Kindle News: U.S files antitrust suit against Apple and publishers not settling. DOJ A/G statement at press conference included. UPDATE5

"Justice Department formally charges Apple, big five publishers in e-book price fixing case"

That's Engadget's headline

It's short and to the point. The Kindle Forum had the Engadget article, and the Washington Post one below, by Bob Van Voris, was sent by Edward Boyhan and has MUCH more detail. I have to leave, so I'll just direct you to the stories and to the transcript or release of Attorney General Holder's statement today.

Essentially, The DOJ decided to sue Apple, Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster over alleged e-book price-rigging.  Apple and Macmillian have already denied any wrongdoing, Engadget points out, saying that the agreements were enhancing competition in an industry previously dominated by Amazon (Oh, brother).

Fuller story: Washington Post with Bloomberg, by Bob Van Voris.

The Kindle Forum members also came up with the US Dept of Justice webpage for Attorney General Eric Holder's speech today at the Ebooks Press conference.

  Here it is in its entirety, as it's meant for all of us as a public service.:

' Today I’m joined by Acting Assistant Attorney General for the Antitrust Division Sharis Pozen, and Connecticut Attorney General George Jepsen, to announce the Justice Department’s latest progress in protecting American consumers from anticompetitive harm, ensuring fairness in the marketplace, and making certain that cutting-edge technologies are available at the lowest possible price.

In recent years, we have seen the rapid growth – and the many benefits – of electronic books. E-books are transforming our daily lives, and improving how information and content is shared. For the growing number of Americans who want to take advantage of this new technology, the Department of Justice is committed to ensuring that e-books are as affordable as possible.

As part of this commitment, the Department has reached a settlement with three of the nation’s largest book publishers – and will continue to litigate against Apple, and two additional leading publishers – for conspiring to increase the prices that consumers pay for e-books.

Earlier today, we filed a lawsuit in U.S. District Court for the Southern District of New York, against Apple and five different book publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. In response to our allegations, three of these publishers – Hachette, HarperCollins and Simon & Schuster – agreed to a proposed settlement. If approved by the court, this settlement would resolve the Department’s antitrust concerns with these companies, and would require them to grant retailers – such as Amazon and Barnes & Noble – the freedom to reduce the prices of their e-book titles. The settlement also requires the companies to terminate their anticompetitive most-favored-nation agreements with Apple and other e-books retailers.

In addition, the companies will be prohibited for two years from placing constraints on retailers’ ability to offer discounts to consumers. They will also be prohibited from conspiring or sharing competitively sensitive information with their competitors for five years. And each is required to implement a strong antitrust compliance program. These steps are appropriate – and essential in ensuring a competitive marketplace.

Beginning in the summer of 2009, we allege that executives at the highest levels of the companies included in today’s lawsuit – concerned that e-book sellers had reduced prices – worked together to eliminate competition among stores selling e-books, ultimately increasing prices for consumers. As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles.

During regular, near-quarterly meetings, we allege that publishing company executives discussed confidential business and competitive matters – including Amazon’s e-book retailing practices – as part of a conspiracy to raise, fix, and stabilize retail prices. In addition, we allege that these publishers agreed to impose a new model which would enable them to seize pricing authority from bookstores; that they entered into agreements to pay Apple a 30 percent commission on books sold through its iBookstore; and that they promised – through contracts including most-favored-nation provisions – that no other e-book retailer would set a lower price. Our investigation even revealed that one CEO allegedly went so far as to encourage an e-book retailer to punish another publisher for not engaging in these illegal practices.

In advancing this critical investigation, I’d like to thank Attorney General Jepsen and Texas Attorney General Greg Abbott – along with our partners at the European Commission – for their hard work and close cooperation. Today’s action sends a clear message that the Department’s Antitrust Division continues to be open for business – and that we will not hesitate to do what is necessary to protect American consumers.

