on the iPad in the first place, much less on terms that subsidise their operations… Nevertheless, Apple allows all e-book retailer apps that are compliant with its policies – including those offered by Amazon, Barnes & Noble and other competing e-book retailers – to be offered in its App Store."
It said the move would merely serve to strengthen Amazon: "This requirement would promote a competitive imbalance and serve to entrench Amazon's dominant position. To the extent the injunction would give Amazon the advantage of in-app purchasing though a hyperlink without requiring it to pay Apple for the privilege of direct access to Apple's iPad customers, the injunction simply protects Amazon - 'the dominant e-retailer for books' - from competition."
Apple also said that being prohibited from negotiating certain terms such as 'most favoured nation' clauses with publishers would place them "at a competitive disadvantage by limiting its flexibility to choose a business model . . . The provisions seek to punish Apple and harm competition rather than correct any wrongdoing or benefit consumers."
But the DOJ insisted that the requirements were "not unduly burdensome, and allows Apple to compete vigorously and lawfully, thereby balancing the goal of minimal invasiveness with remedial objectives".
The new filings follow the DoJ's victory in the e-book price fixing case, which ruled that Apple has conspired with major publishers Hachette Book Group, HarperCollins, Simon & Schuster, Macmillan and Penguin, to raise the price of e-books. The publishers all settled with the DoJ, leaving Apple to fight the claims in court.