DoJ Claims Apple Implemented In-App Purchase Rules to 'Retaliate Against Amazon'

iBooks.pngThe Department of Justice today filed a revised punishment proposal for Apple in its ongoing e-book dispute with the company, reports GigaOM.

While the new proposal is largely the same as the original, it includes an expanded section on Apple's in-app purchasing policies along with the accusation that Apple initiated the rules specifically to "retaliate against Amazon for competitive conduct that Apple disapproved of" and to "make it more difficult for consumers using Apple devices to compare ebook prices among different retailers."

When Apple debuted App Store subscriptions back in 2011, it instituted a rule that prevented developers offering subscription and purchased content from including direct links to stores that would bypass the in-app purchase system. As a result, e-book retailers like Amazon and other digital media providers were forced to remove links to outside content.

Though Apple has argued that its App Store policies are unrelated to the e-books case, the Department of Justice disagrees and maintains that Apple should be forced to re-allow links to outside bookstores within apps. As part of its own argument, the DoJ points out that Apple does not receive a 30 percent cut for all goods sold through its App Store and likens digital e-books to physical goods.

During the August 9 conference, Apple's counsel argued that the provision should not be adopted because it was “absurd” to suggest that Apple had changed its apps policy to discriminate against e-book retailers.

These statements are incorrect. Apple misrepresented the factual circumstances surrounding this matter, including how the App Store operated and operates. It simply is not true that Apple receives a 30 percent commission from all retailers for all goods sold through apps. To use Apple's counsel's own examples, one can buy shoes today on an iPad using a Zappos app.

As evidence that Apple was conspiring to raise prices to punish Amazon, the Department of Justice submitted an email from Steve Jobs to Phil Schiller and Eddy Cue, which specifically mentions an Amazon Kindle commercial and suggests Apple force books, newspapers, and magazines to use Apple's "far superior payment system."

sjobsemailAlong with the new evidence, the DoJ continues to insist that e-book retailers should be allowed “costless hyperlinks” in their App Store apps for a two-year period.

Effectuating the provision requires Apple to make no change whatsoever to its iBookstore or App Store. However, returning to the pre-conspiracy policy will result in greater price transparency, and keep Apple from continuing to reap profits from its collusive behavior.

The revised proposal also cuts the proposed injunction time against Apple in half, but continues to require the nullification of existing agency model deals and the implementation of a third party monitor to ensure Apple's continued adherence to internal antitrust compliance policies.

According to Bloomberg, Apple has objected to the revised government proposal, saying that an outside compliance monitor isn’t necessary.

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Top Rated Comments

Brandon263 Avatar
140 months ago
Kinda agree with the DOJ on this one. Why can't Apple just compete with Amazon based on prices? It's not like they don't have the money.
Score: 39 Votes (Like | Disagree)
piecloud Avatar
140 months ago
Seems if you purchase something to use on/within the iOS device, Apple takes a cut, but if it is something not related to an iOS device, Apple does not take a cut.

What if MS wants to take a cut of every iTunes purchase on Windows?
Score: 19 Votes (Like | Disagree)
Yojimbo007 Avatar
140 months ago
It is becoming overly obviouse that this lunatic judge is in bed with Amazon !
Score: 15 Votes (Like | Disagree)
Oletros Avatar
140 months ago
It is becoming overly obviouse that this lunatic judge is in bed with Amazon !

It is becoming overly obvious that you don't have read the article
Score: 13 Votes (Like | Disagree)
Designer Dale Avatar
140 months ago
Can you get Apple iBooks from Amazon? How about Google apps? All these companies restrict their content to their devices, but everyone seems to want a ride on the Apple ecosystem.

Let's see the DOJ try to force Ford dealers to sell Chevy products. And I'm not talking about the used car lot.

Dale
Score: 13 Votes (Like | Disagree)
bryanescuela Avatar
140 months ago
Re:

Shame on u Steve!
Score: 12 Votes (Like | Disagree)