I am grateful for the outstanding leadership that Acting Assistant Attorney General Sharis Pozen has provided in this matter. Not only has she ensured a seamless transition in the Division’s senior leadership, she has proven that vigorous enforcement will remain its hallmark. I also want to commend her dedicated team, and thank each of the attorneys and investigators who worked so hard to make today’s announcement possible. Although this matter remains in its initial stages, it’s clear that, in all of you, the Department – and the American people – could have no stronger team of advocates.

At this time, I’d like to turn things over to Sharis, who will provide additional details on today’s action. '

Acting Asst. Atty General Sharis A Pozen speaks next
  She cites quotes from publishers in connection with openly conspiring among themselves to get Amazon to raise prices.

 She prefaced these with, "I would just like to give you a flavor of the egregiousness of the alleged behavior, which took place at the highest levels of these publishing companies by providing you with some statements from our complaint..."


Kindle-Edition blog subscribers
Again, Kindle-Edition subscribers can click on the links and once on the Web,
click Menu/Article-Mode and read these fairly comfortably.  I hope that will work well for most.

ApppleInsider talks about other aspects involved.  Simon & Schuster, Hachette and HarperCollins have already settled with the department to avoid the suit.  Apple, Macmillan, and Penguin are the holdouts.

From Reuters:

' The Justice Department complaint cites an email from an executive for an unnamed publisher pointing out the need for the publishers to work together to convince Amazon to raise prices.

"We've always known that unless other publishers follow us, there's no chance of success in getting Amazon to change its pricing practices," the executive wrote.

"Without a critical mass behind us, Amazon won't 'negotiate,' so we need to be more confident of how our fellow publishers will react," the executive said in the email. '

FULL TEXT of the DOJ case against Apple and the publishers, found by Larkspotter at the forum.  It's a 36-page pdf.

Wired's Tim Carmody reports DOJ Announces Terms of Settlement With Three Publishers in E-Book Suit.  He lists them and includes the proposed settlement doc.

Update 5 - Commenter Tom Semple writes that the Publishers Lunch site's Details From the DOJ's Lawsuit "summarizes some of the juicier details," so I'm adding it here while back briefly and am leaving again.
  Thanks, Tom!


Related articles
TIMELINE:  Ebook Pricing Wars - what DOJ would have seen.
Also, History of the e-book pricing wars



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Google book settlement: What's it all about? Pros and Cons

CNet's Greg Sandoval reports on the Google book settlement plan drawing fire in court.

For those who wonder what it's all about, CNet describes the "disparate and dissenting constituencies" that showed up in federal court Thursday, Feb. 18, to comment on Google's plan to create an all-encompassing digital library.

After giving a description of the scene in court, Cnet states the basics:

' Google wishes to create a vast and unprecedented digital library and has reached an agreement with groups representing book publishers and authors that would allow the search engine to display digital snippets of out-of-print books still covered by copyright.  Their representatives appeared before U.S. District Judge Denny Chin to seek approval for the deal.

Perhaps best known for presiding over the Bernie Madoff securities-fraud case, Chin is now tasked with determining whether the controversial settlement is fair to authors, publishers, Google's competitors, and the public.

  One main issue is that Google would have the right to exploit titles belonging to authors who have not given their approval. '

Chin wasn't about to issue a ruling before first hearing from stakeholders, an important one being the U.S. Department of Justice, which has not been smiling on Google's plans for what is termed the "orphaned books."

Supporter Lateef Mtima, a Harvard law professor and director of Harvard's Institute for Intellectual Property and Social Justice, told the Judge:

  "Copyright was intended to be an engine of cultural development,
    not a brake."

Paul Courant, a professor at the University of Michigan who oversees the school's libraries, said that digitizing books frees knowledge from the restrictions of geographical locations.  Most books at the University can't be read unless you are there, in Ann Arbor.

However, of those who addressed the court, settlement opponents outnumbered supporters 3 to 1.  CNet continues:

' Detractors claimed Google's plan poses an unprecedented threat to the privacy of book readers.  Several authors argued that the agreement would desolate copyright law.  Competitors, such as Microsoft and Amazon, said the settlement is an attempt by Google to set itself up as the all-powerful emperor of digital information.

