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Justice Department Seeks Oversight of Apples iTunes Store

Punishment Would Include Music, Movies and TV Content Sold on iTunes

By CHAD BRAYIAN SHERR

Apple Inc.’s e-book problem is spilling over into its other media businesses.

After winning last month an e-books antitrust suit against Apple, the Justice Department on Friday asked a federal judge to limit Apple’s influence in the publishing market and give the government oversight of the iTunes Store and App Store.

The government proposals, if accepted, could give music, television-show and content owners more leverage in negotiations with a company that has been an aggressive bargainer in opening up traditional media to digital distribution.

Apple is currently negotiating with owners of video programming about potential new devices and services for the living room. After negotiating with record labels, it recently announced a new music streaming service, iTunes Radio.

The government seeks to prohibit Apple from reaching agreements with media companies that increase the prices at which Apple’s rivals sell e-books, music, TV shows or movies.

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The Apple logo inside the entrance to the Apple Store on 5th Avenue in New York.

Apple objected strongly to the proposals, calling them a “draconian and punitive intrusion into Apple’s business, wildly out of proportion to any adjudicated wrongdoing or potential harm,” in a court filing Friday.

Last month, U.S. District Judge Denise Cote in Manhattan found that Apple had colluded with five major U.S. publishers to drive up the prices of e-books. The remedies proposed Friday underscore the risks Apple took when it gambled with a trial after the publishers settled similar civil allegations. The company has said it plans to appeal.

The trial earlier this summer revolved around the steps Apple took to gain a foothold in e-books when it created what it called iBookstore. Apple still makes the bulk of its revenue from products such as the iPad and iPhone, but the iTunes Store, which houses the iBookstore and App Store, is a strategically important area that accounts for about 10% of the company’s revenue.

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