Unites States of America v. Apple, Inc. et al

Filing 363

DECLARATION of Lawrence E. Buterman in Support re: 361 Memorandum of Law in Support. Document filed by Unites States of America. (Buterman, Lawrence)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK __________________________________________ ) ) ) Plaintiff, ) ) v. ) ) APPLE, INC., et al., ) ) Defendants. ) __________________________________________) UNITED STATES OF AMERICA, Civil Action No. 12-cv-2826 (DLC) __________________________________________ ) THE STATE OF TEXAS, et al., ) ) Plaintiffs, ) ) v. ) ) PENGUIN GROUP (USA) INC., et al., ) ) Defendants. ) __________________________________________) Civil Action No. 12-cv-03394 (DLC) DECLARATION OF LAWRENCE E. BUTERMAN IN SUPPORT OF PLAINTIFFS’ REVISED PROPOSED INJUNCTION 1 I, LAWRENCE E. BUTERMAN, hereby declare as follows: 1. I am a Trial Attorney with the Antitrust Division of the Department of Justice, counsel for the United States of America in U.S. v. Apple, Civil Action No. 12-cv-2826. I am admitted to practice in the State of New York, the United States District Courts for the Southern and Eastern Districts of New York and the United States Court of Appeals for the Second Circuit, and am a member in good standing with this Court. I submit this declaration in support of Plaintiffs’ revised proposed injunction against Apple. 2. Attached as Exhibit 1 is a true and correct copy of Plaintiffs’ Revised Proposed Injunction. 3. Attached as Exhibit 2 is a true and correct copy of a document comparing Plaintiffs’ Revised Proposed Injunction to Plaintiffs’ initial proposed injunction, submitted to the Court on August 2, 2013. The comparison was generated using Microsoft Word. 4. Attached as Exhibit 3 are true and correct copies of selected pages from the deposition of Mr. Eddy Cue, conducted in this matter on March 12 and March 13, 2013. 5. Attached as Exhibit 4 is a true and correct copy of a printout from the website of Zappos.com, describing the company’s iPad shopping app, and the fact that it allows individuals to purchase products from the app. The url is http://www.zappos.com/zappos-ipad-app 6. Attached as Exhibit 5 is a true and correct copy of a screenshot taken from amazon.com’s iPad shopping app, indicating that one can buy various good, including physical books. 2 7. Attached as Exhibit 6 is a true and correct copy of Apple’s “Getting Started with In-App Purchase on iOS and OS X,” version 3.1, dated February 13, 2013. The document is available at https://developer.apple.com/in-app-purchase/In-App-Purchase-Guidelines.pdf 8. Attached as Exhibit 7 is a true and correct copy of an article by Claire Cain Miller & Miguel Helft, published by the New York Times on February 1, 2011, entitled Apple Moves to Tighten Control of App Store. 9. Attached as Exhibit 8 is a true and correct copy of an article by David Carnoy, published on CNET Reviews on June 9, 2011, entitled What Apple’s Latest Rules Change Means for Kindle, Nook, and Kobo E-reader Apps. 10. Attached as Exhibit 9 is a true and correct copy of a document produced by Apple in this matter, bearing identification number APLEBOOK-03306618. 11. Attached as Exhibit 10 is a true and correct copy of an October 2010 version of Apple’s App Store Review Guidelines, produced by Apple in this matter, bearing identification number APLEBOOK-03322259. 12. Attached as Exhibit 11 are true and correct copies of documents produced by Apple in this matter bearing identification numbers APLEBOOK-03345727, APLEBOOK03345725 and APLEBOOK-03345975. Dated: August 23, 2013 Lawrence E. Buterman 3 EXHIBIT 1 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK __________________________________________ ) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) Civil Action No. 1:12-CV-2826 v. ) ) APPLE, INC., et al., ) PLAINTIFF UNITED STATES’ ) FINAL JUDGMENT Defendants. ) __________________________________________) and ) THE STATE OF TEXAS, et al., ) PLAINTIFF STATES’ ) ORDER ENTERING Plaintiffs, ) PERMANENT INJUNCTION ) v. ) ) Civil Action No. 1:12-CV-3394 1 PENGUIN GROUP (USA) INC., et al., ) ) Defendants. ) __________________________________________) DENISE L. COTE, UNITED STATES DISTRICT JUDGE I. DEFINITIONS As used in this Final Judgment and Order Entering Permanent Injunction: A. “Agency Agreement” means an agreement between an E-book Publisher and an E-book Retailer under which the Retailer acts as an agent of the Publisher and is paid a 1 Pursuant to the agreement of the parties and Court order, the proceedings in Texas et al. v. Penguin Group (USA) Inc. et al., Civ. A. No. 1:12-CV-3394, have been bifurcated. Issues related to non-injunctive relief, including damages and civil penalties, will be addressed in subsequent proceedings. commission (or a portion of the Retail Price) in connection with the sale of one or more of the Publisher’s E-books. B. “Apple” means Apple, Inc. C. “E-book” means an electronically formatted book designed to be read on a computer, a handheld device, or other electronic devices capable of visually displaying E-books. D. “E-book App” means a software application sold or distributed through Apple’s “App Store” relating to the reading, browsing, purchase, sale, recommendation, selection, or cataloging of any book or E-book. E. “E-book Publisher” means any Person that, by virtue of a contract or other relationship with an E-book’s author or other rights holder, owns or controls the necessary copyright or other authority (or asserts such ownership or control) over any E-book sufficient to distribute the E-book within the United States to E-book Retailers and to permit such E-book Retailers to sell the E-book to consumers in the United States. Publisher Defendants are E-book Publishers. For purposes of this Final Judgment, E-book Retailers are not E-book Publishers. F. “E-book Retailer” means any Person that lawfully sells (or seeks to lawfully sell) E-books to consumers in the United States, or through which a Publisher Defendant, under an Agency Agreement, sells E-books to consumers. Apple is an E-book Retailer. For purposes of this Final Judgment, Publisher Defendants and all other Persons whose primary business is book publishing are not E-book Retailers. G. “Effective Date” means the date, under Section VIII.A of this Final Judgment, on which this Final Judgment takes effect. 2 H. “External Compliance Monitor” means the person appointed by the Court to perform the duties described in Section VI of this Final Judgment. I. “Final Judgment” means this document: the Final Judgment in United States v. Apple, Inc., et al., Civil Action No. 1:12-CV-2826, and the Order Entering Permanent Injunction in The State of Texas, et al. v. Penguin Group (USA) Inc., et al., Civil Action No. 1:12-CV-3394. J. “Hachette” means Hachette Book Group, Inc. K. “HarperCollins” means HarperCollins Publishers L.L.C. L. “Macmillan” means Holtzbrinck Publishers, LLC d/b/a Macmillan and Verlagsgruppe Georg von Holtzbrinck GmbH. M. “Penguin” means Penguin Group (USA), Inc., The Penguin Group, a division of U.K. corporation Pearson plc, The Penguin Publishing Company Ltd, Dorling Kindersley Holdings Limited, and Penguin Random House, a joint venture by and between Pearson plc and Bertelsmann SE & Co. KGaA, and any similar joint venture between Penguin and Random House Inc. N. “Person” means any natural person, corporation, company, partnership, joint venture, firm, association, proprietorship, agency, board, authority, commission, office, or other business or legal entity, whether private or governmental. O. “Plaintiff States” means the States and Commonwealths of Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Mexico, New York, North Dakota, Ohio, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, and Wisconsin and the District of Columbia. 3 P. “Publisher Defendants” means Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. Q. “Representative Plaintiff States” means, as of the Effective Date of this Final Judgment, the States of Texas and Connecticut. The Plaintiff States may designate a different Plaintiff State as a substitute Representative Plaintiff State at any time by communicating the change in writing to Apple and the United States. R. “Retail Price” means the price at which an E-book Retailer or, under an Agency Agreement, an E-book Publisher sells an E-book to a consumer. S. “Retail Price MFN” means a term in an agreement between an E-book Publisher and an E-book Retailer under which the Retail Price at which an E-book Retailer or, under an Agency Agreement, an E-book Publisher sells one or more E-books to consumers depends in any way on the Retail Price, or discounts from the Retail Price, at which any other E-book Retailer or the E-book Publisher, under an Agency Agreement, through any other E-book Retailer sells the same E-book(s) to consumers. T. “Simon & Schuster” means Simon & Schuster, Inc. II. APPLICABILITY This Final Judgment applies to Apple and each of its affiliates, subsidiaries, officers, directors, agents, employees, successors, and assigns, to any successor to any substantial part of the business, and to all other Persons acting in concert with Apple and having actual notice of this Final Judgment. III. PROHIBITED CONDUCT 4 A. Apple shall not enforce any Retail Price MFN in any agreement with an E-book Publisher relating to the sale of E-books. B. Apple shall not enter into any agreement with an E-book Publisher relating to the sale of E-books that contains a Retail Price MFN. C. Apple shall not enter into any agreement with a Publisher Defendant that restricts, limits, or impedes Apple’s ability to set, alter, or reduce the Retail Price of any E-book or to offer price discounts or any other form of promotions to encourage consumers to purchase one or more E-books. The prohibitions in this Section III.C shall expire, for agreements between Apple and a Publisher Defendant, on the following dates: 1. For agreements between Apple and Hachette: 24 months after the Effective Date of this Final Judgment; 2. For agreements between Apple and Harper Collins: 30 months after the Effective Date of this Final Judgment; 3. For agreements between Apple and Simon & Schuster: 36 months after the Effective Date of this Final Judgment; 4. For agreements between Apple and Penguin: 42 months after the Effective Date of this Final Judgment; and 5. For agreements between Apple and Macmillan: 48 months after the Effective Date of this Final Judgment. D. Apple shall not (1) retaliate against or punish, (2) threaten to retaliate against or punish, or (3) urge another Person to retaliate against or punish any E-book Publisher for refusing to enter into an agreement with Apple relating to the sale of E-books or for the terms on which the 5 E-book Publisher sells E-books through any other E-book Retailer. This provision does not require Apple to enter into an agreement with an E-book Publisher or E-book Retailer, or seek to prevent Apple from negotiating terms of agreement in good faith. E. Apple shall not communicate, directly or indirectly, to any E-book Publisher (1) the status of its contractual negotiations with any other E-book Publisher; (2) the actual or proposed contractual terms or business plans or