Apple to Ship iBooks with iOS8, Invite More Scrutiny from the DOJ

ibooksApple thrilled many in digital publishing when they announced earlier this week that iBooks would ship with iOS8, but I fear that joy may be short-lived. While this move is going to give authors better opportunities to market to to users of iDevices, it's also going to make it a lot harder for Apple to carry out their business.

By adding iBooks to iOS 8, Apple is guaranteeing that any future action they take with respect to ebooks will be scrutinized by the US Dept of Justice. If there is even the slightest hint that one of Apple's decisions will harm an ebook competitor then that decision will trigger a full blown investigation by the DOJ, and could result in another antitrust lawsuit.

I am suggesting this possibility not just because Apple is bitterly fighting an antitrust lawsuit at the moment, but also because the Apple/iBooks situation reminds me of a trick Microsoft pulled in the 1990s.

As you may recall, Microsoft was sued in 1998 by the DOJ (and 20 states) for violating the Sherman Antitrust Act. From Wikipedia:

The plaintiffs alleged that Microsoft abused monopoly power on Intel-based personal computers in its handling of operating system and web browser sales. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system. Bundling them together is alleged to have been responsible for Microsoft's victory in the browser wars as every Windows user had a copy of Internet Explorer. It was further alleged that this restricted the market for competing web browsers (such as Netscape Navigator or Opera) that were slow to download over a modem or had to be purchased at a store. Underlying these disputes were questions over whether Microsoft altered or manipulated its application programming interfaces (APIs) to favor Internet Explorer over third party web browsers, Microsoft's conduct in forming restrictive licensing agreements with original equipment manufacturers (OEMs), and Microsoft's intent in its course of conduct.

Microsoft and the DOJ ultimately settled that lawsuit in 2001, and the OS maker settled a similar investigation in Europe in 2009.

Apple will probably never get in trouble for controlling the OS running on the hardware they make, but any action they take which might favor iBooks over the competition will quite result in accusations of bundling, an antitrust violation.

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For example, do you recall when Apple decided in early 2011 to require all transactions on iOS must go through Apple?

That rule was a practical impossibility for the major ebook retailers (none of them could afford to pay Apple 30% vig).  But more importantly, that decision (which emails show was made by Steve Jobs himself) was deliberately intended to harm Amazon. It is also known to have directly killed at least one ebook retailer.

If iBooks had been bundled into iOS at the time Apple would have been the subject of an antitrust investigation, and rightly so.

Given that Apple has already lost one antitrust lawsuit, they are going to have to be very careful to avoid triggering another investigation. If I were in their place, I would have never have bundled iBooks into iOS. It's just too fraught with risk.

What's more, it's not like Apple needs the extra revenue; at best Apple earns a billion dollars a year from iBooks (my guesstimate). That's chump change to a company that regularly posts quarterly revenues in the $30 billion to $50 billion range.

But I suppose someone at Apple decided that the small increase in revenue is worth the risk.

27 thoughts on “Apple to Ship iBooks with iOS8, Invite More Scrutiny from the DOJ

        1. Laziness isthe greatest barrier to achieving something that requires other people, sometimes even when it only requires one’s self.

  1. I think it comes with any new iPad already. It hasn’t always done, but when I bought an Air recently I’m pretty sure it was on it already. Don’t know about iPhones.

  2. Well from the author/publisher side this is great! An astonishing % of people tell me they looked for a published book in “the Apple store” and gave up because they couldn’t find it. Turns out they were searching in the App store. In some cases, they didn’t have iBooks installed and didn’t even realize it was necessary for getting Apple ebooks! They seem to assume that everything is available in the App store. For the Amazon app, everyone seems to know they have to download it before they can read anything. But many people just try to use the App store when trying to get books. Also, iBooks has the best support for interactive EPUB3 features. So, making it easier to access iBooks will hopefully encourage other ebook App providers to provide similar features as well. (Are you listening Amazon?)

  3. Yeah, only problem is that they’re already doing this with Safari. Sure, you can get other browsers on iOS, but it’s bundled with Safari, and the system is locked down to the point where other browsers could never perform as fast as Safari.

