Dear DoJ: You Need To Sue Apple Again

A lovely thing about living in the modern age is that when the government files its documents with the courts, it now includes email addresses.

This is the email I have sent to all of the Department of Justice attorneys listed in the antitrust suit papers filed against Apple and some of the Big Six book publishers.

Dear [Department of Justice Attorney]:

Thank you for paying attention to the eBook marketplace and recognizing the pricing conspiracy executed by Apple and several of the Big Six of American book publishing.

I am grateful that you took these steps to restore and ensure competition among eBook sellers.

However, I need to call your attention to another restraint of trade issue that involves Apple.

As you know from the Department’s recent action against it, Apple also offers an eBook app, called iBooks, which enables people to read the eBooks they download and purchase from the Apple-owned iBookstore.

The advantage iPhone and iPad owners have in using the iBooks app is that they can browse and purchase eBooks from within that app. It’s a seamless customer experience.

By contrast, all eBook apps from competing eBook stores — such as those from Amazon, Kobo, Barnes & Noble, and others — cannot offer an identical shopping experience. They are disallowed by Apple. Apple has demanded from each of its iBookstore competitors a 30% cut of any purchases made using Apple APIs for what is called “in-app purchasing.”

To me, this is every bit as much restraint of trade as the collusive price-fixing that made the Department bring Apple and its co-conspirators before the court for remedy.

There is simply no reason for Apple to expect its competitors to cut it in on their profits. Apple did not build their eBook stores. Apple did not sign up the writers who are exclusive to their eBook stores. Apple did not spend any money to market their competitors’ eBooks.

Apple claims that its in-app APIs are proprietary and that using them requires Apple’s profit participation of thirty percent. There is no technical reason why any of its eBook store competitors should be restricted to Apple’s API for in-app purchases other than Apple unilaterally demanding that they use them.

Please consider the case of Sony, which pioneered the current eInk eBook device market with its Reader well before Amazon entered as a competitor. Sony spent the money to create a reading app that would run on Apple’s iPhone. According to reports, Sony’s app offered in-app purchasing. Apple refused to list Sony’s app in its App Store. While it is unclear whether Sony used Apple’s API or those of its own, the end result was to deny one company from competing on equal footing with Apple in the eBook shopping experience. Further, Sony’s app has never appeared in the App Store, preventing current Sony customers from enjoying their Sony-purchased eBooks on any mobile Apple device at all.

Indeed, it was just last year that Apple finally demanded all of its eBook store competitors remove in-app purchasing from their already-listed App Store apps or face delisting. Amazon, Kobo, Barnes & Noble, as well as others, had no choice but to comply. Just as all eBook stores were forced to comply with the conspiracy of price-fixing the Department took action to remedy.

The result of this for all eBook buyers is to favor iBooks due to its seamless in-app purchasing experience and to add friction to the eBook purchasing of all eBook competitors to Apple. As well, again, to totally deny Sony eBook customers any app at all.

If the Department will take the time to investigate this matter, I think it will conclude that Apple itself has been engaging in restraint of trade far beyond the boundaries of the current legal action the Department has taken against it.

Further inquiry will reveal that there is simply no technical merit to Apple’s assertion that eBook competitors must use its APIs or none at all. From a privacy standpoint alone, it is none of Apple’s business what eBook someone chooses to buy from a competing eBook store.

As Apple continues to grow in market strength, its position in the eBook market will grow greater than that which American book publishers have feared in regard to Amazon. The number of mobile Apple devices sold and in use is already a multiple of all dedicated eBook devices sold in the United States, making Apple — and not Amazon — the dominant outlet for eBook sales. And while in this position, it enjoys a shopping experience advantage that it willfully denies to its competitors.

Apple is quickly enjoying a dominant position in mobile devices that Microsoft once enjoyed with desktop computers. And, as Microsoft once did (which prompted action from the Department), Apple is acting to consolidate its lead by preventing a level playing field for those who might compete against it with, at the very least, eBooks.

Acting against the collusive Agency Pricing Model was only the first step that was required by the Department to ensure a competitive eBook marketplace.

The second step is to act against Apple’s advantageous position in regard to offering a superior shopping experience to eBook customers, which it denies all of its competitors. There should be a level playing field. There is simply no technical reason for there not to be.

Thank you for your time and consideration of this matter.