arrangements it has with any other E-book Publisher, or (3) any non-public competitively sensitive information it learns from any other E-book Publisher, including, but not limited to: a. the E-book Publisher’s business plans or strategies; b. the E-book Publisher’s past, present, or future wholesale or retail prices or pricing strategies for books licensed or sold in any format (e.g., print books, E-books, or audio books); c. any terms in the E-book Publisher’s agreement(s) with any retailer of books licensed or sold in any format; or d. any terms in the E-book Publisher’s agreement(s) with any author. Nothing in this Section III.E prohibits Apple from developing and offering to E-book Publishers a standard form contract containing the terms on which Apple would agree to sell the E-book Publishers’ E-books, and so informing an E-book Publisher that it is a standard from; nor shall this prohibit Apple from publicly communicating the retail price of E-books available on the iBookstore. F. Apple shall not enter into or maintain any agreement with any E-book Publisher or supplier of any other form of content (e.g., music, other audio, movies, television shows, or apps) 6 where such agreement likely will increase, fix, or set the price at which other E-book Retailers or retailers of other forms of content can acquire or sell E-books or other forms of content. Nothing in this Section III.F prohibits Apple from entering into or maintaining an agreement with an E-book Publisher or supplier of any other form of content merely specifying prices that Apple must pay for the content. G. Apple shall not enter into or maintain any agreement with any other E-book Retailer where such agreement likely will increase, fix, stabilize, or set the prices or establish other terms on which Apple or the other E-book Retailer sells E-books to consumers. IV. REQUIRED CONDUCT A. On the Effective Date of this Final Judgment, Apple shall terminate any Agency Agreement with a Publisher Defendant. B. For any E-book App that any Person offered to consumers through Apple’s App Store as of July 10, 2013, Apple shall continue to permit such Person to offer that E-book App, or updates to that E-book App, through the App Store. C. 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, except that, for two years after the Effective Date of this Final Judgment, Apple shall allow any E-book Retailer to provide a hyperlink to its website or e-bookstore in or through its E-book App without either compensating Apple for any sales of E-books that follow consumers’ use of such hyperlink or requiring the E-book Retailer to include functionality in the E-book App (e.g., a “buy button”) the use of which might impose an obligation on the E-book Retailer to compensate Apple. 7 D. Apple shall furnish to the United States and the Representative Plaintiff States, within ten business days of receiving such information, any information that reasonably suggests to Apple that its suppliers of any form of content (e.g., books, music, other audio, movies, television shows, or apps) have impermissibly coordinated or are impermissibly coordinating on the terms on which they supply or offer their content to Apple or to any other Person. V. ANTITRUST COMPLIANCE To ensure its compliance with this Final Judgment and the antitrust laws, Apple shall perform the activities enumerated below in Sections V.A through V.J of this Final Judgment. Within thirty days after the Effective Date of this Final Judgment, Apple’s Audit Committee, or another committee comprised entirely of outside directors (i.e., directors not also employed by Apple), shall designate a person not employed by Apple as of the Effective Date of the Final Judgment to serve as Antitrust Compliance Officer, who shall report to the Audit Committee or equivalent committee of Apple’s Board of Directors and shall be responsible for supervising Apple’s performance of the following: A. furnishing a copy of this Final Judgment, within thirty days of its Effective Date, to each of Apple’s officers and directors and to each of Apple’s employees engaged, in whole or in part, in activities relating to Apple’s iBookstore; B. furnishing a copy of this Final Judgment in a timely manner to each officer, director, or employee who succeeds to any position identified in Section V.A of this Final Judgment; C. ensuring that each person identified in Sections V.A and V.B of this Final Judgment receives at least four hours of training annually on the meaning and requirements of this 8 Final Judgment and the antitrust laws, such training to be delivered by an attorney with relevant experience in the field of antitrust law; D. obtaining, within sixty days after the Effective Date of this Final Judgment and on each anniversary of the Effective Date of this Final Judgment, from each person identified in Sections V.A and V.B of this Final Judgment, and thereafter maintaining, a certification that each such person (a) has read, understands, and agrees to abide by the terms of this Final Judgment; and (b) is not aware of any violation of this Final Judgment or the antitrust laws or has reported any potential violation to the Antitrust Compliance Officer; E. conducting, in consultation with the External Compliance Monitor, an annual antitrust compliance audit covering each person identified in Sections V.A and V.B of this Final Judgment, and maintaining all records pertaining to such audits; F. communicating annually to Apple’s employees that they may disclose to the Antitrust Compliance Officer, without reprisal, information concerning any potential violation of this Final Judgment or the antitrust laws; G. taking appropriate action, within three business days of discovering or receiving credible information concerning an actual or potential violation of this Final Judgment, to terminate or modify Apple’s conduct to assure compliance with this Final Judgment; and, within seven days of discovering or receiving such information, providing to the United States, the Representative Plaintiff States, and the External Compliance Monitor a description of the actual or potential violation of this Final Judgment and the corrective actions taken; H. furnishing to the United States, the Representative Plaintiff States, and the External Compliance Monitor on a quarterly basis electronic copies of any non-privileged communications 9 with any Person containing allegations of Apple’s noncompliance with any provisions of this Final Judgment or the antitrust laws; I. maintaining, and furnishing to the United States, the Representative Plaintiff States, and the External Compliance Monitor on a quarterly basis, a log of all oral and written communications, excluding privileged or public communications, between or among any person identified in Sections V.A or V.B of this Final Judgment and 1. any person employed by or associated with another E-book Retailer, relating, in whole or in part, to E-books, devices for reading E-books, or E-book Apps; or 2. employees or representatives of two or more E-book Publishers, relating, in whole or in part, to E-books, devices for reading E-books, or E-book Apps, including, but not limited to, an identification (by name, employer, and job title) of the author and recipients of and all participants in the communication, the date, time, and duration of the communication, the medium of the communication, and a description of the subject matter of the communication; and J. providing to the United States, the Representative Plaintiff States, and the External Compliance Monitor annually, on or before the anniversary of the Effective Date of this Final Judgment, a written statement as to the fact and manner of Apple’s compliance with Sections III and IV of this Final Judgment. VI. EXTERNAL COMPLIANCE MONITOR A. The Court shall appoint an External Compliance Monitor to undertake the responsibilities and duties described in this Section VI. On or before the Effective Date of this 10 Final Judgment, the United States and the Representative Plaintiff States jointly shall recommend to the Court one or more persons to serve as External Compliance Monitor. B. The External Compliance Monitor shall have the power and authority to monitor Apple’s compliance with the terms of this Final Judgment, to review and evaluate Apple’s existing internal antitrust compliance policies and procedures, and to recommend to Apple changes to address any deficiencies in those policies and procedures. C. The External Compliance Monitor shall conduct an initial review to assess whether Apple’s internal antitrust compliance policies and procedures in existence at the time of his or her appointment are reasonably designed to detect and prevent violations of the antitrust laws. Within 180 days of his or her appointment by the Court, the External Compliance Monitor shall provide a written report to Apple, the United States, and the Representative Plaintiff States setting forth his or her assessment of Apple’s internal antitrust compliance policies and procedures and, if appropriate, making recommendations reasonably designed to improve Apple’s policies and procedures for ensuring antitrust compliance. D. The External Compliance Monitor may, at any time prior to the expiration of this Final Judgment, provide one or more additional written reports to Apple, the United States, and the Representative Plaintiff States setting forth additional recommendations reasonably designed to improve Apple’s policies and procedures for ensuring antitrust compliance. The External Compliance Monitor may provide such additional reports on his or her own initiative or at the request of the Court, the United States, or the Representative Plaintiff States. E. Apple shall adopt, within 60 days after it receives a report from the External Compliance Monitor concerning its internal antitrust compliance policies and procedures, all 11 recommendations to which it does not object as unduly burdensome, impractical, or costly. If Apple objects to any recommendation as unduly burdensome, impractical, or costly, it shall propose in writing to the External Compliance Monitor, the United States, and the Representative Plaintiff States, within 30 days after it receives the report, an alternative policy, procedure, or system designed to achieve the same objective or purpose. If Apple and the External Compliance Monitor fail, after good faith discussions, to agree on an alternative policy or procedure within 30 days of Apple’s objection to a recommendation, Apple shall promptly adopt the External Compliance Monitor’s initial recommendation or, after consultation with the United States and the Representative Plaintiff States, apply to this Court within 14 days for relief. F. The External Compliance Monitor shall file quarterly reports with the United States, the Representative Plaintiff States, and the Court setting forth Apple’s efforts to comply with the Final Judgment. To the extent such reports contain information that the External Compliance Monitor deems confidential, such reports shall not be filed in the public docket of the Court. G. If the External Compliance Monitor in the exercise of his or her responsibilities under this Section VI discovers or receives