Court Won’t Let Apple Competitors Avoid Commissions On In-App Ebook Sales

Apple won’t have to let competitors restore in-app purchasing without a commission–a proposal the company said would have handed Amazon a big advantage in the ebook market–Judge Denise Cote indicated during a hearing late Tuesday afternoon.

According to media reports, Cote said the free ride for competitors wasn’t necessary to enable consumers to shop for the best price on ebooks. That was one of several proposals made by the Department of Justice that Cote indicated she would either reject or soften in setting an injunction against Apple for orchestrating a price-fixing conspiracy. She expects to file her formal decision next week.

Even before yesterday’s hearing, the DOJ had backed off a proposal to essentially ban agency pricing at Apple for five years. Instead, Apple will renegotiate its contracts with the five defendant publishers on a staggered schedule beginning in two years. Publishers Weekly reports:

“Apple had also asked that it be allowed to decide the order of publisher renegotiations, but that did not come up at the hearing, meaning that the order selected by the DOJ would likely remain in the final injunction: Hachette, after two years; HarperCollins at 30 months; S&S at 36 months; Penguin at 42 months; and Macmillan, the last to settle the DOJ charges, at 48 months.”

In other good news for Apple, Cote said the injunction will address ebooks only, not all types of content as the DOJ had requested. And instead of putting the company under the broad oversight of an external monitor for five years as the DOJ proposed (originally it was 10 years), she’ll appoint a monitor for two years, with the possibility of a one-year extension, to focus narrowly on ensuring Apple complies with antitrust rules.

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