DOJ Revises Apple E-Books Proposal, Barely

The Justice Department on Friday released a revised proposal for how it believes Apple should be punished for an e-book price-fixing scheme.

The DOJ said it would allow a five-year injunction rather than a 10-year term, as well as staggered negotiations with book publishers. But it declined to back off requests regarding an external auditor and the ability to purchase e-books from rivals like Amazon within the iOS ecosystem.

"As we have said all along, the purpose of the remedy is to fix the competitive problems, restore competition to the marketplace and to prevent the illegal behavior from continuing in the future," the DOJ said in a statement. "We have revised the proposed remedy taking into account the court's comments and this fast changing industry."

Cutting the injunction time from 10 to five years ensures "that Apple will not be 'locked in' for an extended time to a set of terms of which changes in the industry could alter the import," the DOJ said.

However, the government reserves the right to seek a one-year extension of the injunction if necessary, and they can seek up to five one-year extensions, so Apple might end up under the government's thumb for 10 years anyway.

Meanwhile, the DOJ was not swayed by Cupertino's argument on some of its other proposals, including an outside monitor who will make sure that Apple is not engaging in any anti-competitive behavior.

Apple said it will handle the issue on its own via two new litigators, but "it is simply unreasonable to assume that an internal compliance lawyer, entrenched in that culture and beholden to those executives for his or her position and remuneration, will alone be able to effectuate the necessary changes," the DOJ argued.

"While Apple argues that an external monitor would be 'extremely costly and burdensome,' [the DOJ] respectfully submit that failing to appoint a monitor will prove extremely costly to consumers and the marketplace," the agency argued.

The DOJ also pushed for links to rival e-book apps. Right now, rivals like Amazon and Barnes & Noble have iOS apps that allow people to read purchased books on iPads or iPhones. But when Apple started demanding a 30 percent cut of all in-app purchases, the book retailers pulled the ability to purchase e-books from within their apps. Instead, customers must do so from the browser and then re-open the app, where their purchases will be available. Under this deal, the apps would include a link to those browser-based e-book stores.

The DOJ pointed to iOS apps from Amazon and Zappos, which allow for the purchasing of goods without having to turn over a 30 percent cut. "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 DOJ said.

The case dates back to April 2012, when the DOJ sued Apple and five publishers - Macmillan, Penguin, Hachette, HarperCollins, and Simon & Schuster - over an alleged "illegal conspiracy" involving e-book price fixing. The publishers settled with the government, but Apple fought back and the case went to court in June. A New York district judge later found that Cupertino is guilty of e-book price fixing.

When it was first proposed earlier this month, Apple argued that the DOJ's proposal was "a draconian and punitive intrusion into Apple's business, wildly out of proportion to any adjudicated wrongdoing or potential harm."