evidence that suggests to the External Compliance Monitor that Apple is violating or has violated this Final Judgment or the antitrust laws, the External Compliance Monitor shall promptly provide that information to the United States and the Representative Plaintiff States. H. Apple shall assist the External Compliance Monitor in performance of the responsibilities set forth in this Section VI. Apple shall take no action to interfere with or to 12 impede the External Compliance Monitor’s accomplishment of its responsibilities. The External Compliance Monitor may, on reasonable notice to Apple: 1. interview, either informally or on the record, any Apple personnel, who may have counsel present; any such interview to be subject to the reasonable convenience of such personnel and without restraint or interference by Apple; 2. inspect and copy any documents in the possession, custody, or control of 3. require Apple to provide compilations of documents, data, or other Apple; and information, and to submit reports to the External Compliance Monitor containing such material, in such form as the External Compliance Monitor may reasonably direct. I. Any objections by Apple to actions by the External Compliance Monitor in fulfillment of the External Compliance Monitor’s responsibilities must be conveyed in writing to the United States and the Representative Plaintiff States within ten calendar days after the action giving rise to the objection. J. The External Compliance Monitor may hire, subject to the approval of the United States, after consultation with the Representative Plaintiff States, any consultants, accountants, attorneys, or other persons reasonably necessary to fulfilling the External Compliance Monitor’s responsibilities. The External Compliance Monitor and any persons hired to assist the External Compliance Monitor shall serve at the cost and expense of Apple, on such terms and conditions as the United States, after consultation with the Representative Plaintiff States, approves, including, but not limited to, the execution of customary confidentiality agreements. The compensation of the External Compliance Monitor and any persons hired to assist the External Compliance Monitor 13 shall be on reasonable and customary terms commensurate with the individuals’ experience and responsibilities. The External Compliance Monitor shall submit a quarterly expense report to the United States and the Representative Plaintiff States. K. If the United States, after consultation with the Representative Plaintiff States, or Apple determines that the External Compliance Monitor has ceased to act or failed to act diligently or in a cost-effective manner, it may recommend that the Court appoint a substitute External Compliance Monitor. VII. PLAINTIFFS’ ACCESS A. For purposes of determining or securing compliance with this Final Judgment, or of determining whether the Final Judgment should be modified or vacated, and subject to any legally recognized privilege, from time to time duly authorized representatives of the United States Department of Justice Antitrust Division or the Representative Plaintiff States, including, but not limited to, consultants and other persons retained by the United States or the Representative Plaintiff States, shall, upon written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division or a joint written request by authorized representatives of each Representative Plaintiff State, and on reasonable notice to Apple, be permitted: 1. access during regular business hours to inspect and copy, or at the option of the United States or the Representative Plaintiff States, to require Apple to provide to the United States and the Representative Plaintiff States hard copy or electronic copies of all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of Apple, relating to any matters contained in this Final Judgment; and 14 2. to interview, either informally or on the record, Apple’s officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the reasonable convenience of the interviewee and without restraint or interference by Apple. B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division or a joint written request by authorized representatives of each Representative Plaintiff State, Apple shall submit written reports or respond to written interrogatories, under oath, relating to any of the matters contained in this Final Judgment. Written reports authorized under this paragraph may require Apple to conduct, at its cost, an independent audit or analysis relating to any of the matters contained in this Final Judgment. C. No information or documents obtained by the means provided in this Section shall be divulged by the United States or any Plaintiff State to any person other than an authorized representative of the executive branch of the United States, the Attorney General’s Office of any Plaintiff State, or the External Compliance Monitor, except in the course of legal proceedings to which the United States or the relevant Plaintiff State(s) is a party (including, but not limited to, grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law. D. If at the time information or documents are furnished by Apple to the United States and the Representative Plaintiff States, Apple represents and identifies in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and Apple marks each pertinent page of such material, “Subject to claim of protection under Rule 26(c)(1)(G) of the Federal Rules of Civil 15 Procedure,” then the United States and the Representative Plaintiff States shall give Apple ten calendar days notice prior to divulging such material in any civil or administrative proceeding. VIII. ADDITIONAL PROVISIONS A. This Final Judgment shall take effect 30 days after the date on which it is entered. If the Final Judgment is stayed, all time periods in the Final Judgment will be tolled during the stay. B. This Court retains jurisdiction to enable the United States, the Representative Plaintiff States, any other Plaintiff State (after consultation with the United States and the Representative Plaintiff States), or Apple to apply to this Court at any time for, or to act sua sponte to issue, further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions. C. This Final Judgment shall expire by its own terms and without further action of this Court five years after its Effective Date, provided that, at any time prior to its expiration, the Court may sua sponte or on the application of the United States or any Plaintiff State extend the Final Judgment by one or more one-year periods, if necessary to ensure effective relief. SO ORDERED: DENISE L. COTE UNITED STATES DISTRICT JUDGE Dated: 16 EXHIBIT 2 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK __________________________________________ ) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) Civil Action No. 1:12-CV-2826 v. ) ) APPLE, INC., et al., ) PLAINTIFF UNITED STATES’ ) FINAL JUDGMENT Defendants. ) __________________________________________) and ) THE STATE OF TEXAS, et al., ) PLAINTIFF STATES’ ) ORDER ENTERING Plaintiffs, ) PERMANENT INJUNCTION ) v. ) ) Civil Action No. 1:12-CV-3394 1 PENGUIN GROUP (USA) INC., et al., ) ) Defendants. ) __________________________________________) DENISE L. COTE, UNITED STATES DISTRICT JUDGE I. DEFINITIONS As used in this Final Judgment and Order Entering Permanent Injunction: A. “Agency Agreement” means an agreement between an E-book Publisher and an E-book Retailer under which the Retailer acts as an agent of the Publisher and is paid a 1 Pursuant to the agreement of the parties and Court order, the proceedings in Texas et al. v. Penguin Group (USA) Inc. et al., Civ. A. No. 1:12-CV-3394, have been bifurcated. Issues related to non-injunctive relief, including damages and civil penalties, will be addressed in subsequent proceedings. commission (or a portion of the Retail Price) in connection with the sale of one or more of the Publisher’s E-books. B. “Apple” means Apple, Inc. C. “E-book” means an electronically formatted book designed to be read on a computer, a handheld device, or other electronic devices capable of visually displaying E-books. D. “E-book App” means a software application sold or distributed through Apple’s “App Store” relating to the reading, browsing, purchase, sale, recommendation, selection, or cataloging of any book or E-book. E. “E-book Publisher” means any Person that, by virtue of a contract or other relationship with an E-book’s author or other rights holder, owns or controls the necessary copyright or other authority (or asserts such ownership or control) over any E-book sufficient to distribute the E-book within the United States to E-book Retailers and to permit such E-book Retailers to sell the E-book to consumers in the United States. Publisher Defendants are E-book Publishers. For purposes of this Final Judgment, E-book Retailers are not E-book Publishers. F. “E-book Retailer” means any Person that lawfully sells (or seeks to lawfully sell) E-books to consumers in the United States, or through which a Publisher Defendant, under an Agency Agreement, sells E-books to consumers. Apple is an E-book Retailer. For purposes of this Final Judgment, Publisher Defendants and all other Persons whose primary business is book publishing are not E-book Retailers. G. “Effective Date” means the date, under Section VIII.A of this Final Judgment, on which this Final Judgment takes effect. 2 H. “External Compliance Monitor” means the person appointed by the Court to perform the duties described in Section VI of this Final Judgment. I. “Final Judgment” means this document: the Final Judgment in United States v. Apple, Inc., et al., Civil Action No. 1:12-CV-2826, and the Order Entering Permanent Injunction in The State of Texas, et al. v. Penguin Group (USA) Inc., et al., Civil Action No. 1:12-CV-3394. J. “Hachette” means Hachette Book Group, Inc. K. “HarperCollins” means HarperCollins Publishers L.L.C. L. “Macmillan” means Holtzbrinck Publishers, LLC d/b/a Macmillan and Verlagsgruppe Georg von Holtzbrinck GmbH. M. “Penguin” means Penguin Group (USA), Inc., The Penguin Group, a division of U.K. corporation Pearson plc, The Penguin Publishing Company Ltd, Dorling Kindersley Holdings Limited, and Penguin Random House, a joint venture by and between Pearson plc and Bertelsmann SE & Co. KGaA, and any similar joint venture between Penguin and Random House Inc. N. “Person” means any natural person, corporation, company, partnership, joint venture, firm, association, proprietorship, agency, board, authority, commission, office, or other business or legal entity, whether private or governmental. O. “Plaintiff States” means the States and Commonwealths of Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Mexico, New York, North Dakota, Ohio, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, and Wisconsin and the District of Columbia. 