    Windows RT and Phone both do the same thing.

    Android ships with Chrome now, but other browsers can get the access they need to compete. *shrug*

    I’m just saying that packaging iBooks might not be as risky as you think because mobile operating systems already get away with so much. I agree it’s not necessarily RIGHT, but hey, I’m not a lobbyist, so my opinion doesn’t count much. :-)

    1. But has Apple taken any action to harm the other web browsers? I don’t think they have, and that’s my point here. Apple has deliberately harmed other ebook retailers, and abusing your monopoly to harm the competition is illegal.

      1. Right. Bundling per-se is fine as long as it doesn’t hamper competitors. (Or one of the competitors happens to be a major presidential fund raiser.)
        But if, for example, Apple were now to invoke their rule about disallowing apps that duplicate OS features or set it up so that all epubs go straight to iBooks and iBooks only…
        It’s something the feds are going to be monitoring closely.

        They might get away with it if they don’t actively stomp on the smaller epub vendors, especially with their declining market share but two years ago when they commanded 80% tablet share they would’ve gotten a very quick call.

        It’s kinda like the Randy Penguin merger: the penguin now controls half the BPH market but since the BPH share of the trade book business is shrinking they didn’t have to buy too many politicians to get approval.

      2. @Quinton Yes, but the fact that they’ve already had legal trouble in the book department means it is more likely that they will do so again as they’ll be under greater scrutiny in that area

        @Nate From what I understand they do hamper if not outright harm the competition with regards to web browsers on iOS. IIRC any third-party browser on iOS is required to use the safari engine but are denied access to the code/APIs/or whatnot required to accelerate java script performance which means that any third party browser will perform worse than the native safari browser which comes bundled with the devices. This means competitors have to rely on features and UI to compete since they are essentially blocked from competing in the performance department. Granted, this is what I remember reading around the web at some point so don’t quote me on it as the gospel truth.

      3. Yes, Nate, they have. You can’t design a web browser for iOS that will function near as fast or as efficiently as Safari because of how Safari is tied into the operating system. Third party browser don’t have the same access (they can’t use their own engines), and thus suck on iOS.

        They absolutely are harming competition (and so is Microsoft in Windows Phone/RT).

        Check this out: http://venturebeat.com/2013/04/15/mozilla-ceo-we-refuse-to-bring-firefox-to-ios-until-apple-lets-us-use-our-web-engine/

          1. Excuse me but NOT “Completely, 100% false.” If you’ll notice that article is about something that will be available in iOS 8, in other words what we said is true as of this moment though it seems it WILL change to some degree in the future. The changes that that article says are coming will allow other browsers to be as fast but not faster than the pre-installed safari as they’d still be limited to using the safari engine, just now with access to the Nitro java script component, but there is no mention of their being able to use their own engines.

          2. Oh yeah, for all intents and purposes it’s false…because even if it were a problem the resolution is nigh.

            And of course they can’t introduce their own engines. Apple is going to make iOS the security nightmare that Android often proves to be.

  4. From a developer perspective it makes life easier for the customer. At the moment the iTunes store is a mess because everything but the kitchen sink is thrown into it. Splitting it out and making sure that the separate apps for podcasts, music, books, and apps are all there, makes a lot of sense. I don’t think they have anything to worry about as Google already does the same thing (you have android and want it labeled as such, then you have to have a set number of apps installed, including google play).

    The bigger question is the one you’re missing, and that’s because no one has looked closely at it yet. i.e. What hooks does the new API’s have into the ibooks app?

    The fact that apple has made it a lot easier to get into other apps is a big change, and very very interesting (from a business perspective).

    The new Samsung Galaxy Nooks will probably do the same thing too so its not like an abuse of market share (unlike Microsoft in the 90s).

