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Apple's book rule: 'I wouldn’t be surprised if phones were ringing at the FTC,' analyst says

February 1, 2011 |  1:08 pm

Books

Apple Inc. is changing the rules about how e-books can be sold and accessed via its iPhone and iPad devices -- a move that may get the attention of regulators, one analyst said.

Apple on Tuesday said it was changing its rules to require any vendors who sell books to iPhone and iPad users through their websites to also allow users to buy books inside the app. Until now, companies such as Google and Amazon have routed iPhone app users to their own book sites to purchase books they could download into the app. But Apple is now probably going to force those booksellers to change their apps.

"We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase," said a statement by Apple spokesperson Trudy Muller.

Sony sparked an outcry Monday night when it said the latest version of its e-reading app had been rejected by Apple over related issues.

James McQuivey, an analyst with Forrester Research, saw the move by Apple as a way to force more transactions to be funneled through its app store, where Apple receives a 30% cut of any sale.

"One way to look at this is that Apple is leveraging its monopoly power"over the iPad and iPhone platforms," McQuivey said. "One could argue that Apple is simply maximizing shareholder value by leveraging its platforms."

But McQuivey cited two potential drawbacks to Apple’s approach.

By dictating where digital books can be sold and turning away developers such as Sony, Apple may be squelching innovation, he said.

Secondly, such restrictions could be interpreted as restraint of trade, which is frowned upon by federal regulators such as the U.S. Federal Trade Commission.

"I wouldn’t be surprised if phones were ringing at the FTC today about this," McQuivey said.

Apple's platform is, however, more open in some respects than some of its competitors. Unlike the iPhone and iPad, the bestselling Amazon Kindle device does not easily allow readers to buy or access books sold by vendors other than Amazon, effectively locking out all of its competitors.

Sony, which submitted its app in early December, declined to go into detail on its proposed app.

"We opened a dialog with Apple to see if we can come up with an equitable resolution for both companies as well as our consumers but reached an impasse at this time," Sony said in a statement Tuesday.

Sony's app would have worked almost exactly like both Amazon’s Kindle app, which steers readers to Amazon’s Web store via a browser on the iPad and iPhone, and Google's Books app, which works the same way. After purchasing a book on the Amazon or Google sites, users are prompted to return to the app, where their purchases are automatically downloaded.

In a statement, Google affirmed Tuesday that its users can, as of now, "link out to the Google eBookstore and purchase new ebooks using the Safari browser."  The company did not respond to a question about whether it would have to change its iPhone "Google Books" app.

Messages to an Amazon spokesperson were not returned. In the meantime, Sony said it was "working on other solutions to bring the Reader experience to Apple mobile devices."

One possibility is for Sony to build a site, based on HTML 5, that would allow readers to access their books via a connected browser, but that would require a constant connection to the Internet as users would not be able to download the book.

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-- David Sarno and Alex Pham

Image: Screen grab from an iPhone showing various e-reading applications.

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