Apple to Pay $450 Million to Settle E-Book Price Fixing Case

[BaldiMac]

1) Apple is about the most "evil" company out there when it comes to competition. They continually try to stamp out the little guy, or sue anyone and everyone at a drop of a hat. It's their right to do this, but I always have to scratch my head as many on this forum give them a pass...while at the same time we all know there's a high concentration of "progressive thinkers" on this forum, who are typically more skeptical of "evil companies". This is both an observation and an opinion so take it for what it's worth.

Maybe because your observation is what amounts to selection bias. You see the things that reinforce your predetermined point of view. Is Apple any more litigious than it's competitors? Are they really anti-competition compared to the monopolies that they compete against in most of their markets?

 

[PinkyMacGodess]

1) The value of a product is not based on it's marginal cost.
2) No one suggested paying the same price for eBooks as paper books. The pricing tiers that the publishers negotiated with Apple for new release eBooks were just over half the price of new release paper books.

Really?

Because when this came up the first time, I was looking at the printed book price, and the iTunes price, and they were the same... Paying $14.95 for an ebook, and not getting dinner and a kiss is just raw...

 

[BaldiMac]

Really?

Because when this came up the first time, I was looking at the printed book price, and the iTunes price, and they were the same... Paying $14.95 for an ebook, and not getting dinner and a kiss is just raw...

List price for a new release best seller paper book is usually $25-$30. Maybe you found a discount or exception. Looking on B&N now, most are discounted to $17-$25. Still above the price tiers negotiated by Apple.

And, again, the value of a book is not based on how much it costs to produce each additional copy.

 

[brewcitywi]

Dear Samsung

Dear Samsung,

That check that you were about to write to us...could you sign it over to the US Government?

Signed,
Apple

Easy come, easy go, I guess!

 

[IJ Reilly]

Ah, forgetabbouit.

 

[Stephen123]

Legit question here, what is the difference between what Apple did and what Amazon does? Because I hear people say that Amazon gets away with worse than what Apple did.

Amazon was using a system where the seller sells them a book for a price A and they sell to the public for B. Often for popular titles B was below A because Amazon was consolidating the market and driving out competitors. But then for ebooks, because they had few competitors and B was about twice A.

So then Apple starts selling ebooks and there’s all this room for prices to go down. Apple made a deal that ANY book publisher who wanted to sell through them could set any price they want and Apple would keep 30% of whatever price that was. BUT Apple included a clause in that contract saying that if you want to sell through Apple you could not sell through someone else for less.

This drove down the price of ebooks substantially. And much to Amazon’s delight, Apple and all the publishers where accused of conspiring to REDUCE the price of ebooks. This is obviously ridiculous, but it stuck because of that clause saying you could not sell through someone else for less.

So Apple and the major publishers were convicted of reducing prices which was anti-trust because it included all the major publishers and was a crime because of the not through someone else for less clause.

 

[Tigger11]

Amazon was not paying 1.000 euro/day because of predatory pricing.

I bet you if Amazon is found using predatory pricing in the EU they won't pay 1.000euro/day.

Yes they were. Back in January of 2004, the Booksellers union took Amazon to court, Amazon stalled a bunch and then lost, then they appealed it up the court chain then back in December 2007 the Highest French Appeal Court found that Amazon was violating the 1981 Lang law in France by selling their books too cheaply (ie at minimum French pricing plus free shipping) , they were told to pay 100,000 Euros damages to the Booksellers Union who had sued them plus court costs and told to start selling books at the correct price within 10 days or pay a fine of 1000 Euros a day until they complied. Amazon proudly stated we will just pay the fine and have been until this week (Monday July 14th to be exact) when the French changed the law in an attempt to stop Amazon again, making free shipping illegal in France. So now Amazon is charging 0.01 Euro for shipping in France as of Monday. So Amazon has been paying 1000 Euros per day fine for predatory pricing since January of 2008, until this week, so your entire comment above is incorrect. Google "France fines Amazon" to read more.
-Tig

 

[leifashley]

What a bunch of BS...

This is nonsense. Apple tried to structure a deal to remain competitive, the publishers go back to Amazon saying, "Pay the same as Apple or we will pull our books!", and the DOJ blames Apple.

Scam.

 

[rhett7660]

Amazon was not paying 1.000 euro/day because of predatory pricing.

I bet you if Amazon is found using predatory pricing in the EU they won't pay 1.000euro/day.

http://www.nytimes.com/2008/01/14/technology/14iht-amazon.4.9204272.html?_r=0

http://www.pcmag.com/article2/0,2817,2249940,00.asp

 

[TheRealCBONE]

This is nonsense. Apple tried to structure a deal to remain competitive, the publishers go back to Amazon saying, "Pay the same as Apple or we will pull our books!", and the DOJ blames Apple.

