Lawyers acting for Apple are today expected to ask a federal judge to dismiss the DOJ antitrust case against the company in its entirety.
The Department of Justice has for years been investigating whether Apple broke antitrust law by abusing its dominant position in the US smartphone market, before deciding that it did, and filing charges in March of this year …
Expand Expanding Close
Adobe is the latest target of the US Department of Justice’s recent wave of high-profile lawsuits. The company’s subscription cancellation practices are the specific target of the DOJ, which the government says is tantamount to ‘trapping’ users in subscriptions and has resulted in a formal lawsuit.
Expand Expanding Close
A Department of Justice investigation has concluded that the FBI inadvertently misled Congress when it said that it had exhausted all attempts to access the iPhone used by one of the San Bernardino killers.
The FBI claimed in a court filing that it had no means to access data stored on the iPhone without Apple’s assistance, a claim later repeated to Congress. A report covering this statement concludes that while it was technically true, it gave a misleading impression …
Just over a week ago, the FBI revealed that it had successfully unlocked the iPhone 5c used by one of the San Bernardino gunmen without the help of Apple. To this day, the FBI has not publicly disclosed the method it used to gain access, and it’s unclear if it ever will. The National Journal, however, reports today that the FBI has been briefing members of the Senate on how it was able to gain access to the locked iPhone.
Apple may be battling one branch of U.S. law enforcement on a terrorist-related issue, but CNN reports that the company is working closely with another on a broader fight against ISIS. Apple is one of six leading tech and media companies offering assistance to the Department of Justice in countering ISIS messaging and posts on social media.
At a meeting conducted at the Justice Department on Wednesday, executives from Apple, Twitter, Snapchat, Facebook, MTV and Buzzfeed offered their input to top counter intelligence officials, according to an industry source familiar with the meeting.
In all, nearly 50 companies and community groups participated, along with the National Security Council, the State Department and the British Embassy.
The issue is not just one of propaganda, said National Counterterrorism Center director Nick Rasmussen, but of directly encouraging acts of terrorism …
Some law enforcement officials are frustrated that Apple and other tech companies appear to be winning the PR battle over data privacy, reports the NYT.
Some Justice and F.B.I. officials have been frustrated that the White House has not moved more quickly or been more outspoken in the public relations fight that the tech companies appear to be winning, the law enforcement officials said, speaking on the condition of anonymity because they were not authorized to discuss the private conversations.
The comments came in the wake of a DOJ drugs and guns investigation where the agency obtained a court order to obtain iMessages between suspects, and Apple responded that it was unable to comply as end-to-end encryption is used, meaning that Apple has no way to decrypt the communications. Tim Cook said of iMessages a year ago that the content is “encrypted and we don’t have the key.”
There has long been tension between Apple and law enforcement agencies over encryption, Apple arguing that its customers right to privacy outweighs the right of law enforcement agencies to intercept communications – a stance strengthened by the Snowden revelations into large-scale electronic surveillance by governments. Law enforcement officials have become increasingly strident and hyperbolic in their statements on the subject.
United States Attorney General Eric Holder said last year that less stringent protection would still “adequately protect personal privacy,” FBI Director James Comey claimed that Apple’s encryption was “putting people beyond the law,” the DOJ suggested that iPhone encryption could eventually lead to the death of a child” and Manhattan district attorney Cyrus Vance, Jr, said that the iPhone would be “the terrorists’ communication device of choice.”
Apple is once again coming under fire for business practices and deals around Apple Music, the subscription music and video streaming service it launched last month. Consumer Watchdog, a prominent consumer advocacy group, issued a letter to the United States Federal Trade Commission and Department of Justice today, asking the government to put restrictions on Apple’s “plans to dominate the subscription music sector” while citing “serious antitrust concerns” based on information it received.
Expand
Expanding
Close
We’ve already heard several times that Apple has been facing investigations from both the Department of Justice and Federal Trade Commission over how it negotiated with labels for Apple Music. Now, the New York State’s attorney general has posted a letter from Universal Music Group in which it claims that it is not doing anything illegal to prohibit the access of free music services by the consumer. From the letter:
UMG does not currently have any agreements with Apple Inc. (i) to impede the availability of third-party free or ad-supported music streaming services, or (ii) that limit, restrict, or prevent UMG from licensing its recorded music repertoire to any third- party music streaming service on any terms that UMG may choose. Nor does UMG intend to enter into any such agreements.
Apple has been accused of using its large pull with labels to put other streaming music services like Spotify at a disadvantage. One specific example of this that has been pointed out earlier is Apple forcing labels to reduce the music that it makes available to ad-supported services in an effort to bolster the selection available on Apple Music.