    1. Actually you kind of have the android thing backwards. Anybody can use android and call it such, but you must comply with certain rules and guidelines to be google approved and if you’re not then you can’t install the google services. Google’s services are definitely a situation where they add a lot of market value since the hangouts app provides easy comminication with all the others who have google certified android devices, the play store provides the best selection of apps on android (there are other alternatives, the best one being the Amazon App store, but they don’t have a selection that’s as large), maps is quite useful and many people love the gmail app (personally I don’t see what’s so great about it) and the other stuff they offer (which I can’t remember). One other reason that manufacturers want to have google services included is that many apps are designed to work on them and rely on APIs which are a part of it, meaning they won’t run (as)well or maybe even at all if they are not included. So anybody can install android and call it that, Google just uses their services as “leverage” in their negotiations to get them to comply.

    1. This is surprising. Was this already the situation before the announcement? If so, it makes the announcement, Nate’s article, and all the comments (including mine) irrelevant.

      1. It could be a preloaded app and still be nearly invisible if you don’t choose to use it. I have iBooks on a 5th gen iPod Touch and if I download an ePub from a web page it gives me the option to either open in iBooks or “something else.” I have to click another button to get a list of other ePub viewers. So far as I can tell, there is no way to fix it to always open a web-downloaded ePub in Marvin, for instance. (If there is a way, I’m sure someone will let me know.) A question that I have, does iOS 8 behave the same way? Does an ePub downloaded from the web auto open in iBooks without giving an option to open in a different app? If that were the case, I’m sure a book actually loaded in the library of an app like Marvin would continue to open there. To make a long story longer, it seems there would be something more “in your face” about iBooks in the new OS. Mark Coker is thoroughly convinced that there is.

      2. Not entirely. iBooks is already installed on new iOS devices but if it comes with iOS 8 it will be installed in all iOS devices. Unless people don’t update, but the vast majority do.

        1. Indeed.

          The difference here is that iBooks is currently shipped with tens of millions of new iDevices, but the iOS 8 update will push it out to hundreds of millions of older iDevices. That is a much larger market than before.

  5. I deleted iBooks on my iPod Touch 5th Gen as an experiment because I hated the way it looks. After it was gone, any ePub files I download via Safari now have Kobo as the default app which has a UI that I much prefer. If you prefer Marvin, just get rid of any other epub capable ereader apps you currently have installed,

    What I hate the most about iBooks is the fact that it makes it hard to transfer any personal, non-DRM epubs you download into it from the web. Forget Ebooks from Apple since I never buy ebooks from there. I’m talking about just free epubs or stuff I bought directly from publishers that have their own ebook distribution channels. You can’t transfer the files from you iBooks app to a PC without using special software (like PhoneBrowse) and even then, the iBook app reformats each file in such a way that they are no longer a single file. When you do manage to export them from iBooks, the single .epub is now a folder with the metadata and HTML files inside. I had to zip the folder then convert it to the regular epub format by using Calibre.

    Moral of the story… I’m never using iBooks to open epub files ever again. I managed to export all 600+ epub files I had in my iPad iBooks app and will soon delete the app from my iPad like I did with my iPod and just load the epubs in either Kobo, Google books, or hell, even Dropbox.

    1. Why would I want the ability to transfer epubs easily? Well, for backup purposes mostly. Yes, I know you can backup you iDevice via iCloud or iTunes on either Windows or Mac, but, I like having copies of the ebooks on my PC that I can easily organize and upload to my other devices. Sure you can sync ebooks purchased from the Apple store between your registered iDevices, but unlike Amazon that allows you to send personal documents or non-Amazon purchased ebooks directly to your Kindle device/app with auto-upload to the cloud (which then allows you to download the same ebook on any other device you have Kindle on with no other extra fiddling) iBooks doesn’t. I’d download an ebook in my iPad, and I”d download another on my iPod depending on which one I’m currently using… Then there’s no way to consolidate those libraries without a bunch of hassle because of the way iTunes works or doesn’t work. ‘Transfer Purchases’ doesn’t work for content you didn’t buy from Apple. And if your PC/MAC doesn’t have the same ebooks as what you have on your iOS device, syncing will just replace your iOS iBooks library with whatever you’ve got saved in your iTunes library.

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