Apple Blames Book Publishers in E-Books Antitrust Lawsuit

Discussion in ' News Discussion' started by MacRumors, May 14, 2013.

  1. macrumors bot


    Apr 12, 2001

    Reuters is reporting that Apple has responded to the Justice Department's accusations that the company colluded with publishers to increase e-book pricing, saying that it negotiated with the publishers separately and reached different agreements with each.
    In a court filing dated April 26 but released on Tuesday, Apple said it had approached publishers to create an online bookstore that would eventually become the iBookstore and had demanded a 30 percent commission, that publishers would not undercut prices paid to Apple, and that "windowing" be scrapped.

    Apple said that points of contention in early negotiations centered around Apple's demand for a 30 percent commission and price caps. Apple went on to note that each publisher immediately offered its own counterproposals in what Apple described as "tough negotiations."

    The company also claims that before it entered the market the publishers were engaged in a battle to break Amazon's grip on the low-cost e-book market, with Apple laying the blame for any potential collusion on the publishers.

    The lawsuit was originally filed in April 2012 and included HarperCollins, Simon and Schuster, Hachette Book Group, Macmillan and Penguin, but the Justice Deparment settled with the publishers and has since concentrated on Apple. Recently, CEO Tim Cook was ordered to testify in the case.

    Article Link: Apple Blames Book Publishers in E-Books Antitrust Lawsuit
  2. macrumors 68020

    Dec 13, 2012
    Southern California
    Apple blames ___________

    Fill in the blank with nearly anything & it would be appropriate :)
  3. macrumors regular

    Jun 29, 2010
    Sydney, Australia
  4. macrumors 6502

    May 21, 2011
    Today's forecast for MacRumors:

    Mostly cloudy with a 100% chance of multiple lawsuit stories.
  5. Moderator emeritus


    Apr 27, 2005
    San Francisco, CA
    Completely nonsensical. Amazon was paying publishers exactly what they asked for. It was Apple that demanded a different pricing model, and coerced publishers to use that model with all other resellers.
  6. macrumors G5


    Nov 14, 2011
    WWDC can't come soon enough.
  7. macrumors 6502a

    Mar 27, 2011
    Harrisburg, PA
    That title is a bit of an exaggeration. It sounds to me like Apple is responding to an inquiry with an account of events that transpired. How is that "blaming" someone?

    The statement even says Apple started the negotiations off with their own list of revenue and policy requirements.

    Apple may do their share of finger pointing, but that's not what's being described here at all.
  8. macrumors regular

    Mar 11, 2011
  9. macrumors 6502

    Dec 26, 2011
    Eric Holder cannot threaten Apple for the evidence against Apple is weak. The blowback would be quite embarrassing. All Apple care about is $, the 30% cut. Coincidentally, the 8x10 ratio is perfect for nearly all txtbooks.
  10. macrumors 68030


    Sep 3, 2010
    what on earth are you talking about?


    yeah except not really. the publishers were upset with amazon because amazon would discount the ebooks so deeply, devaluing both them and the hardcover editions. the publishers *liked* the agency model because they could set the price.
  11. macrumors regular

    Nov 20, 2010
    ^ your so gullible. the publishers dont have to sell anything unless the terms meet there needs. the agency model only helps apple. and the fact that theyre trying to place the blame on the publishers considering they didnt offer individual agreements with each publisher shows the collusion. Remeber Apple buys zero books to sell, Amazon buys all the books they sell. Another example of Apples greed and were better than everyone attitude. ohhh poor Apple somebody quick, get them a tax break.
  12. macrumors 601


    Jun 18, 2007
    It sounds like Apple was well aware of what the publishers' intents to set price-fixing was for (i.e. to try and break Amazon's market share grip) and Apple knowingly went right along with the pricing scheme despite the knowledge it was part of a plot to break Amazon's grip.

    In other words, you don't have to be the creator of the idea for collusion in order to conspire with others to actually do it. "They made me do it" is not a good defense, IMO. Apple should have immediately approached the DOJ when it became clear there was a conspiracy to price-fix.

    Of course, I think many gas stations (perhaps unspoken collusion of a sort) pretty much do the same thing and they get away with it so my own faith in these laws and the system is pretty weak. If you don't go along with the flow of the tide, you typically get dragged under and drown. In other words, how could Apple know they would pick this particular battle to fight when they typically ignore nearly all attempts to thwart competition in ways other than making the better product (i.e. competition)? If Apple rocked the boat, they would be out of the market segment. If they don't rock the boat, they risk getting picked up in the same legal raid as the publishers.

    OTOH, Apple likes to dictate to ALL of its own distributors exactly what they are allowed to charge for their products and often punish (including removing from distribution) those that don't do it and offer sales of items they don't want to be sold for less than retail. So once again like with the legal battles where Apple is just as guilty of patent lawsuits, etc. as the rest, I don't feel sorry for Apple getting caught with its hand in the cookie jar.
  13. macrumors 65816

    Apr 3, 2012
    Ebook before Apple: retail price competition

    Ebook after Apple: no retail price competition.

    At 25 seconds mark:

    Quoting Steve Jobs "the price will be the same (everywhere)".

    After the DOJ lawsuit and settlements: retail price competition

    Retail price competition: prices are different at one seller compare to another. These retailers are competiting.