Scam.

You can't break the law to remain/become competitive. You doubly can't break the law in such a stupid fashion as to insure you get caught. I'm sure the Apple lawyers plotzed when they found out how idiotic their bosses were being. They were basically daring the DOJ to smack them by meeting, talking about colluding to keep their profits high, keep Amazon down/raise market prices, keeping paper trails of it, then discussing getting rid of the evidence.

If Apple and the others had been slightly less ham-fisted than the Mafia, they could have gotten everything they were looking for and not heard a peep out of the DOJ.

 

[leifashley]

You can't break the law to remain/become competitive. You doubly can't break the law in such a stupid fashion as to insure you get caught. I'm sure the Apple lawyers plotzed when they found out how idiotic their bosses were being. They were basically daring the DOJ to smack them by meeting, talking about colluding to keep their profits high, keep Amazon down/raise market prices, keeping paper trails of it, then discussing getting rid of the evidence..

That's a load of crock my friend. Apple did not break the law whatsoever, and a settlment precludes the final ruling.

Amazon was selling ebooks under the wholesale price, so low to gain market that publishers started pulling out for fear of cannibalizing their paper sales. So apple struck up a better deal than even itunes music:
1. publishers set the price
2. Apple takes 30%
3. Only stipulation is that Apple could match prices with a competitor if it was lower so Apple could compete.

Apple did zero price fixing. What happened was the publishers went back to Amazon with that and said, "Pay us what we're getting paid on Apple's store or we're pulling out books out of Amazon". This was the publishers price fixing, not Apple...

Watch now, DOJ might actually go after the publishers as well. Why did they pick on Apple? I'm sure Amazon went crying to them.

 

[Oletros]

http://www.nytimes.com/2008/01/14/technology/14iht-amazon.4.9204272.html?_r=0

http://www.pcmag.com/article2/0,2817,2249940,00.asp

Yes they were. Back in January of 2004, the Booksellers union took Amazon to court, Amazon stalled a bunch and then lost, then they appealed it up the court chain then back in December 2007 the Highest French Appeal Court found that Amazon was violating the 1981 Lang law in France by selling their books too cheaply (ie at minimum French pricing plus free shipping) , they were told to pay 100,000 Euros damages to the Booksellers Union who had sued them plus court costs and told to start selling books at the correct price within 10 days or pay a fine of 1000 Euros a day until they complied. Amazon proudly stated we will just pay the fine and have been until this week (Monday July 14th to be exact) when the French changed the law in an attempt to stop Amazon again, making free shipping illegal in France. So now Amazon is charging 0.01 Euro for shipping in France as of Monday. So Amazon has been paying 1000 Euros per day fine for predatory pricing since January of 2008, until this week, so your entire comment above is incorrect. Google "France fines Amazon" to read more.
-Tig

Do you people really read the links you post?

They have not been fined for predatory pricing, they have been fined for free shipping, the ****ing book price in France, like here in Spain is fixed and the maximum discount any company can make is 5%

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Just a quick question for you:
Precisely who are you accusing of 'forcing' "ALL the stores... [into] the agency model"?

Apple couldn't have forced Google, B&N, Amazon, or Sony to do so, because Apple wasn't in negotiations with them. Nor were are they the supplier of the e-books to be sold in those other stores.

The publishers, Apple was accused of conspiring with them

True, but 'dumping', the practice of selling below cost in order to drive your competitors out of the market, is illegal.

Dumping is for international trade, I suppose you're talking about predatory pricing.

----------

Amazon was using a system where the seller sells them a book for a price A and they sell to the public for B. Often for popular titles B was below A because Amazon was consolidating the market and driving out competitors. But then for ebooks, because they had few competitors and B was about twice A.

So then Apple starts selling ebooks and there’s all this room for prices to go down. Apple made a deal that ANY book publisher who wanted to sell through them could set any price they want and Apple would keep 30% of whatever price that was. BUT Apple included a clause in that contract saying that if you want to sell through Apple you could not sell through someone else for less.

This drove down the price of ebooks substantially. And much to Amazon’s delight, Apple and all the publishers where accused of conspiring to REDUCE the price of ebooks. This is obviously ridiculous, but it stuck because of that clause saying you could not sell through someone else for less.

So Apple and the major publishers were convicted of reducing prices which was anti-trust because it included all the major publishers and was a crime because of the not through someone else for less clause.