Nothing drew more fire than the settlement's plans to force authors to "opt out" in order to prevent Google from scanning snippets of their books.  Critics say that Google has everything backward here.  They ask why is it that authors must go out of their way to opt out in order to prevent Google from exploiting their work?

Doesn't copyright law already require that they give their permission first before someone can license their work? '

One might think the Dept. of Justice opinion carries some weight...

' William Cavanaugh, an assistant U.S. attorney general told Chin that the publishers and the Authors Guild do not have a right to enable a third party such as Google to use an author's work without their permission.  "This (settlement) has the effect of rewriting contracts," said Cavanaugh, who also told the judge that the government continues to investigate whether the agreement violates antitrust laws. '

Privacy is another concern.

' Representatives from the Electronic Frontier Foundation and The Center for Democracy & Technology described worrisome scenarios whereby information about people's reading habits could be tracked with Google's proposed service.  For example, Google would possess records of a person who read a sexually explicit book or some other controversial title.  In addition, Google would have the ability to log even the pages the person read. '

Google's attorney told the court that the company IS interested in getting rights to the "orphan works," titles for which the author isn't known or can't be found.

CNET closes with

' The question of properly paying someone who is entitled to compensation under Google's plan but may not be aware of it has been a hot issue. Google said that the money earned from orphan works is what will make the digital library a feasible business. Google's attorney said that others, such as Microsoft, who attempted to digitize books in the past couldn't monetize their efforts this way and that's why they failed. '

FROM COMMENTS AT CNET
1. 'By smilin - Out of print doesn't mean what you think.  It just means a book isn't being printed at the time.  Almost always the copyright holder does an additional run.

What if the publisher doesn't want to opt-in?  If you do an opt-out policy then you have essentially forced an opt-in.  The logic one would use to make this seem OK just makes my brain lock up.  Copyright owners would likely not opt in because they OWN the rights and intend to excercise them to make money.  If you take said right away then you have just stolen that opportunity from them." '

  I've got a friend who is an author of a recent yet out of print book.  They have plans to publish this as an e-book on Amazon.  What happens when they try to sell such a book and the customer has already found a copy of it for free on Google?

2. By orbital_bruiser - February 19, 2010 1:18 PM PST
  '...At issue is people [Authors Guild and non-related publishers] that don't own the copyright on material giving Google the right to scan and charge access without permission.  Not only that, the people that don't have the rights to works in question are agreeing to allow ONLY Google to do this...'

3. By ACLU_NorCal - February 19, 2010 9:39 AM PST
  'There are serious privacy implications of google book search that were raised yesterday by the ACLU, EFF, and CDT.  Because the settlement does not contain any privacy protections for users, Google's system will be able to monitor which books users search for, and even which pages they read and how long they spend on each page.  Google could then create a massive "digital dossier" that might be vulnerable to fishing expeditions by law enforcement or civil litigants.

Read more about the privacy implications on the ACLU-NC's website: bit.ly/9LCadq

- ACLU of Northern California '

4. By job514 February 20, 2010 12:04 AM PST
  'Opt-In is a ridiculous concept for this occasion.  These books have fallen out of print because the publisher in most cases has neglected it.  Google is offering a way to monetize these books again.  If the author is dead and/or the publisher is out of business then who is going to represent the rights of this book?  No one!  Who gets to see this book?  Depending on how many copies are left in existence... and how close you are to the library that has it.

  For a repository to be of true value it must include as many works as possible.  If I am researching the occurrence of the word "communism" in books from 1970's-1980's, and half of the out of print books are missing because the publisher neglected the work then I'm S.O.L.  Then again... if these books do indeed have continuing value then the author/publisher if he/she is still around will have incentive to claim it.  Google doesn't get the money in the mean time either...  It is set aside for a period of time for the right-holder to reclaim.  Copyright has failed us. Google has come up with a win/win solution. ' 'Share this post if you'd like others to see it.
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