    No retail price competition: prices are the same everywhere (fixed pricing).
  14. macrumors newbie

    May 15, 2013
    The situation is not clear cut

    You seem to imply that before the iBook store there was a competitive situation. Can't agree. Amazon was guilty of predatory pricing in my opinion and this in itself was anti trust. Now, I agree two wrongs don't make a right, but to sanction Apple for manipulating a "market" where it wasn't possible to profit from sales is wrong. If the anti trust bodies had sanctioned Amazon for its pricing policies, and a viable market had emerged, then there would have been no need for the publishers to try to protect themselves from being beholden to a single outlet.
  15. macrumors 68040

    Dr McKay

    Aug 11, 2010
    Read the Motto.

    News AND rumors. This qualifies as news. Would you rather that the site invent some rumors to start spreading?
  16. macrumors 65816

    Apr 3, 2012

    In its pretrial arguments, Justice said publishers Hachette and HarperCollins came up with an “agency model” in which publishers rather than retailers would set the prices consumers would pay for e-books.

    Cue played the key role, Justice documents contend. He summarized meetings with publishers for Apple’s late CEO, telling Jobs that publishers, “saw . . . the plus” of the agency model and that it “solves [the] Amazon issue,” Justice quoted him as saying.

    The company also quoted Jobs as telling biographer Walter Isaacson that Apple had “told the publishers, ‘We’ll go the agency model, where you set the price, and we get our 30 percent, and yes, the customers pays a little more, but that’s what you want anyway.’ ”

    Those statements, Justice said, demonstrated an illegal scheme that broke antitrust laws and harmed consumers.

    “Apple knew that the plan it was proposing involved a ‘dramatic business change’ for publisher defendants,” Justice wrote in its arguments. “Accordingly, Apple kept each publisher defendant aware that it was orchestrating and coordinating a common approach for all of them.”


    How would you feel if the manufacturers rather than the retailers setting the prices consumers would pay for TVs, fridge, laptops, Blu-Ray players, Blu-Ray movies etc...?
  17. macrumors newbie

    May 15, 2013
    Predatory Pricing is Anti-Trust

    So in order to compete with Amazon, Apple should have been prepared to match Amazon's price. Even though Amazon in many cases was selling at break-even or making a loss?

    The game Amazon is playing is to go for growth and worry about profit later. Wall Street gets it: Amazon is priced for MASSIVE growth in the long term. They will do this by destroying competition and preventing competitors from entering the market. Once they achieve this, they will own the publishers and be able to strike any deal they desire. They will also be able to charge the reader whatever they like within reason.
  18. EbookReader, May 15, 2013
    Last edited: May 15, 2013

    macrumors 65816

    Apr 3, 2012
    How can Amazon be predatory pricing when it makes a profit from selling ebooks?

    It's called a loss leader. Sell some popular books at cost or below cost, sell 95% of other ebooks at profit. End result: overall profits

    Supermarkets have been doing this for decades.

    Apple is using this "loss leader" pricing right now for its iBookstore on a few ebooks. Apple could have competed with Amazon on prices if it wanted to. Buy ebook at wholesale like Amazon did. Have a sale on a few popular titles and sell the rest at profits.

    Apple is better suited to this strategy than Amazon since Apple is many times more profitable and have a bigger cash hoard.

    But Apple wanted the 30% margin. Wholesale competition means the margin would be very tiny. Best way to get the 30% margin is to forced Amazon and B&N and other ebookstore to take the 30% margin too.

    When retailers are guaranteed 30% margin and no price competition, who lose out? Consumers

    That's why the publishers have agreed to pay something like $52 million in restitution for the ebook price fixing.


    What law has Amazon broken in their quest to destroy competitions and preventing competitors from entering the market?

    Amazon can't be guilty of what they haven't done yet. I.E. raising the price when they have a monopoly.

    In fact, when Amazon have 90% of the ebook market and they jack up the price, buying it at $7 wholesale and selling at $12, what to prevent competitors like a guy in his garage can buy $7 wholesale and sell it at $9.

    Amazon price: $12
    Competitor price: $9

    Look at Apple domination in digital music selling at $1.29.
    Amazon competed buy selling a lot of popular songs at $0.99, less margin but increase market share. Some did switch from Itunes to AmazonMP3.
  19. macrumors newbie

    May 15, 2013
    And once Amazon completely dominates the eBook market, will they still give the publishers what they ask for, or would they dictate terms?
  20. macrumors 6502a

    Jul 27, 2011
    Lucky Country
    Er .... this won't hurt the one dollar bargain bin, will it?
  21. macrumors 6502a


    Jun 17, 2009
    The CCTV Capital of the World
    iBook's is something I have yet to embrace anywhere near the level I use, music and iOS Apps..

    I personally think there is still more value and comfort in reading real book's than eBooks. Good for travelling though, however with so many other things to do with an iOS device these day's reading often get's demoted..
  22. macrumors newbie

    May 15, 2013
    That would be Anti-Trust law. Specifically predatory pricing by selling at a loss in order to dominate a market.
  23. macrumors member

    Mar 13, 2013
    If Apple continues to suit with everyone, it will waste all the money on lawers ):confused:
  24. macrumors newbie

    May 15, 2013
    This would make little or no difference to Amazon with a 90% market share. In the same way that selling songs at 30¢ cheaper has made little or no difference to iTunes.
  25. macrumors 68000

    Apr 22, 2008

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