DoJ says Apple's in-app purchasing rules were aimed at Amazon
Friday, August 23, 2013 @ 3:32pm
| The US Department of Justice has filed a revised settlement proposal for the outcome of its recent trial victory against Apple. The proposal is similar to the original, but incorporates an expanded section on in-app purchases, claiming that Apple formulated its rules to "retaliate against Amazon for competitive conduct that Apple disapproved of" and "make it more difficult for consumers using Apple devices to compare ebook prices among different retailers."
Since their inception in 2011, Apple's rules for in-app purchases have prevented apps from linking to outside storefronts that would bypass the Apple in-app purchase system, out which the company claims a 30 percent revenue cut. That forced a number of parties, including Amazon, to strip links to pre-existing stores out of their software.
The DoJ remarks that Apple applies its 30 percent cut unequally. "During the August 9 conference, Apple's counsel argued that the provision [reintroducing links to outside bookstores] should not be adopted because it was 'absurd' to suggest that Apple had changed its apps policy to discriminate against e-book retailers," it writes. "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 deeper evidence of a conspiracy, the DoJ includes an email exchange (below) between Steve Jobs, Eddy Cue, and Phil Schiller. Schiller complains about a 2010 TV ad for Amazon's Kindle apps, in which a woman is able to buy and read a book on an iPhone but then switch to an Android phone and keep reading. "While the primary message is that there are Kindle apps on lots of mobile devices, the secondary message that can't be missed is that it is easy to switch from iPhone to Android. Not fun to watch," part of Schiller's message reads.
Jobs replies asking for ideas, but then immediately suggests that "The first step might be to say they must use our payment system for everything, including books (triggered by the newspapers and magazines). If they want to compare us to Android, let's force them to use our far superior payment system. Thoughts?"
An important concession the DoJ is offering in the new settlement is the halving of a proposed injunction from 10 years to five. Apple would still, however, have to cancel its existing agency model deals with book publishers, and take on a third-party monitor to ensure compliance with antitrust rules. The company has protested, arguing that a monitor isn't necessary, and that the revised settlement terms are still designed to "inflict punishment."