Federal judge upholds Apple's 30% take on in-app e-book sales

Computerworld - A federal judge on Thursday rejected government regulators' demand that Apple waive its 30% commission on all in-app e-book sales by third-party retailers, including Amazon, for two years.

Instead, Judge Denise Cote ruled that Apple could continue to bar e-book apps from its iOS App Store if the programs included links to external websites where customers could buy books or subscriptions.

Cote, who has presided over the e-book price-fixing case against Apple, issued her final injunction Thursday. Under that injunction, Apple is prohibited from disclosing deals it strikes with one e-book publisher to others -- a way to prevent it from again conspiring to set industry-wide prices -- and its behavior will be monitored for two years by a court-appointed antitrust compliance officer.

Her rejection of the Department of Justice's (DOJ) proposal that Apple be required to change its App Store policies, however, was a victory of sorts for Apple.

"Apple shall apply the same terms and conditions to the sale or distribution of an E-book App through Apple's App Store as Apple applies to all other apps sold or distributed through Apple's App Store," Cote ruled.

"This provision does not prevent Apple from introducing new categories of apps with different terms and conditions or from changing its App Store terms and conditions and applying them in a reasonable manner as long as Apple does not discriminate against E-book Apps," she wrote in the final injunction.

In early August, after Cote had found Apple guilty of violating antitrust laws, the DOJ and 33 state attorneys general had proposed a suite of remedies to ensure Apple could not become a repeat offender. Among them was a demand that e-book retailers be allowed to include links to external sales websites in their iPhone and iPad apps, a move that would have let the retailers sidestep Apple's 30% commission on all in-app revenue.

The DOJ and state attorneys general said that the commission exemption would "reset competition to the conditions that existed before the conspiracy" and "let consumers ...easily compare Apple's prices with those of its competitors."

Apple opposed the change, arguing last month that the government's App Store dictates had no connection to the e-book pricing conspiracy case, and that such interference in its business practice was "outrageous."

"Plaintiffs' proposed injunction would require Apple to carve out an exception to its blanket rule -- applicable to the more than 850,000 apps in the App Store -- that a commission applies to in-app sales of digital goods, and it would allow e-book retailers to make such sales commission-free," Apple's lawyers said in an August filing with the court.

Apple also made an implied threat, saying it was "under no duty to allow other retailers to offer apps on the iPad in the first place, much less on terms that subsidize their operations." That threat was effectively hollow, however, since an earlier order by Cote had blocked Apple from dumping e-book apps from the App Store.

Cote will decide on what damages Apple must pay in early 2014. Some e-book retailers, including Amazon, have told customers that they can expect between 73 cents and $3.06 for every eligible e-book purchased between April 1, 2010, and May 21, 2012, based on already-struck settlements with the book publishers.

Apple has said it will appeal Cote's July antitrust ruling.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

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10th Annual CIO Forum Features Federal CIO Vivek Kundra, November 6, 2009

EVENT HIGHLIGHTS
More than 130 people gathered at the Ronald Reagan Building and International Trade Center on Nov. 5, 2010 to learn and discuss “Innovation 2.0: Information Technology in Government and Business.” Keynote speaker Spain “Woody” Hall, CIO of General Dynamics IT, talked about “Driving an Organizational Culture of Innovation,” explaining that “It’s the people stuff that is really challenging when it comes to innovation. … Innovation doesn’t just happen, it is a process that needs to be managed and driven.” Read more & Watch Video

For decades information technology (IT) and digital infrastructures have served as a platform for innovation. From the personal computer to the Internet to social media, scores of IT innovations have spawned new business models, created novel products and services, and helped business and government organizations discover new ways of engaging with their customers and constituents. What are the new frontiers in technology-enabled innovation? What are the new developments that will create disruptive change in the organization of work across a range of sectors in both business and government? How do executives manage the continued wave of technological innovation and identify technologies that are most likely to create value? How do they create and sustain an innovation culture in their organizations? Join leaders from government and a range of industries to discuss technology-enabled innovation and the future.