3 P. “Publisher Defendants” means Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. Q. “Representative Plaintiff States” means, as of the Effective Date of this Final Judgment, the States of Texas and Connecticut. The Plaintiff States may designate a different Plaintiff State as a substitute Representative Plaintiff State at any time by communicating the change in writing to Apple and the United States. R. “Retail Price” means the price at which an E-book Retailer or, under an Agency Agreement, an E-book Publisher sells an E-book to a consumer. S. “Retail Price MFN” means a term in an agreement between an E-book Publisher and an E-book Retailer under which the Retail Price at which an E-book Retailer or, under an Agency Agreement, an E-book Publisher sells one or more E-books to consumers depends in any way on the Retail Price, or discounts from the Retail Price, at which any other E-book Retailer or the E-book Publisher, under an Agency Agreement, through any other E-book Retailer sells the same E-book(s) to consumers. T. “Simon & Schuster” means Simon & Schuster, Inc. II. APPLICABILITY This Final Judgment applies to Apple and each of its affiliates, subsidiaries, officers, directors, agents, employees, successors, and assigns, to any successor to any substantial part of the business, and to all other Persons acting in concert with Apple and having actual notice of this Final Judgment. III. PROHIBITED CONDUCT 4 A. For five years after the Effective Date of this Final Judgment, Apple shall not enforce any Retail Price MFN in any agreement with an E-book Publisher relating to the sale of E-books. B. For five years after the Effective Date of this Final Judgment, Apple shall not enter into any agreement with an E-book Publisher relating to the sale of E-books that contains a Retail Price MFN. C. For five years after the Effective Date of this Final Judgment, Apple shall not enter into any agreement with a Publisher Defendant that restricts, limits, or impedes Apple’s ability to set, alter, or reduce the Retail Price of any E-book or to offer price discounts or any other form of promotions to encourage consumers to purchase one or more E-books. The prohibitions in this Section III.C shall expire, for agreements between Apple and a Publisher Defendant, on the following dates: 1. For agreements between Apple and Hachette: 24 months after the Effective Date of this Final Judgment; 2. For agreements between Apple and Harper Collins: 30 months after the Effective Date of this Final Judgment; 3. For agreements between Apple and Simon & Schuster: 36 months after the Effective Date of this Final Judgment; 4. For agreements between Apple and Penguin: 42 months after the Effective Date of this Final Judgment; and 5. For agreements between Apple and Macmillan: 48 months after the Effective Date of this Final Judgment. 5 D. Apple shall not (1) retaliate against or punish, (2) threaten to retaliate against or punish, or (3) urge another Person to retaliate against or punish any E-book Publisher for refusing to enter into an agreement with Apple relating to the sale of E-books or for the terms on which the E-book Publisher sells E-books through any other E-book Retailer. This provision does not require Apple to enter into an agreement with an E-book Publisher or E-book Retailer, or seek to prevent Apple from negotiating terms of agreement in good faith. E. Apple shall not communicate, directly or indirectly, to any E-book Publisher (1) the status of its contractual negotiations with any other E-book Publisher; (2) the actual or proposed contractual terms or business plans or arrangements it has with any other E-book Publisher, or (3) any non-public competitively sensitive information it learns from any other E-book Publisher, including, but not limited to: a. the E-book Publisher’s business plans or strategies; b. the E-book Publisher’s past, present, or future wholesale or retail prices or pricing strategies for books licensed or sold in any format (e.g., print books, E-books, or audio books); c. any terms in the E-book Publisher’s agreement(s) with any retailer of books licensed or sold in any format; or d. any terms in the E-book Publisher’s agreement(s) with any author. Nothing in this Section III.E prohibits Apple from developing and offering to E-book Publishers a standard form contract containing the terms on which Apple would agree to sell the E-book Publishers’ E-books, and so informing an E-book Publisher that it is a standard from; nor 6 shall this prohibit Apple from publicly communicating the retail price of E-books available on the iBookstore. F. Apple shall not enter into or maintain any agreement with any E-book Publisher or supplier of any other form of content (e.g., music, other audio, movies, television shows, or apps) where such agreement likely will increase, fix, or set the price at which other E-book Retailers or retailers of other forms of content can acquire or sell E-books or other forms of content. Nothing in this Section III.F prohibits Apple from entering into or maintaining an agreement with an E-book Publisher or supplier of any other form of content merely specifying prices that Apple must pay for the content. G. Apple shall not enter into or maintain any agreement with any other E-book Retailer where such agreement likely will increase, fix, stabilize, or set the prices or establish other terms on which Apple or the other E-book Retailer sells E-books to consumers. IV. REQUIRED CONDUCT A. On the Effective Date of this Final Judgment, Apple shall terminate any Agency Agreement with a Publisher Defendant. B. For any E-book App that any Person offered to consumers through Apple’s App Store as of July 10, 2013, Apple shall continue to permit such Person to offer that E-book App, or updates to that E-book App, on the same terms and conditions between Apple and such Person or on terms and conditions that are more favorable to such Personthrough the App Store. C. 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, except that, for two years after the Effective Date of this Final 7 Judgment, Apple shall allow any E-book Retailer to provide a hyperlink to its website or e-bookstore in or through its E-book App without either compensating Apple for any sales of E-books that follow consumers’ use of such hyperlink or requiring the E-book Retailer to include functionality in the E-book App (e.g., a “buy button”) the use of which might impose an obligation on the E-book Retailer to compensate Apple. D. Apple shall furnish to the United States and the Representative Plaintiff States, within ten business days of receiving such information, any information that reasonably suggests to Apple that its suppliers of any form of content (e.g., books, music, other audio, movies, television shows, or apps) have impermissibly coordinated or are impermissibly coordinating on the terms on which they supply or offer their content to Apple or to any other Person. V. ANTITRUST COMPLIANCE To ensure its compliance with this Final Judgment and the antitrust laws, Apple shall perform the activities enumerated below in Sections V.A through V.J of this Final Judgment. Within thirty days after the Effective Date of this Final Judgment, Apple’s Audit Committee, or another committee comprised entirely of outside directors (i.e., directors not also employed by Apple), shall designate a person not employed by Apple as of the Effective Date of the Final Judgment to serve as Antitrust Compliance Officer, who shall report to the Audit Committee or equivalent committee of Apple’s Board of Directors and shall be responsible for supervising Apple’s performance of the following: A. furnishing a copy of this Final Judgment, within thirty days of its Effective Date, to each of Apple’s officers and directors and to each of Apple’s employees engaged, in whole or in part, in activities relating to Apple’s iBookstore; 8 B. furnishing a copy of this Final Judgment in a timely manner to each officer, director, or employee who succeeds to any position identified in Section V.A of this Final Judgment; C. ensuring that each person identified in Sections V.A and V.B of this Final Judgment receives at least four hours of training annually on the meaning and requirements of this Final Judgment and the antitrust laws, such training to be delivered by an attorney with relevant experience in the field of antitrust law; D. obtaining, within sixty days after the Effective Date of this Final Judgment and on each anniversary of the Effective Date of this Final Judgment, from each person identified in Sections V.A and V.B of this Final Judgment, and thereafter maintaining, a certification that each such person (a) has read, understands, and agrees to abide by the terms of this Final Judgment; and (b) is not aware of any violation of this Final Judgment or the antitrust laws or has reported any potential violation to the Antitrust Compliance Officer; E. conducting, in consultation with the External Compliance Monitor, an annual antitrust compliance audit covering each person identified in Sections V.A and V.B of this Final Judgment, and maintaining all records pertaining to such audits; F. communicating annually to Apple’s employees that they may disclose to the Antitrust Compliance Officer, without reprisal, information concerning any potential violation of this Final Judgment or the antitrust laws; G. taking appropriate action, within three business days of discovering or receiving credible information concerning an actual or potential violation of this Final Judgment, to terminate or modify Apple’s conduct to assure compliance with this Final Judgment; and, within 9 seven days of discovering or receiving such information, providing to the United States, the Representative Plaintiff States, and the External Compliance Monitor a description of the actual or potential violation of this Final Judgment and the corrective actions taken; H. furnishing to the United States, the Representative Plaintiff States, and the External Compliance Monitor on a quarterly basis electronic copies of any non-privileged communications with any Person containing allegations of Apple’s noncompliance with any provisions of this Final Judgment or the antitrust laws; I. maintaining, and furnishing to the United States, the Representative Plaintiff States, and the External Compliance Monitor on a quarterly basis, a log of all oral and written communications, excluding privileged or public communications, between or among any person identified in Sections V.A or V.B of this Final Judgment and 1. any person employed by or associated with another E-book Retailer, relating, in whole or in part, to E-books, devices for reading E-books, or E-book Apps; or 2. employees or representatives of two or more E-book Publishers, relating, in whole or in part, to E-books, devices for reading E-books, or E-book Apps, including, but not limited to, an identification (by name, employer, and job title) of the author and recipients of and all participants in the communication, the date, time, and duration of the communication, the medium of the communication, and a description of the subject matter of the communication; and J. providing to the United States, the Representative Plaintiff States, and the External Compliance Monitor annually, on or before the anniversary of the Effective Date of this Final 10 Judgment, a written statement as to the fact and manner of Apple’s compliance with Sections III and IV of this Final Judgment. VI. EXTERNAL COMPLIANCE MONITOR A. The Court shall appoint