DOJ Offers Revised Settlement for Apple, 5 Publishers
The new offer takes into account several of Judge Cote’s comments on the initial proposed settlement, including staggering the renegotiation process with Apple’s co-conspiring book publishers and changing some of the language concerning the sale of apps in iTunes.
Under the new agreement Apple will still have to renegotiate existing contracts with publishers, and they will still be blocked from adopting agency pricing again. But instead of setting the ban on agency at 4 years, the new proposal will let Apple renegotiate contracts at staggered intervals.
Apple will be able to renegotiate with Hachette 24 months "after the Effective Date of the Final Judgment" Next would be HarperCollins at 30 months, and Simon & Schuster will be able to negotiate a new contract with Apple 3 years after the settlement is approved. Random Penguin Solutions will be allowed to renegotiate after 3 and a half years, and Macmillan will have to wait a full 4 years.
In case you were wondering, the publishers are indeed lined up in the chronological order in which they agreed to settle (this was one of Judge Cote’s suggestions). For example, Macmillan was the last to settle, so the DOJ picked them as tail end charlie. And the first 3 publishers settled almost immediately, so they got to go ahead of Penguin.
The new settlement proposal also changes some of the restrictions on iTunes, but it doesn’t remove the requirement that Apple allow their competition (Amazon, Kobo, et al) to link from inside their iOS reading apps to their respective ebookstores (for a period of two years). But it also seems that the DOJ is still going to require Apple to avoid agreements with "any E-book Publisher or supplier of any other form of content (e.g., music, other audio, movies, television shows, or apps) where such agreement likely will increase, fix, or set the price at which other E-book Retailers or retailers of other forms of content can acquire or sell E-books or other forms of content." That’s going to have an interesting effect on Apple’s negotiations, and it will probably cause Apple to have to run new contracts by the external monitor.
But in spite of softening some of the terms, the DOJ is firm in standing their ground on the point that an external monitor is necessary. The DOJ point out that Apple’s claim of stronger internal compliance cannot be trusted; many of the lawyers and management currently working for Apple were also there when the conspiracy occurred and thus cannot be trusted not to conspire again.
If this revised proposed settlement is approved by Judge Cote it will take effect thirty days after her approval. Apple is likely going to to file their response to the revised proposed injunction by the end of day Friday; with luck it will be as entertaining as their previous response.