Friday, November 5, 2010
11th Annual CIO Forum: Information Technology in Government and Business
Location: Ronald Reagan Building & International Trade Center
Address: 1300 Pennsylvania Avenue, N.W., Washington, D.C. 20004 [ map & directions | parking ]

Featured Speakers:

Andy Baer, Comcast, Chief Information OfficerSujal Patel, President and CEO, Isilon SystemsSpain “Woody” Hall, CIO, General Dynamics ITPanelists:

Peter Asbill, Songza MediaMike Brown, Chief Scientist, ComscoreMichael Byrne, Geographic Information Officer, FCCMarty Colburn, Executive Vice President and Chief Technology Officer, FINRABrian Goler, VP of Marketing, oDeskKenneth M. Ritchhart, CIO, Customs and Border Protection, U.S. Dept. of Homeland Security Donna Roy, Executive Director, National Information Exchange Model, DHSArjun Sethi, Chief Executive Officer, lolappsAjay Sravanpudi, Founder, President and Chief Executive Officer, LucidMedia Networks, Inc.Russ Travers, Deputy Director, National Counter Terrorism CenterModerator: Larry Fitzpatrick, President, Computech

The CIO Forum is proudly hosted by the Robert H. Smith School of Business' Center for Health Information and Decision Systems (CHIDS) and the Center for Digital Thought and Strategy (DIGITS).

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Smith Finance Fellows Visit Federal Reserve, FDIC [PHOTOS]

Smith Finance Fellows Visit Federal Reserve, FDIC

Robert H. Smith School of Business finance faculty member Elinda F. Kiss recently took student groups to visit the Federal Deposit Insurance Corporation and Federal Reserve buildings in Washington, D.C.

The trips consisted of University of Maryland undergraduate students enrolled in Kiss’s Banking and Private Wealth Management Fellows Program and Master of Science students from her Bank Management course.

Kiss noted that these trips gave the students an opportunity to interact with senior policy makers, as they met with Rich Brown, chief economist at the FDIC, and Janet Yellen, vice chair at the Federal Reserve, during the trips.

During the trip to the Federal Reserve, the students met Yellen in the boardroom where the Federal Open Market Committee meets, which meant one of the students was able to sit in Federal Reserve Chairman Ben Bernanke’s chair.

“Throughout the semester we had been learning about the role of the Federal Reserve in the regulation of banking institutions, as well as studying their balance sheet and monetary policy tools,” said Wendy Chen, a finance major who graduated in May. “I found Mrs. Yellen to be both an engaging and intelligent speaker who helped me see how some of the concepts we learned in class are applied to the FOMC meetings, such as setting the targeted federal funds rate and monitoring the balance sheet of the Fed.”

Chen’s comments about Yellen were echoed by Michelle Hill, a senior finance-accounting major, who also said she enjoyed getting an inside perspective of the Federal Reserve. “As an American, oftentimes I feel out of the loop with what the government and Federal Reserve Board of Governors are doing. It was a delight to get an inside perspective on the current issues. I now understand truly how hard it is to run the central bank. Many factors, some that most Americans do not consider at all, come to play when making banking decisions for our country.”

Pierce Kugler, a senior finance-accounting major, added: “Ms. Yellen discussed the current state of the economy and the Fed’s plans for improving the economy after the recession. She also gave us plenty of time to ask her questions regarding the Fed and her opinion regarding the crises in Europe. I enjoyed hearing an expert’s point of view on current financial topics, and the tools the Fed uses to manage the economy. “

In addition to Brown, the students on the FDIC trip met with Daniel Bean, an FDIC analyst, and an FDIC intern.

Brown gave a presentation to the students in which he discussed the financial crisis that began in 2007 and what the FDIC is doing to prevent future bank failures.

“The FDIC actually charges premiums to banks so that if they fail, the FDIC will have enough funds to cover the take over of the bank,” said Anastasia Adams, a senior finance-marketing major, who attended the FDIC trip. “Rich Brown also mentioned that the regulation and actions taken by the FDIC aim to prevent ‘too big to fail,’ which is also something discussed in Professor Kiss’s class. Through preventing too big to fail, the FDIC hopes to prevent another financial crisis.”

“I really liked how much of Rich Brown’s presentation actually related to the material we had been learning over the semester so we could actually comprehend the material aspects,” said Susan Ali, a senior finance-economics major.

Derek Zumstein, a finance major who graduated in May, said he enjoyed the opportunity to have lunch with Brown and ask additional questions.

“Overall, I liked the event, especially the time we got to ask Rich questions at lunch,” he said. “That smaller setting helped draw out some deeper questions than the Q&A period during Rich’s presentation.”

Ted McCauley, a finance major who graduated in May, summed up the experience: “The trip to the FDIC was a valuable insight into the inner workings of what fuels the decisions made in respect to our economy.”

Peter Haldis, MBA Candidate 2014

About the University of Maryland's Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, MS in business, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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