an External Compliance Monitor to undertake the responsibilities and duties described in this Section VI. On or before the Effective Date of this Final Judgment, the United States and the Representative Plaintiff States jointly shall recommend to the Court one or more persons to serve as External Compliance Monitor. B. The External Compliance Monitor shall have the power and authority to monitor Apple’s compliance with the terms of this Final Judgment, to review and evaluate Apple’s existing internal antitrust compliance policies and procedures, and to recommend to Apple changes to address any deficiencies in those policies and procedures. C. The External Compliance Monitor shall conduct an initial review to assess whether Apple’s internal antitrust compliance policies and procedures in existence at the time of his or her appointment are reasonably designed to detect and prevent violations of the antitrust laws. Within 180 days of his or her appointment by the Court, the External Compliance Monitor shall provide a written report to Apple, the United States, and the Representative Plaintiff States setting forth his or her assessment of Apple’s internal antitrust compliance policies and procedures and, if appropriate, making recommendations reasonably designed to improve Apple’s policies and procedures for ensuring antitrust compliance. D. The External Compliance Monitor may, at any time prior to the expiration of this Final Judgment, provide one or more additional written reports to Apple, the United States, and the Representative Plaintiff States setting forth additional recommendations reasonably designed to 11 improve Apple’s policies and procedures for ensuring antitrust compliance. The External Compliance Monitor may provide such additional reports on his or her own initiative or at the request of the Court, the United States, or the Representative Plaintiff States. E. Apple shall adopt, within 60 days after it receives a report from the External Compliance Monitor concerning its internal antitrust compliance policies and procedures, all recommendations to which it does not object as unduly burdensome, impractical, or costly. If Apple objects to any recommendation as unduly burdensome, impractical, or costly, it shall propose in writing to the External Compliance Monitor, the United States, and the Representative Plaintiff States, within 30 days after it receives the report, an alternative policy, procedure, or system designed to achieve the same objective or purpose. If Apple and the External Compliance Monitor fail, after good faith discussions, to agree on an alternative policy or procedure within 30 days of Apple’s objection to a recommendation, Apple shall promptly adopt the External Compliance Monitor’s initial recommendation or, after consultation with the United States and the Representative Plaintiff States, apply to this Court within 14 days for relief. F. The External Compliance Monitor shall file quarterly reports with the United States, the Representative Plaintiff States, and the Court setting forth Apple’s efforts to comply with the Final Judgment. To the extent such reports contain information that the External Compliance Monitor deems confidential, such reports shall not be filed in the public docket of the Court. G. If the External Compliance Monitor in the exercise of his or her responsibilities under this Section VI discovers or receives evidence that suggests to the External Compliance Monitor that Apple is violating or has violated this Final Judgment or the antitrust laws, the 12 External Compliance Monitor shall promptly provide that information to the United States and the Representative Plaintiff States. H. Apple shall assist the External Compliance Monitor in performance of the responsibilities set forth in this Section VI. Apple shall take no action to interfere with or to impede the External Compliance Monitor’s accomplishment of its responsibilities. The External Compliance Monitor may, on reasonable notice to Apple: 1. interview, either informally or on the record, any Apple personnel, who may have counsel present; any such interview to be subject to the reasonable convenience of such personnel and without restraint or interference by Apple; 2. inspect and copy any documents in the possession, custody, or control of 3. require Apple to provide compilations of documents, data, or other Apple; and information, and to submit reports to the External Compliance Monitor containing such material, in such form as the External Compliance Monitor may reasonably direct. I. Any objections by Apple to actions by the External Compliance Monitor in fulfillment of the External Compliance Monitor’s responsibilities must be conveyed in writing to the United States and the Representative Plaintiff States within ten calendar days after the action giving rise to the objection. J. The External Compliance Monitor may hire, subject to the approval of the United States, after consultation with the Representative Plaintiff States, any consultants, accountants, attorneys, or other persons reasonably necessary to fulfilling the External Compliance Monitor’s responsibilities. The External Compliance Monitor and any persons hired to assist the External 13 Compliance Monitor shall serve at the cost and expense of Apple, on such terms and conditions as the United States, after consultation with the Representative Plaintiff States, approves, including, but not limited to, the execution of customary confidentiality agreements. The compensation of the External Compliance Monitor and any persons hired to assist the External Compliance Monitor shall be on reasonable and customary terms commensurate with the individuals’ experience and responsibilities. The External Compliance Monitor shall submit a quarterly expense report to the United States and the Representative Plaintiff States. K. If the United States, after consultation with the Representative Plaintiff States, or Apple determines that the External Compliance Monitor has ceased to act or failed to act diligently or in a cost-effective manner, it may recommend that the Court appoint a substitute External Compliance Monitor. VII. PLAINTIFFS’ ACCESS A. For purposes of determining or securing compliance with this Final Judgment, or of determining whether the Final Judgment should be modified or vacated, and subject to any legally recognized privilege, from time to time duly authorized representatives of the United States Department of Justice Antitrust Division or the Representative Plaintiff States, including, but not limited to, consultants and other persons retained by the United States or the Representative Plaintiff States, shall, upon written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division or a joint written request by authorized representatives of each Representative Plaintiff State, and on reasonable notice to Apple, be permitted: 1. access during regular business hours to inspect and copy, or at the option of 14 the United States or the Representative Plaintiff States, to require Apple to provide to the United States and the Representative Plaintiff States hard copy or electronic copies of all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of Apple, relating to any matters contained in this Final Judgment; and 2. to interview, either informally or on the record, Apple’s officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the reasonable convenience of the interviewee and without restraint or interference by Apple. B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division or a joint written request by authorized representatives of each Representative Plaintiff State, Apple shall submit written reports or respond to written interrogatories, under oath, relating to any of the matters contained in this Final Judgment. Written reports authorized under this paragraph may require Apple to conduct, at its cost, an independent audit or analysis relating to any of the matters contained in this Final Judgment. C. No information or documents obtained by the means provided in this Section shall be divulged by the United States or any Plaintiff State to any person other than an authorized representative of the executive branch of the United States, the Attorney General’s Office of any Plaintiff State, or the External Compliance Monitor, except in the course of legal proceedings to which the United States or the relevant Plaintiff State(s) is a party (including, but not limited to, grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law. 15 D. If at the time information or documents are furnished by Apple to the United States and the Representative Plaintiff States, Apple represents and identifies in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and Apple marks each pertinent page of such material, “Subject to claim of protection under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,” then the United States and the Representative Plaintiff States shall give Apple ten calendar days notice prior to divulging such material in any civil or administrative proceeding. VIII. ADDITIONAL PROVISIONS A. This Final Judgment shall take effect 30 days after the date on which it is entered. If the Final Judgment is stayed, all time periods in the Final Judgment will be tolled during the stay. B. This Court retains jurisdiction to enable the United States, the Representative Plaintiff States, any other Plaintiff State (after consultation with the United States and the Representative Plaintiff States), or Apple to apply to this Court at any time for, or to act sua sponte to issue, further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions. 16 C. Unless this Court grants an extension, thisThis Final Judgment shall expire by its own terms and without further action of this Court tenfive years after its Effective Date, provided that, at any time prior to its expiration, the Court may sua sponte or on the application of the United States or any Plaintiff State extend the Final Judgment by one or more one-year periods, if necessary to ensure effective relief. SO ORDERED: DENISE L. COTE UNITED STATES DISTRICT JUDGE Dated: 17 EXHIBIT 3 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------x UNITED STATES OF AMERICA, Plaintiff, vs. CASE NO. 12-CV-2826(DLC) APPLE INC., et. al, Defendants. --------------------------------x VIDEOTAPE DEPOSITION OF EDDY CUE TUESDAY, MARCH 12, 2013 Palo Alto, California 10:05 a.m. Reported by: KIMBERLEE SCHROEDER, CSR, RPR, CCRR Job No.: 29197 11 1 10:07:15 2 10:07:22 3 10:07:23 4 10:07:25 Reporter to mark as Exhibit 1 a copy of your 5 10:07:28 deposition transcript. 6 10:07:31 referring to it from time to time over the next couple 7 10:07:33 of days, so I just want to have it -- I want you to 8 10:07:38 have it there, and we can refer to it when we need to. 9 10:07:42 its investigation on or about January 25th, 2011? A. I do. MR. BUTERMAN: A. 10 I'm going to ask the Court I think that we'll probably be Okay. (Plaintiff's Exhibit 1 was 11 10:07:57 marked for identification.) 12 10:07:57 MR. BUTERMAN: 13 10:07:59 through it quickly. 14 10:08:03 that to be the transcript from your deposition? 