Apple finally meets its match (Hint: It's called the DOJ)
Wouldn't it be ironic if Apple got tripped up by something so seemingly insignificant as an e-book? But even a Steve Jobs, if he were still around, would be hard-pressed to talk his way out of the company's current predicament.
If The Wall Street Journal's reporting is accurate, Apple has failed to reach agreement with regulators investigating charges of price-fixing involving e-book titles. Of course, this could change on a moment's notice. But if so, it won't be because the trustbusters are ready to bend.
The U.S. Justice Department, which has coordinated its probe of Apple and six big publishers with the European Commission, isn't saying much publicly. So it was telling that Europe's competition commissioner, Joaquin Almunia, did invite a reporter in to send a one-sided message to the parties concerned. "The companies involved know very well under which conditions we are ready to settle," Almunia told the Journal, sounding a bit like Ulysses S. Grant laying down the law to his opposite number for the surrender of Vicksburg."If our conditions cannot be met in a satisfactory way, we will continue our investigation." And then, presumably, sue their pants off.
For now, at least, any deal that conforms to government terms would translate into a defeat for Apple, which has been fingered as the ringleader in a scheme to maintain artificially high prices on e-books.
A settlement would likely involve tearing up contracts the publishers signed with Apple when it first introduced the iPad tablet computer in 2010, according to the people familiar with the matter. Publishers who sign on to the settlement would likely have to allow market leader Amazon.com resume discounting their e-books, a practice they dislike. It is unclear whether books by publishers who settle with the government would continue to be available on the iPad, and if so at what price.
That would be a rare reversal for Apple, which has been on such an incredible roll in the last year, especially. On the strength of record demand for iPhones and iPads, we've now reached the point where some on Wall Street now think Apple's stock can hit $1,000 per share and envision a a trillion dollar market cap as possible in the not-too-distant future. Not even the much-publicized controversy over worker conditions at factories operated by its Chinese contractor Foxconn have tarnished Apple's teflon-coated image.
Word has it that Apple along with Penguin Group and Macmillan are the remaining holdouts. If they're hoping to wait out the Justice Department, good luck to them. After all, this is the Justice Department, a landing zone for hard-headed bureaucrats who know just how to take down targets -- including tech celebs -- who get too big for their britches. Just ask Bill Gates.Editor's note: One of the publishing companies reportedly under investigation is Simon & Schuster, which is owned by CNET's corporate parent CBS Corp.