Apple to Allow Rival E-Book Retailers to Provide Direct Links to Content

I didn’t see this coming, although in hindsight, I should have.

The DOJ and 33 state attorney generals just published their proposed remedies in the Apple price fixing case. Most of it was expected: ending existing contracts with retailers and appointing an external monitor to ensure they don’t slip again.

But check out this one:

“Apple will also be prohibited from entering into agreements with suppliers of e-books, music, movies, television shows or other content that are likely to increase the prices at which Apple’s competitor retailers may sell that content. To reset competition to the conditions that existed before the conspiracy, Apple must also for two years allow other e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their e-bookstores, allowing consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.”

If I’m reading that correctly, it’s huge. E-book retailers are already free to provide links from their apps to their stores. They just have to give 30 percent of the sale to Amazon (as an in-app purchase), so understandably, they’d rather not do that. But this line seems to indicate that Apple can’t enforce that 30 percent cut for two years:

” … prohibited from entering into agreements with suppliers of e-books, music, movies, television shows or other content that are likely to increase the prices at which Apple’s competitor retailers may sell that content.” (Emphasis ours)

The only way retailers could make the same amount of money on a sale through the app, while still giving Apple their 30 percent, would be to raise the price of the book. Looks to me like that won’t be happening.

Considering how many people read and buy books on their iDevices through Nook, Kindle, and Kobo, that’s very good for consumers. Apple must have seen this coming, which explains why they fought so hard.

Happy day for us!

5 Comments on Apple to Allow Rival E-Book Retailers to Provide Direct Links to Content

  1. Not a done deal yet. As noted in NY times, judge needs to review this as it only what the DOJ wants but may not get.

  2. @Julius, true. I’ll be curious to see what the judge decides.

  3. I’m curious about what happens with this DOJ idea when Apple appeals? Won’t it have to wait until Apple loses completely?

    I suspect Apple will keep this in the courts as long as possible. Which could mean it will be a long time before this happens.

  4. To me, there is a huge difference between in-app purchases and an in-app link to an outside store.

    With an in-app purchase, apple is handling all the transaction costs for the benefit of the app publisher. You are using your apple.com account and the credit card on record with apple.com to complete the purchase. Apple then has to transfer the money into the app publishers account. That would justify the 30% commission.

    An in-app link to an outside store is a completely different situation. The app publisher has to run the external website, set up payment methods, and then directly deal with the customer if things go wrong. Why in the world does Apple think they deserve the exact same commission under those circumstances. A product is going to cost 30% more just because it was linked by an app with Apple doing nothing more than making the app available for download.

    Competition and choice are good. If a retailer wants Apple to handle all the transactions for them in exchange for 30% of the revenue, then let them. If they are willing to take on the cost, risk, and responsibility of doing it themselves, then they shouldn’t be put into an anti-competitive situation just because a person may link through an app rather than through Safari on the exact same device.

  5. Presumably, it’s out there as a talking point. I would expect Apple and the DoJ to be doing some kind of talking all the way up from here on out. If Apple can negotiate the DoJ down to something acceptable to them (fat chance, but you never know) then they can skip the expense of the rest of the trial. Despite Apple’s bluster, they have to know the chances of a positive outcome through the courts are slim.

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