15 10:08:18 16 10:08:19 17 10:08:20 18 10:08:26 There were a couple of documents that Apple 19 10:08:28 produced to us in this litigation earlier this week, 20 10:08:32 and I'm going to introduce them as exhibits and see if 21 10:08:35 maybe you can just tell me what you know about them. 22 10:08:39 Let me mark as Exhibit 2 a document bearing 23 10:08:42 24 25 A. Q. Just -- you can leaf My question is: Do you recognize (Reviewing document.) Yes, I believe it is. Q. Great. Now, the next bit of housekeeping. identification number APLEBOOK-03546224. (Plaintiff's Exhibit 2 was 10:09:09 marked for identification.) DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 12 1 10:09:09 2 10:09:12 MR. BUTERMAN: Then as Exhibit 3, a document bearing identification number APLEBOOK-03546241. 3 (Plaintiff's Exhibit 3 was 4 10:09:34 marked for identification.) 5 10:09:34 MR. BUTERMAN: 6 10:09:36 going to be very general in nature, but please take as 7 10:09:40 much time as you need to familiarize yourself with the 8 10:09:43 documents. 9 10:09:43 A. (Reviewing document.) 10 10:09:53 Q. So, Mr. Cue, starting with Exhibit 2, can you 11 10:09:56 12 10:09:59 13 10:10:03 that we make available to all employees to describe 14 10:10:06 the way we do business on a worldwide basis. 15 10:10:11 16 10:10:14 "Business Conduct: 17 10:10:18 correct? 18 10:10:18 A. That's correct. 19 10:10:19 Q. How often do you receive a copy of this 20 10:10:22 21 10:10:23 A. I don't recall that. 22 10:10:24 Q. Do you recall ever receiving a copy of this 23 10:10:29 24 10:10:29 A. Um, I don't recall. 25 10:10:32 Q. Do you know if Apple has a policy to provide Q. Mr. Cue, my questions are tell me what Exhibit 2 is? A. Q. I believe this is a document that we create And for the record, the document is entitled The Way We Do Business Worldwide"; document? document? DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 13 1 10:10:41 2 10:10:44 A. I believe we do, but I don't know for sure. 3 10:10:47 Q. Okay. 4 10:10:50 that document is entitled, "Antitrust and Competition 5 10:10:54 Law Policy"; correct? 6 10:10:57 A. Correct. 7 10:10:57 Q. And do you understand what this document is? 8 10:11:02 A. I'm not sure. 9 10:11:04 Q. Do you recall if you've ever seen it before? 10 10:11:07 A. I don't recall. 11 10:11:09 Q. And do you know whether this is a document 12 10:11:15 13 10:11:20 A. Again, I don't know. 14 10:11:22 Q. Okay. 15 10:11:35 16 10:11:37 A. 17 10:11:40 it's annual. 18 10:11:42 Q. 19 10:11:44 required to sign some sort of certification that 20 10:11:47 you've completed the training? 21 10:11:49 22 10:11:55 23 10:11:55 24 10:11:57 25 10:12:05 this document to all of its employees? And then with respect to Exhibit 3, that is regularly disseminated to Apple employees? Are you required to complete any types of annual training? A. I complete certain training. I don't know if I don't know the timing of it. And once you complete training, are you I don't recall. Maybe. It's all electronic, so... Q. Benefits of working at Apple. Can you tell me what your title is? A. Yes. I'm senior vice president of internet DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 282 1 REPORTER'S CERTIFICATE 2 3 I, KIMBERLEE SCHROEDER, CSR 11414, duly 4 authorized to administer oaths pursuant to Section 5 30(c) of the Federal Rules of Civil Procedure, hereby 6 certify that the witness in the foregoing deposition 7 was by me duly sworn to testify the truth, the whole 8 truth and nothing but the truth in the within-entitled 9 cause; that said deposition was taken at the time and 10 place therein stated; that the testimony of the said 11 witness was reported by me and thereafter transcribed 12 by me and that the witness was given an opportunity to 13 read and correct said deposition and to subscribe the 14 same. 15 I further certify that I am not of counsel or 16 attorney for either or any of the parties to said 17 cause of action, nor in any way interested in the 18 outcome of the cause named in said cause of action. 19 I declare under penalty of perjury under the 20 laws of the State of California that the foregoing is 21 true and correct. 22 Dated this 13th day of March, 2013. 23 24 KIMBERLEE SCHROEDER, CSR, RPR, CCRR 25 DAVID FELDMAN WORLDWIDE, INC. 450 Seventh Avenue - Ste 500, New York, NY 10123 1.800.642.1099 EXHIBIT 4 Zappos App for iPad® Mobile Device | Zappos.com Page 2 of 2 In our native shopping app for the iPad® mobile device, you’ll be able to search, browse, read reviews, collect favorites, AND buy really awesome products from a brand selection most folks probably didn’t even realize we carried. At Zappos.com you can find super cool cases and accessories for your ipad mobile phone. We have iPad mobile device cases, cell phone cases, headphones, and electronics. If you’re already familiar with all the things we carry, then you’ll be extra pleased to learn that the full catalog of products is available through the app. Our app hit over 10,000 downloads in its first week in the app store, ranked in the top 10 free app list, and spent time in “New and Noteworthy” and the “What’s Hot” lists within the Apple app store. We’re always looking for feedback and ideas, so please download it and give it a spin. We'd like to hear from you via @Zappos_Mobile on Twitter. Bring on the good, the bad, and the not so pretty. Try it. Rate it. We love you! Download Now ZAPPOS FAMILY CORE VALUE: 10. Be Humble http://www.zappos.com/zappos-ipad-app 8/20/2013 EXHIBIT 5 EXHIBIT 6  Getting Started with In-App Purchase on iOS and OS X Version 3.1 February 23, 2013 Getting Started with In-App Purchase Overview In-App Purchase gives you the flexibility to support a variety of business models in your iOS apps and Mac apps. With In-App Purchase, you can offer your customers additional digital content, functionality, services and even subscriptions within your paid or free app. For example, In-App Purchase will allow you to sell: • Digital books or photos • Additional game levels • Access to a turn-by-turn map service • Subscriptions to digital magazines or newsletters • Digital content hosted on Apple servers In-App Purchase is implemented in your app via the Store Kit framework. Store Kit provides the functionality to process payments for items offered in your app via the App Store and Mac App Store. In-App Purchase uses the same business terms used for apps sold on the App Store and Mac App Store. You receive 70% of the purchase price of each item you sell within your app, paid to you on a monthly basis—no credit card fees apply. This document describes in detail the types of business models supported by In-App Purchase and gives you the information you need to create an In-App Purchase experience that users find compelling, intuitive, and easy to use. What to Sell The catalog of items you plan to sell is a primary part of the In-App Purchase user experience. Think carefully about what your business model is and what you want to sell in your application. There are four supported categories of In-App Purchase items that you may sell: • Content • Functionality • Services • Subscriptions Items from the supported categories must fall within one of the following purchase types: • Consumables • Non-Consumables • Auto-Renewable Subscriptions • Free Subscriptions • Non-Renewing Subscriptions There are a handful of important guidelines to keep in mind as you design your application: • You must deliver your digital good or service within your app. Do not use In-App Purchase to sell real-world goods and services. • You must make your In-App Purchase items available to all of the devices registered to a user. February 23, 2013 • You may not offer items that represent intermediary currency because it is important that users know the specific good or service that they are buying. • Items you offer for purchase may not contain, or relate to, pornography, hate speech, defamation, or gambling (simulated gambling is acceptable). • In-App Purchase items cannot be shared across applications or platforms. In-App Purchase Types Items offered via In-App Purchase fall within one of the five following purchase types. Make sure to evaluate what the proper purchase type is for your item before you set up your In-App Purchase product in iTunes Connect. Consumables Consumables are In-App Purchases that must be purchased each time the user needs that item. Consumable In-App Purchases are available for both iOS apps and Mac apps. Some examples of Consumable purchase types are: • Supplies in a game (ammunition, health points, cheats, extra lives, etc) • Accelerators used to decrease advancement time within an app Non-Consumables Non-Consumables are In-App Purchases that only need to be purchased once by the user and are available to all devices registered to a user. This purchase type is used for services that do not expire. Non-Consumable In-App Purchases are available for both iOS apps and Mac apps. Non-Consumable content may be bundled in your app’s binary when you submit to the app store, or it may be downloaded after the user makes the purchase. Starting with iOS 6.0 and OS X Mountain Lion 10.8, your content can be hosted on Apple’s servers. This eliminates the need for you to maintain a server to host content. There is no additional charge for using this functionality. After the user makes a purchase, you can use the SKDownload class in Store Kit to download the content to the user’s device. Hosted content is built using Xcode and uploaded to iTunes Connect. Hosted content is particularly useful if you have large content to download, but it can be used for any downloadable content. See the iTunes Connect Developer Guide for details on how to configure hosted content in iTunes Connect, and the SKDownload class reference for details on how to download the content using Store Kit. Some examples of Non-Consumable purchase types are: • Additional levels within a game • Access to pro-features such as additional camera lenses or audio effects • Lifetime subscription to a service • Books and individual magazine issues Auto-Renewable Subscriptions Auto-Renewable Subscriptions allow the user to purchase episodic content or access to dynamic digital content for a set duration time. At the end of each duration, the subscription will renew itself, until a user opts out. The Auto-Renewable Subscription In-App Purchase type is available for iOS apps only. February 23, 2013 Examples of Auto-Renewable Subscription purchase types are: • Recurring delivery of newspapers or magazine issues • Monthly subscription to audio or video streaming feed • Weekly membership to a dating service • Business app providing cloud storage services Free Subscriptions Free Subscriptions are an extension of Auto-Renewable Subscriptions that permit the delivery of free subscription content to Newsstand-enabled applications. The Free Subscription In-App Purchase type is implemented in the same way as an Auto-Renewable Subscription, just without any charges to the user. Free Subscriptions do not have expirations, but the user can turn off the subscription at any time. Non-Renewing Subscriptions Non-Renewing Subscription allow the sale of services with a limited duration. Non-Renewing Subscriptions must be used for In-App Purchases that offer time-based access to static content and are only