Allegations that Apple is engaging in anti-competitive practices in the run-up to the launch of its rebranded Beats streaming music service are now being investigated by the Department of Justice, according to “multiple sources” cited by The Verge.
The claim is that Apple has been attempting to use its influence to persuade music labels to pull out of deals with free, ad-supported services like Spotify and YouTube in order to reduce competition and increase demand for its own paid service. The European Commission launched an investigation into these same allegations last month …
Following preliminary approval it received in August, Apple has been granted the final court approval it needed in its $450 million ebook settlement, according to a Reuters report.
During a hearing in Manhattan, U.S. District Judge Denise Cote approved what she called an “unusual” accord. It calls for Apple to pay $400 million to as many as 23 million consumers if the company’s appeal of a ruling finding it liable for antitrust violations is unsuccessful.
U.S. District Judge Denise Cote previously expressed concern over the proposed settlement citing a clause in the agreement that she called “most troubling”, but today called the settlement agreement “within the range of those that may be approved as fair and reasonable.”
Expand
Expanding
Close
Apple is facing a new class-action lawsuit from iBooks customers over price-fixing practices according to Reuters. As has been previously argued, Apple conspired with book publishers to hike the prices of ebooks, a violation of U.S. anti-trust law. The Department of Justice won its case against Apple for the same reason last year, and Apple is currently in the middle of appealing that case.
This new lawsuit is a civil case being brought by customers affected by the price-fixing scheme. Today U.S. District Judge Denise Cote ruled that the customers suing could do so as a group despite Apple’s objections. The actual trial will be scheduled for later this year.
Expand
Expanding
Close
Just a few days later after Apple CEO Tim Cook expressed his thoughts about the NSA and data collection transparency, Apple has posted an update to its website with new information regarding account data requests. The company’s press release comes as US Department of Justice comes to a settlement with technology companies over how they are allowed to disclose information about government data requests.
A statement from the DOJ explains the agreement will allow “detailed disclosures about the number of national security orders and requests issued to communications providers, and the number of customer accounts targeted under those orders and requests including the underlying legal authorities.” Due to these new guidelines, Apple has now been able to report FISA and National Security Letters separate from law enforcement requests as show in its graphics above and below. It also notes the new data released today replaces the U.S. data from its Feb. 5 2013 Report on Government Information Requests.
Apple CEO Tim Cook said in a recent interview that he would push congress for more transparency regarding controversial surveillance programs and how companies can disclose information related to information requests. At the time, Cook said that there was much the company couldn’t speak about due to gag orders:
In what is quickly becoming the next big ongoing back and forth between Apple and [insert third party here] of 2014, a new development has unfolded in the antitrust dispute over Apple’s iBooks practices. Michael Bromwich, the external monitor assigned to ensure Apple complies to antitrust laws relating to its iBooks program, has been temporarily removed, Reuters reports, following an “administrative stay” granted to Apple following a recent complaint filed by the Cupertino tech company against the attorney.
Photo: appadvice.com
Judge Cote, who is overseeing the e-books case involving the DOJ and Apple, said today that she does not want to “intrudce much on how Apple does business”, according to an AP article. This is the same judge that found Apple guilty of conspiring to raise prices.
As noted by ATD things morning, Apple recently submitted a court filing calling the latest proposed fixes for its damage to the industry as “broadside masquerading as a brief”. In addition, the company accuses the DOJ of working to give Amazon a competitive advantage. Just four days ago, the DOJ claimed the company’s IAP policies were directly motivated by competition from Amazon.
“Plaintiffs devote much of their brief to seeking to justify an injunction directed at Apple’s unilateral dealings with Amazon (and other e-book retailers) in its App Store, an issue that the plaintiffs did not pursue at trial. Plaintiffs are seeking a remedy that would give Amazon significant competitive advantage over Apple — an advantage it is neither entitled to nor deserves.”
As first spotted by GigaOm, the US Department of Justice has submitted a revised remedy proposal in the ongoing ebook case that previously found Apple guilty of conspiring with publishers to control ebook pricing. While much of the proposal remains the same as the proposal it first submitted at the beginning of this month, the report points out that the DOJ has added more information and a Steve Jobs email as an exhibit showing that Apple changed its in-app purchasing policies specifically “to retaliate against Amazon for competitive conduct that Apple disapproved of.”
While referencing the email above in which Steve Jobs and Apple marketing chief Phil Schiller discuss forcing Amazon to go through Apple’s payment system, the DOJ claims Apple “misrepresented the factual circumstances” since it allows other retailers to bypass its 30% cut:
Expand
Expanding
Close
After a US District judge found Apple guilty of fixing e-book prices, All Things D is reporting that the settlement trial will be set for May.