/s/ Mike Cane

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30 Comments

Filed under Apple: The Company, eBooks: General, Friction

30 responses to “Dear DoJ: You Need To Sue Apple Again

  1. Pingback: The Juicy Details « LJNDawson

  2. anon

    “Apple is quickly enjoying a dominant position in mobile devices that Microsoft once enjoyed with desktop computers.”

    This undermines your argument. It’s Android that is quickly enjoying a dominant position.

    • mikecane

      No. Android devices are too fragmented to yet present a united front against Apple. Not everyone can run every Android app. Some people have 2.1 devices that can’t run eBook apps. The latest Kindle app, for example, requires 2.3 — and that won’t even run on a rooted Nook Touch! Until all devices are made so they can be less obsolete than the original iPhone, Android will be a scattered resistance little more than an annoyance to Apple.

  3. sayana

    I hope you also write an email, that they should sue Amazon next. Because there is no third party reading App available at all on the immensly popular Kindle eInk Reader! And you can’t play Xbox exclusive games on the PlayStation!

    Geez. Amazon owns 60% of the eBook market, they are close to dominating this market, and you are railing against the agency model. *eyerolling*

  4. dumb

    In other words you want US government to redo Apple’s Contract with the sellers of apps to allow weblike model. Level of stupidity it takes to make that argument is beyond words.

    Restrain of trade is simply on third party dealing with Amazon.
    How you leap into “It is my store, I will sell what ever I want”.
    all the ebook wholesalers can go fuck themselves.

    Oh Ya, Apple have unfair advantage in creating iphone and ipad too.

  5. Leo

    Could you link to the papers? Maybe we can start a letter writing campaign?

  6. Enjoy those ebooks while you can! Once Amazon is able to once again sell below cost, further driving physical stores our of business, as it builds a monopoly running under the Kindle, it will then later be able raise prices to what ever it wants with no competition. I guess that ok heh? Apple asked publishers to sell to everyone for the same price, called the agency model, and you think that’s bad? Ok? Let’s sit back and watch! :-)

    • mikecane

      Really? And how do the Big Six publish eight-dollar paperbacks and make money off them? And you forget all the thousands of self-published and smaller press books that are below the outrageous fixed prices of the Big Six.

  7. immovableobject

    The question boils down to this: Can a company that manufactures a razor legally be allowed to control the market for compatible blades? Can a game machine manufacturer control the market for compatible games? This business model has been around for a long time and seems to be tolerated. After all, nothing stops competitors from developing their own competing razors and own game machines which they can control.

    Apple developed and established the iOS platform at great cost. What obligation does it have to even support the viewing third-party eBooks, let alone allow third-party stores to operate within its devices?

    Other e-reader device companies share Apple’s aversion to supporting competing e-book vendors on their devices, and rightfully so.

    I suppose if there were no alternatives to iOS devices, one could claim that Apple holds a monopoly in portable e-readers, and should be compelled to let other merchants have equal access, but that is simply not the case.

    A level playing field already exists. Any company can create an ebook readers and determine it’s policies (many have). But requiring Apple to allow its book-selling competitors to “stand on its shoulders” is anything but a level playing field.

    • mikecane

      >>>Apple developed and established the iOS platform at great cost. What obligation does it have to even support the viewing third-party eBooks, let alone allow third-party stores to operate within its devices?

      So let me get this straight. You were all in favor of the time when Microsoft’s Internet Explorer had proprietary things within it that broke the general-purpose Internet? Because, after all, MICROSOFT BUILT IE. It was THEIR browser.

      No, I didn’t think you would agree with that.

      Next!

      • immovableobject

        I don’t accept your analogy.

        Microsoft controlled 90% of the market for desktop PCs, and obtained that monopoly through unscrupulous means. Apple, on the other hand, earned its iOS market share honestly. The barriers to entry for competition are not the same.

        Apple is not breaking the internet with a proprietary browser. Webkit is standards-based and freely available for any platform to use. In fact, Apple has lead the way in rejecting proprietary Flash as a defacto web standard.

        You are assuming that ebooks should be like web pages and must conform to some “least common denominator” file format. Apple already allows ePub and PDF books to be viewed. Furthermore you seem to imply that no company should be allowed to develop an enhanced eBook format that adds value to the reading experience (like Apple’s new multi-touch textbooks for iPad).