available to iOS apps. Examples of Non-Renewing Subscription purchase types are: • One week subscription to voice guidance feature within a navigation app • Annual subscription to online catalog of archived video or audio In-App Purchase Categories Content Content items include digital books, magazines, photos, artwork, game levels, game characters, and other digital content that can be delivered within your application. Users view the items they purchase as theirs to keep and permanent. Therefore be sure purchased items are available in all instances of your app running on all the devices the user owns, even after your app is deleted from a device, reinstalled, or downloaded to a new device. To restore purchased items on a new device or after your app is reinstalled using the Store Kit framework, your application simply calls the payment queue’s restoreCompletedTransactions method. A transaction will be created and delivered for each already purchased item which you’ll process similarly to that of a new payment request. Consumable items are the one exception to the requirement that your content be available on all the user’s devices. Consumable items are digital items that are used up or disappear after use and can never be reused. Examples of consumable items include virtual poker chips, in-game ammunition, or virtual supplies such as construction materials. If you offer consumable digital items in your In-App Purchase store, it’s required that you mark them as consumable when they are submitted via iTunes Connect and vitally important that you describe the transient nature of these items in your item’s description. Consumable items will not be included in the list of transactions returned after the Store Kit restoreCompletedTransactions method is called. February 23, 2013 You may choose one of the following ways to deliver digital content to users: • Package the content with your app binary and enable it when the user makes a purchase. • Download the content from your servers for use by your app when the user makes a purchase. • For non-consumable purchases, you may host the content on Apple's server for later downloading to your app. Digital content is typically Non-Consumable unless the content is expected to be used only once in which case it would be Consumable. Here are some examples of digital content and what purchase type would be applicable: Example Content Allowed Purchase Type Buy a digital book  Non-Consumable Buy virtual poker chips for use within a single app  Consumable VoIP minutes, U.S.A to Germany  Consumable Buy an item for in-game use  Consumable if single use, otherwise NonConsumable Here are additional examples of content that would not be allowed with details about why they are not allowable: Example Content Allowed Why Is This Not Allowed? Buy a physical book X Physical items cannot be purchased Buy virtual poker chips for use in multiple apps X Items can only be used in the app where the purchase is made Functionality You may sell and unlock additional functionality within your application using In-App Purchase. Adding additional functionality to an app should generally be considered Non-Consumable. Here are some examples of allowable additional functionality you might consider offering: Example Added Functionality Allowed Purchase Type Access to more game levels  Non-Consumable Ability to save  Non-Consumable Ability to manage more than one travel itinerary  Non-Consumable February 23, 2013 Services In-App Purchase also gives you a way to sell digital services within your application. Digital services are usually either Non-Consumable or should be a Non-Renewing Subscription. The differentiation would be whether access to the service is limited to a specific time period. Here are some examples of services you might consider offering, and whether they are allowed: Example Service Allowed Purchase Type Six month access to business card scan services  Auto-Renewable Subscription Voice transcription (no time restriction)  Non-Consumable One year of VoIP telephone service  Non-Renewing Subscription Here are additional examples of services that would not be allowed with details about why they are not allowable: Example Service Allowed Why Is This Not Allowed? Plumbing repair service X Real-world services cannot be purchased Courier delivery X Real-world services cannot be purchased Web design services X Real-world services cannot be purchased Subscriptions Subscriptions and subscription renewals to content or services can be offered to customers for purchase. Renewal of an Auto-Renewing Subscription is handled automatically by the App Store. The user will be reminded shortly before their subscription is about to renew and all the billing is handled automatically by the App Store. Users can easily change their renewal frequency and can opt-out of the renewal by turning off the Auto-Renew switch at least 24 hours before the end of the current subscription period. For Non-Renewing Subscriptions, if you want to allow users to renew their subscription, your application must track the expiration manually. If the user chooses to renew their subscription you have to initiate a new Store Kit purchase request. Tracking of the expiration date of initial or renewed subscriptions is not handled by the App Store and is your responsibility. Additionally, your application must include a mechanism to deliver the purchased NonRenewing Subscription In App Purchase to all iOS devices owned by a single user. February 23, 2013 Here are some examples of allowable subscriptions and what purchase type they would be: Example Subscription Allowed Purchase Type Auto-Renewing Subscription to daily digital newspaper  Auto-Renewable Subscription Auto-Renewing Subscription to live TV streaming service  Auto-Renewable Subscription Subscription to monthly voice-guidance service  Non-Renewing Subscription And some examples of subscriptions that would not be allowed: Example Subscription Allowed Why Is This Not Allowed? Auto-Renewing subscription to monthly voiceguidance service X Content is not episodic in nature (use NonRenewing instead) Gym membership renewal X Subscription to non-digital service Free subscription to provide preview of magazine issues X Free subscriptions cannot be used to provide previews of full content Restoring Previous Completed Purchases As described above, the different In-App Purchase types have different requirements for whether previous purchases must be restored to users devices. This table summarizes the requirements and what support Store Kit provides for tracking the previous purchases: Restore Required? Transaction Restoration Mechanism Consumable No Your server may track purchases and allow user to restore Non-Consumable Yes Use Store Kit’s restoreCompletedTransactions method Non-Renewing Subscriptions Yes Use iCloud or your own server to track purchases and allow user to restore purchased subscriptions to all iOS devices owned by a single user Auto-Renewing Subscriptions Yes Use Store Kit’s restoreCompletedTransactions method Free Subscriptions Yes Use Store Kit’s restoreCompletedTransactions method In-App Purchase Type Defining Your In-App Purchase Store After you have decided what type of items you’re going to provide for In-App Purchase, proceed by writing clear item descriptions, picking appropriate pricing, and designing an InApp Purchase store to showcase your items. February 23, 2013 Item Descriptions While the Store Kit framework provides the functionality to process payments via the App Store, it’s up to your app to display what’s available for purchase. Spend some time crafting item descriptions that accurately describe what each item and how the item is used within your app. Be clear about: • How an item can be used • What’s included in the item • What time period is covered by a subscription, subscription renewal, or service (when applicable) • Whether an item is consumable or not (unless you specify otherwise, users expect items to be re-usable, re-downloadable, and permanent) • Use a consistent item-naming convention for readability and differentiation of similar items. Since your application may be available in App Stores with a region specific currency and language, your item’s localized description and pricing information should be pulled from the App Store via Store Kit’s products request API. You’ll use the information returned from the products request to populate the user interface you present to the customer for item selection and purchase. Item Pricing Before you settle on a price for an item, think about how much users might be comfortable paying, considering: • How frequently they use the item • How the item is used within your application • What the non-digital equivalent of the item might cost Use consistent pricing for similar types of items. In some cases, items might cost more than the initial purchase price of your application. For example, if you sell an app that allows users to subscribe to various digital magazines, a one-year subscription to a magazine might cost more than your app. Users will understand that, for the subscription price, they get: • A number of issues of their favorite digital magazine • Reliable delivery of content • The convenience of digital content that can accompany them wherever they go Designing Your In-App Purchase Store Your In-App Purchase store should be attractive, easy to understand, and simple to use. Follow these design guidelines to help you meet this goal: • Always display the name and cost of each item. • Allow users to view a detailed description for each item. • Group related items according to type. February 23, 2013 • Ensure easy navigation through large catalogs of items. Avoid a long single list of items that requires users to scroll and scroll. • Always indicate when items are consumable. • Ensure that users have to be very intentional about purchasing an item and that the purchase process can’t be started by accident. • Provide a “Check Inventory” button that allows users to check for items they might be missing or that they’ve already purchased on another device. Keep in mind that automatically initiating a restore of previous purchases (which will prompt the user for their iTunes Store password) may be confusing to your users. Submitting Catalog Items to iTunes Connect Every item that you plan to offer for purchase within your you app must be submitted to the App Store through iTunes Connect. When you submit an item, you specify its name, description, pricing, a preview image, and other details, such as localized versions of the item name and description. Every item must also have a product identifier that is associated with your application and uniquely identifies an item sold. Your application uses this product id to fetch localized item descriptions and pricing information from the App Store and to request payments. Your app’s rating must take into account the ratings for new or changed items. If your app’s rating decreases it must be re-approved for sale on the App Store. App and Catalog Item Updates Updates to applications for bug fixes or new functionality, and updates or new items for purchase, are bound by the same guidelines outlined in this article. Document