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DOJ: Steve Jobs Changed Apple’s In App Purchase Policy To Hurt Amazon

DOJ: Steve Jobs Changed Apple’s In App Purchase Policy To Hurt Amazon

August 23, 2013
The U.S. Department of Justice has filed a revised proposed remedy for Apple in the landmark e-book case, which Cupertino lost in July. While its proposed punishment for Apple remains largely the same, the DOJ has used the revision to delve more deeply into its criticism of Apple’s in-app purchasing policy, according to Gigaom. In the new filing, the U.S. government claims that Apple changed its in-app purchase policy in 2011 “to retaliate against Amazon for competitive conduct that Apple disapproved of.” As a result, Amazon was forced to remove the Kindle Store from its iOS app. While the new rules applied to all types of digital content, the government argues that they were primarily put into place “to make it more difficult for consumers using Apple devices to compare ebook prices among different retailers, and for consumers to purchase ebooks from other retailers on Apple’s devices.” As proof, the DOJ offered the following email exchange between the late Apple CEO Steve Jobs and Philip Schiller: The government has remained steadfast in its belief that Apple should be punished for colluding with publishers to set e-book prices. However, they have offered the court some concessions. For one, the DOJ now wants Apple to remove all in-app restrictions for a period of five years, instead of the 10 it originally proposed. However, it wants to retain the right to extend the injunction in one-year increments for up to five additional years. The government also wants Apple to negotiate with publishers at staggered times, rather than all at once. Finally, they would like to see an external monitor put into place, rather than the “vigorous in-house antitrust enforcement program” suggested by Judge Denise Cote. The DOJ argues that “Apple’s in-house enforcement program will be insufficient to change the corporate culture, and that the company cannot be left to solely police itself.” Over a three-week civil antitrust trial, which ended June 20, the Justice Department said that Apple agreed with the publishers in January 2010 to allow them set a higher price for best sellers and new releases in response to the publishers’ “Amazon problem”: a $9.99 price point for those books on Inc. As a result, prices for e-book best sellers rose to $12.99 and $14.99, the government claimed in its lawsuit. On July 10, the judge agreed with the government that this action was illegal, and said that they are entitled to injunctive relief. Apple has not yet responded to the government's new remedy document, though they are expected to appeal whatever the eventual punishment.

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