What? The prices went up, nor down

----------

Watch now, DOJ might actually go after the publishers as well. Why did they pick on Apple? I'm sure Amazon went crying to them.

What? DoJ actually went after the publishers before going after Apple

 

[BaldiMac]

Do you people really read the links you post?

They have not been fined for predatory pricing, they have been fined for free shipping, the ****ing book price in France, like here in Spain is fixed and the maximum discount any company can make is 5%

Hmm... Undercutting the competition through illegally low pricing (free shipping) sure seems like it could be referred to as predatory pricing to me.

 

[samcraig]

What a joke.

Apple tries to save the e-book industry from an abusive monopolist (Amazon) and instead of being thanked for improving the state of competition, the government slaps it down to protect the monopolist.

Apple tried to save the e-book industry? How noble of them

 

[Tigger11]

Do you people really read the links you post?

They have not been fined for predatory pricing, they have been fined for free shipping, the ****ing book price in France, like here in Spain is fixed and the maximum discount any company can make is 5%

Yes and so in a predatory pricing mode while every competitor is selling books for lowest price, + tax, + shipping (if shipped), Amazon is selling for lowest price + no tax (Shipping from Lux) + no shipping and paying a 1000 Euros a day fine for doing that. I'm sorry if this is a language issue, but its the very definition of predatory pricing they are selling at a price that their competitors CANNOT match. Throw in the fact they have been paying a daily fine rather then complying with the court judgement to charge for shipping on books and your entire argument gets silly. The law they violated is all about preventing predatory pricing, they were found by multiple courts to be in violation, and rather then fix that issue they just pay a fine EVERY SINGLE DAY FOR MORE THEN 6 YEARS.

 

[LordVic]

Hmm... Undercutting the competition through illegally low pricing (free shipping) sure seems like it could be referred to as predatory pricing to me.

There's a thin line between "loss leader" (Perfectly legal) and "Predatory Pricing"

apparently Amazon knows how to walk it.

I'm not sure I agree. Loss leader practice tends to have a very finite timeframe due to well, Losses.

Amazon is using it's margins elsewhere to maintain the "loss leader" on certain things.

This is one ting I agree with you on. Amazon to me has really pushed too far over that line.
(don't get me wrong, I do love some free shipping)

 

[PinkyMacGodess]

This is nonsense. Apple tried to structure a deal to remain competitive, the publishers go back to Amazon saying, "Pay the same as Apple or we will pull our books!", and the DOJ blames Apple.

Scam.

That's sort of the way that I remember it. Amazon was doing a 'WalMart', and dictating the end price and profit that the publishers got, and Apple came in 'supporting' the publishers higher prices, yet skimming off their 30%. The publishers got together and turned on Amazon to get more money, and yet, yes, Apple is charged with 'colluding' with publishers to raise prices.

BOTH Amazon and Apple came out smelling of week old garbage that has been steaming in a dumpster, and the customers got the shaft as always.

Apple was telling publishers what they could charge, and their profit, and Amazon was telling them what they were charging, and saying that they would make it up in volume. There is a subtle difference in the tactics.

What I objected to was already paying a premium for owning an iPad, and then paying a premium for the content. I distinctly remember the same 'book' being on both Amazon and iTunes and the Amazon version being, in some cases, less than half the price of the iTunes offering.

Like I've said already in this thread, that's raw... I could have saved a heck of a lot more than $9.01 if I had wanted to use the Kindle app on my iPad...

I hope the next thing that it litigated is the outrageous cost for textbooks.

 

[BaldiMac]

There's a thin line between "loss leader" (Perfectly legal) and "Predatory Pricing"

apparently Amazon knows how to walk it.

I'm not sure I agree. Loss leader practice tends to have a very finite timeframe due to well, Losses.

Amazon is using it's margins elsewhere to maintain the "loss leader" on certain things.

This is one ting I agree with you on. Amazon to me has really pushed too far over that line.
(don't get me wrong, I do love some free shipping)

I agree, if we are speaking in general about US antitrust law. See my post on the Areeda-Turner test for a link to criticism of that standard for predatory pricing.
https://forums.macrumors.com/showthread.php?p=19363994#post19363994

However, my post that you were responding to was about a French antitrust decision that has resulted in Amazon paying fines for years.

 

[LordVic]

I agree, if we are speaking in general about US antitrust law. See my post on the Areeda-Turner test for a link to criticism of that standard for predatory pricing.
https://forums.macrumors.com/showthread.php?p=19363994#post19363994

However, my post that you were responding to was about a French antitrust decision that has resulted in Amazon paying fines for years.