Revision History Date Notes 2013-02-23 Added details about hosted content. Updated examples of Auto-Renewable Subscriptions 2012-03-16 Updated to include Mac OS X support. Details about Non-Renewing Subscriptions. Nothing herein is intended to modify the iOS Developer Program License Agreement, Mac Developer Program License Agreement, the iOS Developer Program Enterprise License Agreement, the iOS Developer Program University Agreement, the iOS Developer Program University Student License Agreement ("Agreement") and/or the App Store Review Guidelines, as they may be modified by Apple from time to time. In the event of any conflict or inconsistency between the Agreement or Guidelines and this document, the Agreement or Guidelines shall govern. Apple may at any time, and from time to time, with or without prior notice to You modify this document as well as any features, functionality or services described herein. You understand that any such modifications may require You to change or update Your Applications at Your own cost. Apple shall not be liable for any losses, damages or costs of any kind incurred by You or any other party arising out of or related to any modification or discontinuation of this document or any of the features, functionality or services described here. February 23, 2013 EXHIBIT 7 Apple Moves to Tighten Control of App Store - NYTimes.com Page 1 of 2 • Reprints This copy is for your personal, noncommercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers here or use the "Reprints" tool that appears next to any article. Visit www.nytreprints.com for samples and additional information. Order a reprint of this article now. February 1, 2011 Apple Moves to Tighten Control of App Store By CLAIRE CAIN MILLER and MIGUEL HELFT SAN FRANCISCO — Apple is further tightening its control of the App Store. Some application developers, including Sony, say Apple has told them they can no longer sell e-books within their apps unless the transactions go through Apple’s system. Apple rejected Sony’s iPhone application, which would have let people buy and read e-books from the Sony Reader Store. Apple said on Tuesday that it was still allowing customers to read e-books they bought elsewhere within apps. For example, a Sony app could still access books the customer bought earlier from Sony’s store. But Steve Haber, president of Sony’s digital reading division, said on Monday that Apple had told his company that from now on, all in-app purchases would have to go through Apple. “It’s the opposite of what we wanted to bring to the market,” Mr. Haber said. “We always wanted to bring the content to as many devices as possible, not one device to one store.” Apps like the Kindle app from Amazon.com and the one that Sony submitted open up a browser window when a user wants to buy something. This allows the app makers to argue that technically the purchase is happening on the Web, not within the app. Apple is now saying the app makers must allow those purchases to happen within the app, not in a separate browser window, with Apple getting its standard 30 percent cut of the transaction. At the moment this applies only to e-book purchases. “We have not changed our developer terms or guidelines,” Trudy Muller, an Apple spokeswoman, said Tuesday. “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.” http://www.nytimes.com/2011/02/01/technology/01apple.html?_r=2&ref=technology&pag... 8/21/2013 Apple Moves to Tighten Control of App Store - NYTimes.com Page 2 of 2 The requirement may signal a shift for Apple. The company has made more money selling hardware than music, e-books or apps. If people could have access to more content from more sources on their iPhones and iPads, the thinking went, then they would buy more devices. The move is also surprising, as Apple has indicated recently that it would be more collaborative, not less, with magazine publishers and other content producers that want more control over how to distribute content on the iPad. “This sudden shift perhaps tells you something about Apple’s understanding of the value of its platform,” said James L. McQuivey, a consumer electronics analyst at Forrester Research. “Apple started making money with devices. Maybe the new thing that everyone recognizes is the unit of economic value is the platform, not the device.” This article has been revised to reflect the following correction: Correction: February 3, 2011 An article on Tuesday about Apple’s tightening of its control of the App Store misstated part of its policy. While the company is requiring e-book purchases within apps to go through its payment system, customers can still use apps to access e-books and other content they bought elsewhere. It is not the case that access to that content will be cut off. http://www.nytimes.com/2011/02/01/technology/01apple.html?_r=2&ref=technology&pag... 8/21/2013 EXHIBIT 8 Page 3 of 10 ◦ Sign in with CNET Reviews What Apple's latest rules change means for Kindle, Nook, and Kobo e-reader apps Apple's recent tweak to its in-app subscription rules has big implications for ereader apps. What's it all mean? by David CarnoyJune 9, 2011 3:53 PM PDT ◦ With Apple's latest rules change, it now looks like e-reading apps won't have to be removed from the App Store. (Credit: Screenshot by David Carnoy/CNET) Apple giveth and Apple taketh away. Today, Apple decided to give a little, as it made some significant tweaks to its in-app subscription rules that impact the fate of e-reader apps. Apple had reportedly set a deadline of June 30 for developers to alter their apps to reflect the new terms for subscriptions in the Apple Store, which required companies to give Apple a 30 percent cut on sales their apps generate. http://reviews.cnet.com/8301-18438_7-20070347-82.html 8/20/2013 Page 4 of 10 In the past, e-reading apps Kindle, Nook, and Kobo have avoided paying the cut by sending customers to a Web-based interface outside the app. When Apple issued its App Store subscription rules last February, however, it made conditions far stricter. The company would require third-party developers to sell any available content from within the app--sales from which siphon Apple's standard 30 percent commission that it was otherwise not receiving from the Web-based purchases. Moreover, the vendors couldn't raise the in-app version of the price to help defer the money they'd now owe to Apple--the rules further stipulated that the in-app price must be at "the same price or less than it is offered outside the app." In other words, the vendor--Amazon, Barnes & Noble, and so forth--would need to sacrifice 30 percent of all sales (and subscription) transactions, effectively requiring them to sell at a loss. (The February changes were due to take effect on June 30.) As one angry developer of the iFlow Reader app noted as his company went out of business, Apple's new rules were impossible to comply with for many companies and that Apple was basically sending an "eviction notice" to digital book sellers. However, Apple's latest amendment to its in-app subscription rules appears to have loosened the noose up while still choking off sales. Let's start with the old rules: 11.13 Apps can read or play approved content (magazines, newspapers, books, audio, music, video) that is sold outside of the app, for which Apple will not receive any portion of the revenues, provided that the same content is also offered in the app using IAP [inapp purchase] at the same price or less than it is offered outside the app. This applies to both purchased content and subscriptions. Now here are the new updated rules: 11.13 Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a "buy" button that goes to a web site to purchase a digital book, will be rejected. 11.14 Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app. As it stands, you currently can't buy e-books from the Kindle, Nook, and Kobo apps, anyway. Instead, they have a single "shop for books" button that boots up the Safari Web browser, where you can purchase what you please from Amazon, Barnes & Noble, and Kobo. According to the new rules, that shopping button will no longer exist. In other words, there can't be any link out to a non-Apple store on the Web. You will, however, be able to read any e-books that you've purchased directly from those e-bookstores. Translation: The Kindle, Nook, and Kobo apps will simply become e-reading apps that will allow you to sync your digital libraries across devices. http://reviews.cnet.com/8301-18438_7-20070347-82.html 8/20/2013 Page 5 of 10 It looks like the 'Shop in the Kindle Store' button will be going away in both the iPad and iPhone Kindle apps. (Credit: Screenshot by David Carnoy/CNET) Using the Kindle app and iPad as an example, now instead of accessing the Kindle Store by clicking the "Shop in Kindle Store" in the top right corner of the home page in the app, you'll have to manually open the Safari browser, buy an e-book, then return to the Kindle app to retrieve that purchase by resyncing your account. It's one extra step, but not the end of the world. When you buy an e-book in the Kindle Store online (on Amazon's Web site) from your computer, you're given the choice of sending the e-book to whatever Kindle-enabled device you've linked to your Amazon account. One would think that you'd still be able to send content to, say, your iPad, but we haven't been able to confirm that with Amazon. (We put out e-mails to all three companies but have yet to hear back about the rules change and what it means to their apps). The long and short of it is while you can expect some changes (we don't know exactly when those changes will happen, but as we said, Apple's original deadline was June 30), if you use an e-reader app on your iOS device, you'll be able to continue accessing your library and presumably update it. But it also appears that Apple's iBooks will be the only e-reader app that will have shopping links in the app. Can this all change tomorrow? Sure. Apple could go ahead and update its rules again. And there's little bit of ambiguity in the phrase, "Apps can read or play approved content," which leaves the door open for Apple to reject certain content for failing to living up to Apple's rules. For now, though, it seems that at least Apple has softened up just enough to avert what probably would have resulted in serious backlash from its users. David Carnoy Executive Editor David Carnoy has been a leading member of CNET's Reviews team since 2000. He covers the gamut of gadgets and is a notable e-reader and e-publishing expert. He's also the author of the http://reviews.cnet.com/8301-18438_7-20070347-82.html 8/20/2013 Page 6 of 10 novels Knife Music and The Big Exit. Both titles are available as Kindle, iBooks, and Nook e-books. ◦ You May Also Like Smartphone shootout: Which phone has fastest camera? Chrome updates with reset button CNET $400? Credit Card Intro Bonuses Are Getting Insane Next Advisor CNET 6 Things You're Doing To Delay Your Retirement investopedia.com about these links Member Comments 0 Comments / 3 people listening Newest | Oldest | Top Comments http://reviews.cnet.com/8301-18438_7-20070347-82.html Sign in Commenting FAQs / Guidelines 8/20/2013 EXHIBIT 9 EXHIBIT 10 EXHIBIT 11