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A judge just spared Apple from the harsh e-book punishment the government wanted

(Aly Song/Reuters)

A federal judge has just handed down the remedy for Apple's e-book price-fixing case. And if the penalty the Justice Department was seeking is any guide, Tim Cook just dodged a bullet. While the judge accepted several of the government's suggested restrictions on Apple's business practices, he rejected the proposal that would have constrained Apple the most in the long run.

The court order prohibits Apple from signing any deal with book publishers that forces them to give Apple the lowest price on the market for e-books. It also prevents Apple from taking its negotiations with one publisher and sharing that information with other publishers, a move designed to thwart the collusion Apple was found guilty of this summer.

Apple must modify or abandon any contracts with e-book publishers that operate on an agency model — the approach whereby Apple takes a cut of the sales from its online stores. In addition, auditors will be keeping an eye on Apple in the future.

All of these were punishments requested by the Justice Department as part of its argument that Apple engaged in anti-competitive behavior. But one thing is missing.

In its proposed remedy, the government said it wanted a ban on Apple striking deals with suppliers in other industries — creators of "music, movies, television shows or other content" — that might result in higher prices. Outside experts said at the time that the DOJ demand was incredibly broad.

"It could conceivably cover any agreement, any deal that through whatever chain of events increases pricing in the particular industry," Ankur Kapoor, an antitrust lawyer at Constantine Cannon, told me. "Regardless of whether that is anticompetitive or pro-competitive or what — it just applies to everything."

With today's ruling, it's clear that Judge Denise Cote agrees. While Apple still must pay the price for its misconduct, it's a much less stringent punishment than the Justice Department wanted. Further evidence that Apple will still come out on top.

Brian Fung covers technology for The Washington Post, focusing on telecommunications and the Internet. Before joining the Post, he was the technology correspondent for National Journal and an associate editor at the Atlantic.



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