        And of course you seem to want to compel Apple to allow competitors (without the overhead of developing an actual platform) to undercut Apple in stores hosted on its own devices.

        If a time ever comes when the majority of popular eBooks are only available for, and viewable on Apple devices, I will join you in calling for action to be taken. I just don’t see this happening.

      • mikecane

        >>>In fact, Apple has lead the way in rejecting proprietary Flash as a defacto web standard.

        And yet you maintain Apple has no strength in the industry by citing on market share. What other company could get away with killing Flash? Just stop.

        >>>You are assuming that ebooks should be like web pages and must conform to some “least common denominator” file format.

        Guess what? That’s what the ENTIRE BOOK INDUSTRY believes too. Do YOU want books that might be unreadable because they’re written with APIs that are no longer compatible with an OS upgrade? Are you old enough to have seen books on CD-ROM? Not one of those made a transition out of CD-ROM. These cannot be read now, either, because they are incompatible with OS X. Try again.

        >>>And of course you seem to want to compel Apple to allow competitors (without the overhead of developing an actual platform) to undercut Apple in stores hosted on its own devices.

        You’re damn right I do. Tell me the investment Apple made in the stores and infrastructure of the Kindle Store, the stores of Barnes & Noble and Kobo and others that justifies their 30% fee? Stop already!

        >>>If a time ever comes when the majority of popular eBooks are only available for, and viewable on Apple devices, I will join you in calling for action to be taken. I just don’t see this happening.

        And so you contradict your pimping of Apple’s Apple-only iBooks Author format.

    • My issue with Apple is that it downgraded my experience as an iPad/iPhone user. I bought the iPad expecting to use the Kindle app as my primary ebook site. I used Kindle and Nook in app buy buttons for about a year. I had every expectation that Apple would IMPROVE my experience, not deliberately hamstring it. Apple was happy enough to have the Kindle app on the iPad when it delivered. Downgrading the experience to try to make iBooks better is a huge turnoff. Implementing agency pricing is another huge turnoff. I like Apple devices, and I’ll use iBooks to read epubs bought elsewhere, but iBooks is my last choice for buying ebooks. They should have made iBooks more attractive – instead they were happy enough to downgrade their own customers experience with competitors. What a shame. I expected better from them.

  8. Pingback: Jeff Bezos Should Send Eric Holder A Christmas Card | InTyNews

  9. Crispo

    Wow. Everyone wants something for nothing.

    First of all, Apple does not have a monopoly in ebooks.

    Secondly, it is not Apple’s responsibility to allow it’s COMPETITORS to use it’s OWN API’s to sell books in an infrastructure they designed for themselves. They are not entitled to anything.

    Apple created the iBook Store – their tech, their rules. If the competition wants to also reap the benefits of a seamless experience for their customers they can BUILD THEIR OWN store to go along with their tablets.

    No one is stopping them.

    Your request is as ridiculous as Real Networks asking to have access to FairPlay. Not going to happen – can’t be enforced.

    • mikecane

      >>>Secondly, it is not Apple’s responsibility to allow it’s COMPETITORS to use it’s OWN API’s to sell books in an infrastructure they designed for themselves. They are not entitled to anything.

      How about YOU being entitled to use a device YOU BOUGHT the way YOU want it? See another reply I made to someone else, re MS IE.

  10. fricfrac

    So, by your argument, ceding total marketing control on pricing to Amazon, enhances competition?
    I think you ought to be careful what you wish for if you think Amazon’s predatory practices can’t be turned against the consumer.
    Of your other complaint, please explain why Apple should make their in-house developed e-publishing system freely available for the competition. Any author has the choice to sell their content anywhere they choose – they don’t have to use the iBook store.

    • mikecane

      >>>in-house developed e-publishing system

      It’s not an ePublishing system. They are APIs that perform the function of allowing purchases inside of apps. That is not something technical that no other company can do. Apple just won’t allow it. As, one time, Apple tried to dictate to their developers what tools they could use to create apps. That didn’t go over well. And I think their lawyers eventually convinced them to drop that. DoJ now needs to convince Apple to let others use their own in-app APIs.

  11. By your logic though, shouldn’t Amazon be required to open the Kindle to competing bookstores from Apple and Barnes & Noble? Should Sony be required to open the Playstation Network Store to non-Playstation devices?