A report earlier this month from GigaOM estimated that Apple could have to pay up to $500 million in consumer damages based on what the five publishers have paid through state and class action cases, but there was no financial related settlements included in the DOJ’s remedy proposal published earlier this month.
The DOJ published its proposal for a remedy in the case with Apple after having reached settlements with five other publishers initially involved earlier in the year. The DOJ’s proposed settlement includes the following:
-Apple must terminate its agreements with the 5 publishers involved
-Must “refrain for five years from entering new e-book distribution contracts which would restrain Apple from competing on price.”
-Must not “serve as a conduit of information among the conspiring publishers or from retaliating against publishers for refusing to sell e-books on agency terms”
-Must not enter contracts for music, movies, TV, or games, that will increase prices for competing retailers
-Must allow other e-book retailers like Amazon and Barnes & Noble to provide links from their e-book apps to their e-bookstores for two years (on iPhone and iPad)
-Must “appoint an external monitor to ensure that Apple’s internal antitrust compliance policies are sufficient to catch anticompetitive activities before they result in harm to consumers”
For those unfamiliar with the e-book case, here’s a quick summary:
Apple is the last defendant in the case, as the five publishers initially involved– Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck, Macmillan, Penguin Group (USA) Inc. and Simon & Schuster Inc–had settled with the courts previously. The publishers agreed to terminate agreements with Apple that would limit ebook price competition and “allow for retail price competition in renegotiated e-book distribution agreements.”
Apple responded to the DOJ’s proposed resolution by calling it a “draconian and punitive intrusion“. In addition, the book publishers also found the settlement to be unacceptable. We’ll have to wait until May for the jury to decide how Apple should pay up.
This afternoon, Apple and the DOJ will be in court to decide the fate of the agency model implementation in the iBookstore. The court has already ruled that Apple has been working with publishers to price-fix and raise the prices of ebooks, but now a punishment must be determined.
This morning, the DOJ responded to publishers’ concerns about the remedies and claimed that, since they are even responding together, they have shown once again how they are banded together (PDF of full response – via GigaOM):
Indeed, the very fact that the Publisher Defendants have banded together once again, this time to jointly oppose two provisions in the Proposed Final Judgment that they believe could result in lower ebook prices for consumers, only highlights why it is necessary to ensure that Apple (and hopefully other retailers) can discount ebooks and compete on retail price for as long as possible.
Photo: appadvice.com
A piece on political news site Politico suggests that Apple’s position of trying to remain aloof from political lobbying and defending lawsuits on principle rather than pragmatism may now be proving a luxury it can no longer afford.
The company marches to its own iTunes, spending little on lobbying, rarely joining trade associations and, in a pattern that’s become more pronounced this summer, refusing to negotiate or settle in many lawsuits.
Experts say Apple’s tried-and-true approach is starting to backfire, as the company has already taken at least one big hit in a high-profile e-books trial …
Apple was the only one of the six defendants in the ebook price-fixing case not to settle – and the result looks likely to be a costly one. Both Apple and Samsung have refused to settle many of their extensive patent battles, despite courts urging them to do so. Only days ago, Apple’s continued U.S. sales of iPhone 4s and 3G iPad 2s were saved only by a Presidential veto …
Expand
Expanding
Close
Photo: appleheadlines.com
Following the Department of Justice’s proposed settlements for the iBooks court case, Apple has submitted a response to the court that clearly shows the company is in no way interested in the suggested changes. The 31 page document is summarized quite well by the initial introduction:
Plaintiffs’ proposed injunction is a draconian and punitive intrusion into Apple’s business, wildly out of proportion to any adjudicated wrongdoing or potential harm. Plaintiffs propose a sweeping and unprecedented injunction as a tool to empower the Government to regulate Apple’s businesses and potentially affect Apple’s business relationships with thousands of partners across several markets. Plaintiffs’ overreaching proposal would establish a vague new compliance regime—applicable only to Apple—with intrusive oversight lasting for ten years, going far beyond the legal issues in this case, injuring competition and consumers, and violating basic principles of fairness and due process. The resulting cost of this relief—not only in dollars but also lost opportunities for American businesses and consumers—would be vast.
Here is the response in its entirety (via TNW):
After reaching settlements with just about every publisher involved in the long-running Apple/Amazon e-book price fixing case, The United States Department of Justice today published its proposal to end the case with Apple after finding the company guilty of conspiring to fix ebook prices during trial earlier this month:
“The court found that Apple’s illegal conduct deprived consumers of the benefits of e-book price competition and forced them to pay substantially higher prices,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Under the department’s proposed order, Apple’s illegal conduct will cease and Apple and its senior executives will be prevented from conspiring to thwart competition in the future.”
