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Feds, states want Apple to revamp e-book practices

NEW YORK — The Justice Department and 33 state attorneys general said Friday they want to prevent Apple from entering into contracts with sellers of e-books, movies, music and other digital content that are likely to raise prices.

The demand comes out of an antitrust suit against Apple and five e-book publishers. A federal judge ruled last month that Apple had colluded with the publishers to raise e-book prices.

Apple has denied wrongdoing and has said it will appeal the decision. It called the remedy proposal "a draconian and punitive intrusion into Apple's business." The inclusion of digital media other than books in the proposal doesn't bear any relation to the findings in the case, Apple said.

The book publishers previously settled the price-fixing charges. They are Hachette, HarperCollins, Simon & Schuster, Holtzbrinck Publishers, doing business as Macmillan, and Penguin Publishing Co. Ltd., doing business as Penguin Group. The settlements were designed to encourage price competition and discounting, but that hasn't happened.

The government alleged the publishers colluded with Apple to move the e-book industry away from the wholesale model used by Amazon.com, which had unnerved publishers by selling e-book versions of popular hardcover titles for as little as $9.99 before the April 2010 release of Apple's iPad. Under its contracts with publishers, Amazon could sell books at any price it wanted.

Apple instead adopted the "agency" model, where publishers set the retail price and the store takes a cut. That pressured Amazon into accepting the same model, the government alleged.

Apple said Friday the government's proposed remedy is unnecessary, since the publishers are already signing new wholesale contracts.

The Justice Department and the attorneys general also want Apple to allow rival e-book sellers to provide links inside their iPhone and iPad apps to their own bookstores.

Feds, states want Apple to revamp e-book practices 08/02/13 [Last modified: Friday, August 2, 2013 8:38pm]
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