U.S. Department of Justice 'remedy' for Apple could do Amazon a solid
The United States Department of Justice has published a document with what it calls its “remedy” to fix Apple’s anti-competitive e-book practices. In it, the DoJ calls for a court-appointed external monitor to watch Apple, and also requires that Apple terminate the agreements it has with the five publishers it conspired with. But the final piece, allowing links from iOS apps to external bookstores, may be a very big deal for e-book sellers like Amazon, Barnes & Noble and others.
Currently, Apple takes a 30% cut from apps that sell digital goods or services. If Amazon wanted to sell Kindle e-books straight through its iOS app, it could do so, but it would have to hand 30% of each sale to Apple. That’s a pretty big cut, and it makes a lot of sense that Amazon doesn’t do this.
But Apple also doesn’t allow Amazon to link to its online bookstore within its apps. Customers who download Kindle for iPad, for example, have no way to purchase and download e-books within the app because of Apple’s restrictions. Amazon did use some creativity to get around this issue with its free sample feature, but if the DoJ has its way, the company might actually be able to upgrade that sample feature significantly. Instead of searching for a title and just getting a sample, imagine also getting a link to that e-book’s Amazon page.
It isn’t the prettiest way to do things, but it’s the best we’ll likely get out of the Kindle app for iOS. And only if this DoJ “remedy” is actually put into place.
There are a couple of caveats, though, the major one being that Apple would only have to allow the bookstore links for two years. After that, the DoJ believes enough time will have passed to “reset” prices and competition in the e-book market, and Apple will be free to ask Amazon to remove the links again. As for the rest of the DoJ’s plan, Apple would be barred from entering into any new contracts with e-book publishers for five years.
I’m not sure Eddy Cue or even Steve Jobs could have imagined the type of problems that iBooks would end up causing. Had they known, perhaps they wouldn’t have pushed forward with it. But it exists now, and despite the company’s best efforts to tilt the odds in its favor, it appears that iBooks and the iBookstore may have to compete just like every other e-book store — on price.
We’ll keep an eye on this story and let you know if the Department of Justice moves forward with its plan. The next court date, which relates to the remedies put forth by the DoJ, will be August 9, 2013.
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