Ahh.

yeah.

if they were doing it as a time limited offer once in a while, the argument of loss leader could hold.

But the fact that Amazon is regularly, Quarter after Quarter posting these miniscule losses, leads me to think that this is their business strategy. To purposely make no profits (on paper) for tax and the like reasons, and in turn uses what would have been profit in order to put in permanent "loss leader" programs such as the free shipping in Europe as a permanent thing.

from a amazon customer perspective, thats awesome. really means that we're getting **** for almost nothing.

But from a market health side, that aint good because it stiffles and kills the competition who cannot compete.

I'm glad at least Euro is starting to look at amazon. I'm not sure why the DOJ doesn't do the same... oh yeah... lobbying.

They all do it. sure, But Lobbying is a cancer to government from all companies.

----------

Pathetic abuse of governmental power.

----------



The government shouldn't be in the business dictating either side or what is 'best for the consumer'. That is what the free market is for.

That is the exact reason for governments. To impose regulations and control to avoid the pitfalls that do occur when the market is allowed complete freedom.

despite what you would like to believe, pure laissez fair economy has proven to be as unfeasible as pure socialist or communistic ideology.

Pragmatism should dictate that any such hardcore ideologies without the ability to practically apply means that they are both flawed philosophies and that there needs to be moderating factors in order to control either side from running away.

We should be leaning towards as much free market as the economy can bear. But if a company abuses that and uses its wealth in order to manipulate and destroy free market, it should be stopped.

it is of my opinion, that Both apple and Amazon (mutually exclusive cases) are guilty of attempting to use their vast wealth to co-erc and manipulate business to drive away competition.

 

[i4m]

who's getting that money?

Is it going towards paying off our national debt?

 

[BaldiMac]

What I objected to was already paying a premium for owning an iPad, and then paying a premium for the content. I distinctly remember the same 'book' being on both Amazon and iTunes and the Amazon version being, in some cases, less than half the price of the iTunes offering.

Like I've said already in this thread, that's raw... I could have saved a heck of a lot more than $9.01 if I had wanted to use the Kindle app on my iPad...

Except for the books involved in this lawsuit, prices were the same on Amazon and the iBookstore because of agency pricing and the MFN clause.

----------

who's getting that money?

Is it going towards paying off our national debt?

From the OP:
"$400 million of the $450 million is earmarked for consumers." But only if Apple loses its appeal.

 

[samwight]

There's a thin line between "loss leader" (Perfectly legal) and "Predatory Pricing"

apparently Amazon knows how to walk it.

I think you mean a *fine* line, and if by "walking" it, you mean "paying" it, then yes, Amazon is doing it.

 

[Zaphodsplanet]

This is bogus

I'm sorry, but this whole lawsuit seems bogus from the get go. One of the few companies that seems to actually have some reverence for copyright protection both with music and written copy.... and they get hammered with this totally bogus lawsuit.

 

[Oletros]

Yes and so in a predatory pricing mode while every competitor is selling books for lowest price, + tax, + shipping (if shipped), Amazon is selling for lowest price + no tax (Shipping from Lux) + no shipping and paying a 1000 Euros a day fine for doing that. I'm sorry if this is a language issue, but its the very definition of predatory pricing they are selling at a price that their competitors CANNOT match. Throw in the fact they have been paying a daily fine rather then complying with the court judgement to charge for shipping on books and your entire argument gets silly. The law they violated is all about preventing predatory pricing, they were found by multiple courts to be in violation, and rather then fix that issue they just pay a fine EVERY SINGLE DAY FOR MORE THEN 6 YEARS.

This is not the very definition of predatory pricing, if so, the French government would have sued for that and not fined for free shipping.

I'm sorry if this is a language issue, but the French government and the EU competition agency never have said that Amazon is engaging in predatory pricing.

----------

That's sort of the way that I remember it. Amazon was doing a 'WalMart', and dictating the end price and profit that the publishers got, and Apple came in 'supporting' the publishers higher prices, yet skimming off their 30%. The publishers got together and turned on Amazon to get more money, and yet, yes, Apple is charged with 'colluding' with publishers to raise prices.

No, Amazon was not dictating the profit publishers got and no, publishers didn't got more money with the agency model

 

[PinkyMacGodess]

No, Amazon was not dictating the profit publishers got and no, publishers didn't got more money with the agency model

I'll admit that I don't understand the whole thing, but that I was not happy finding out that Amazon prices were lower, and Apple was working to make Amazon raise their prices.

But anyway...