Among the key points in the proposal:
Expand
Expanding
Close
Update: Apple provided a comment to AllThingsD and confirmed it will appeal the decision:
“Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations. When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong and we will appeal the judge’s decision.”
Reuters reports that a judge just ruled that Apple conspired to raise the retail prices of e-books and said a trial for damages will soon follow:
The decision by U.S. District Judge Denise Cote[pictured, right] in Manhattan is a victory for the U.S. government and various states, which the judge said are entitled to injunctive relief. The publishers have already settled with the federal government on e-book pricing. Cote ruled after a non-jury trial that ended on June 20.
Apple warned that a guilty verdict in its e-book price-fixing case could have a negative impact on how digital media deals are negotiated in the US and Apple CEO Tim Cook even called the suit ‘bizarre’:
The e-book case to me is bizarre. We’ve done nothing wrong there, and so we’re taking a very principled position. … We’re not going to sign something that says we did something we didn’t do. … So we’re going to fight.
The DOJ had argued that Apple had conspired to raise prices with all of the publishers and hurt rival Amazon.
Interestingly, according to the NYTimes, one of the most damning pieces of evidence in the government’s case is the video below of Steve Jobs talking with Walt Mossberg. Per Daring Fireball: Mossberg asks Jobs why someone would buy a book for $14.99 from the iBookstore when they could buy the same book from Amazon for $9.99.
Jobs: Well, that won’t be the case.
Mossberg: Meaning you won’t be $14.99, or they won’t be $9.99?
Jobs (smiling): The prices will be the same.
After a three week debate between Apple and the U.S. Department of Justice, the controversial e-book price-fixing case concluded today with final summations at the U.S. District Court in Manhattan. As part of its last remarks, Apple presented a 136-slide deck describing its case against the DOJ in full detail underscoring its argument that they did not conspire with publishers to illegally fix e-book prices.
On the other side of the argument, the DOJ argues that Apple was the “ringmaster” of a plot to raise mainstream e-book pricing above Amazon’s pre-established $9.99 price point by moving the industry from a wholesale model to an agency model. In the proposed model, Apple granted retailers the ability to set prices much like Apple’s App Store. Like Apple, the DOJ provided a deck explaining their point of view. Both decks can be viewed below.
U.S. District Judge Denise Cote is expected to rule on the case in the coming weeks.
(via <a href="http://www.ap.org" target="_blank">AP</a>)
The U.S. Department of Justice has released its case against Apple in the alleged ‘ebooks pricing fix’ case (via CNET) that claims Apple made deals with book publishers to manipulate the price of ebooks.
The Justice Department believes Apple moved to raise ebook prices before Apple launched the iPad and the iBookstore so the company could benefit at the cost of the consumer.
Notably, everyone mentioned in the complaint has settled out of court ahead of this week’s trial, but Tim Cook has remained adamant that Apple is innocent of any wrongdoing.
Apple’s iBookstore has established deals with all of the major book publishers and sells ebooks on its proprietary store for viewing on Apple’s iOS devices including the iPhone, iPad, and iPod touch.
As we noted this morning, Tim Cook echoed this message at last week’s D11 conference:
The e-book case to me is bizarre. We’ve done nothing wrong there, and so we’re taking a very principled position. … We’re not going to sign something that says we did something we didn’t do. … So we’re going to fight.
The Justice Department released all 81 slides outlining its case against Apple, which you can view in its entirety below.
Expand
Expanding
Close
We already knew back in December that Pearson, along with a handful of other publishers had decided to settle with the U.S. Department of Justice in the high-profile Apple ebook price-fixing case. Today a statement from Peason’s Penguin unit confirms that it has now also reached an agreement that will see the publisher pay $75 million in consumer damages to the US State Attorneys General on behalf of people that were overcharged due to the alleged price fixing:
Penguin has reached a comprehensive agreement with the US State Attorneys General and private class plaintiffs to pay $75 million in consumer damages plus costs and fees to resolve all antitrust claims relating to eBook pricing. Penguin has also committed to the State Attorneys General to abide by the same injunctive relief as previously agreed in a separate settlement with the Department of Justice.
In anticipation of reaching this agreement, Pearson had made a $40m provision for settlement in its 2012 accounts. An incremental charge will be expensed in Pearson’s 2013 statutory accounts as part of the accounting for the Penguin Random House joint-venture.