    I’m fully on board with the prevailing “it’s my device, I can use it how I wish” mentality, but the App Store is a service provided by Apple that seems to beneficial to all parties here: Apple increases the value of its hardware and makes a small profit, developers get a captive market and a slick payment system, and consumers get a certain amount of quality control and a seamless storefront. If the 30% in overhead is too onerous to developers, they’re always welcome to release their software on another, more open platform. No one is forcing them to develop for iOS.

  12. np

    I totally agree with you as to Apple policies. I have just 2 questions:
    1. Is it possible to use a different API in an apple device? (not that it should matter…)
    2. Isn’t Amazon doing the same thing with its Kindle devices? I can easily buy an Amazon book from my Kindle but otherwise I have to use its nearly non-functional browser. Furthermore, I can read only the supported formats, while, at least, in an iPad i can instal Kindle reader, so I can read what I already own (at least I think that’s how it works, i don’t own an iPad).

    • mikecane

      1. Is it possible to use a different API in an apple device? (not that it should matter…)

      Yes. There were apps with in-app purchasing before Apple developed their own APIs. And the Kindle and Kobo apps, for example, used their own APIs for in-app purchasing.

      2. Isn’t Amazon doing the same thing with its Kindle devices? I can easily buy an Amazon book from my Kindle but otherwise I have to use its nearly non-functional browser. Furthermore, I can read only the supported formats, while, at least, in an iPad i can instal Kindle reader, so I can read what I already own (at least I think that’s how it works, i don’t own an iPad).

      Not entirely. Kindle is a single-purpose device. But I’ve hated Amazon from the start. While Sony and others were promoting the ePub file format for the good of everybody, Bezos decided to cut himself a different piece of cheese. So what we wound up with is basically Windows vs Mac again. Apple, on the other hand, purports to sell a general-purpose device but, in the end, prevents its customers from having equal shopping experiences with its direct eBook competitors whose apps it otherwise permits on its device.

  13. Trey

    Don’t like it, don’t use an iPhone or iPad to read your eBooks. Apple’s game, Apple’s rules. If I build a machine, why should the government waste time and money telling me how I can run it. Too much government already involved.

    • mikecane

      >>>Apple’s game, Apple’s rules.

      Really? And what rights exactly does YOUR MONEY spent on it have in any of this? It’s a DEVICE you bought. Not a goddammed colony Apple is establishing.

  14. Trey

    Mr Cane, while I appreciate and agree with you on several topics, I still believe a company should be able to create a device that allows functionality, and then charge others for participating. What this really boils down to is the ease of use, and for that, Apple charges you a 30% “convenience” fee. We all know we pay more for that “ease of obtainment”, whether it be a quick stop at the corner store for a jug of milk, or the pizza delivery, and now Apple has determined that if you want it now, without jumping through hoops, you have to pay up. I am not so happy about it either, but, I do not want the government wasting tax dollars to try to fix something that many people call capitalism, and I do not want tax dollars spent on fixing something that is not necessary for life on earth, how about spending money on something that is actually a real issue for the masses, not a luxury for the few.

  15. Jason Magder

    Reblogged this on Montreal Gazette.

  16. Mike,
    I’ve also found the missing buy buttons on Kindle, Nook, etc. to be distressing. As an owner of at least 6 ios devices, I am insulted that Apple would hamstring performance in order to force it’s inferior iBooks offering. I expected Apple to make their offering more appealing than others, with better overall selection, lower pricing, maybe DRM free, or enhanced content on the same titles. I wanted to be impressed. Making the competition less accessible and raising agency prices for all just turns me off big time. I’ve bought maybe 3 ibooks, compared to the hundreds I’ve bought from Kindle, Smashwords, Baen and others. I often use iBooks to read books purchased elsewhere, though. I can use pretty much any store app to buy goods (eBay, OfficeMax, etc.) without having to worry about buying ‘in app’ or having to take the extra step of opening Safari and browsing again to locate the item I was viewing, so I don’t understand how Apple can justify the removal of the ‘buy’ button. I doubt it’s against the law, but it stinks that an iPad Kindle user can’t buy a book at the end of sample, but a Droid user can. I hope ios users continue to complain often and loudly to Apple. iBooks is my last choice for buying ebooks.

  17. Pingback: Jeff Bezos Should Send Eric Holder a Christmas Card | Business | Wired

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