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Apple Accuses DOJ of Wanting Amazon to Have 'Significant Competitive Advantage'
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Yes, we know what Apple says. Taking apart the artificial differentiation, there is no difference between buying a Harry Potter novel from Amazon app and the Kindle app. That was my question, not what Apple has stated in their policies
Depending on context, of course there is a difference. But you don't seem to want to tell us your point in order to put your question in context.
There is a massive difference.... one is a physical purchase of something which I can do what I want with and resell should I so desire, the other is a licence to use the (DRM protected) digital content of the book which comes along with a "terms of use" (see http://www.amazon.co.uk/gp/help/customer/display.html?nodeId=200501450) and the ability for Amazon to revoke my access at any time they see fit.
If even Amazon can impose such a massive difference in the terms of the sale of these "same" items then it it any wonder that Apple do to?
And you still seem oblivious to the concept of "in app consumption"... the Amazon App doesn't sell anything for in app consumption. The Kindle App would if Amazon chose to offer it which is why the IAP 30% fee would apply.
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The rules have changed with the settlements the publishers made with the DOJ.
1) They need to have staggered contract negotiations with retailers (i.e. B&N, Amazon, Apple, etc).
2) All contracts with Apple have to be re-done and the MFN excluded. This has already been done.
3) MFN must be removed from all contracts.
4) The agency model can exist. However, with a twist. The retailer can use their commission. i.e. in Apple's case the 30% of the price, and discount that percentage or amount, to lower the cost of the item to the end user. Thus, on a $10 selling item, Apple can lower the cost up to $3.00, which is out of their own pocket. In turn, this prevents a company like Amazon from selling an item at a loss, which was happening under the wholesale model.
5) a publisher can offer a vendor a discount on items in the catalog, but not on the entire catalog. It is something like a small percentage of their entire catalog.
I',m sure there are other rules.
What makes no sense is then the govt turns around and says, for Apple, that no more agency model. If anything that benefits Apple and not the publishers, since Apple can then sell at a loss and do what Amazon had done in the past. To me this is why the publishers objected to the DOJ settlement. Bot to mention, the Apple settlement resets the clock on the number of years that the terms of the agreement have to been in place. Especially, since in many cases, the publishers have made changes almost a year ago already. The majority of punishments to Apple seem to hurt the publishers more. Besides the new purchase link requirement, in the revised proposal.
That's called a loss leader. Why do you insist on saying that Amazon is practicing predatory pricing then come up with exactly the distinction that makes it a loss leader and not predatory pricing. Are you unaware of the meaning of words or something?
Predatory pricing, at least to me, implies a company selling goods well below cost, willing to take a hefty hit to their bottom line in order to drive competition out of the market.
Amazon only docked a couple of bucks off their bestsellers, and made up that loss through other ebook sales. They were selling a relatively small selection of books at or slightly below their wholesale cost. That's a straight up by the books loss leader strategy to me. Nothing predatory or illegal about it.
I provided a definition for predatory pricing earlier in the thread.
Again, which part of the definition makes it unreasonable to apply to Amazon's strategy?
Amazon is selling best sellers well below cost. The idea that they make it up through the rest of their eBook sales is my primary disagreement with the DOJ. I don't believe it is reasonable to treat the eBook market as a commodity market where best sellers have the same market value as less popular books.
I don't understand what competitive advantage Amazon gets if they have links to their bookstore in their app. If I am in my Kindle app, it is because I want to read a Kindle book.
The definition that you quoted is not a legal definition. It just gives an idea about what predatory pricing is. If we applied such straightforward definitions in all aspect of our live we would all be in jail. As the things stand right now, DOJ is not even trying to charge Amazon with the crimes you attribute to them. That's in contrast to Apple case where they not only were already charged but they were already convicted. Your interpretation of the law would be more relevant if you were in a position to enforce it. Apparently you are not.
"Predatory pricing involves temporarily pricing a product low enough to end a competitive threat"
If Amazon makes money in their ebook division, what excuse does the competition have not to be able to compete? And based on Amazon's business model of low margin, high volume, how is them selling products cheaper than their competitor predatory pricing, when they make money.
edit: The key word is temporarily. Once the competition is gone, the company will raise prices to recoup its loss. Amazon can keep their strategy up forever. Its their business model, not temporary predatory pricing.
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As I said: Whether Apple is guilty or not is irrelevant to the ridiculous proposed action by the DOJ.
What sort of accounting trick do you have use to be able to claim that Amazon makes money, with an EPS of minus 0.23?
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There's so obviously a thin line between a loss leader and predatory pricing. I'm just surprised that some of you can be so sure that Amazon is legitimately using the former.
Perhaps he has not to do any trick because he has said that the ebook division was profitable so your repeated EPS claim means nothing.
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As I said: Whether Apple is guilty or not is irrelevant to the ridiculous proposed action by the DOJ.
What answer has nothing to do with the claim I quoted earlier
Read his quote again. He stated "products"--leading anyone to assume not just ebooks--and that it's all part of Amazon's business model. Claiming that they make money under their current business model is not true. Me pointing out the negative EPS is completely relevant.
Or like Best Buy letting me look up products from Apple's store using the iPhone they sold me. Oh wait.
Change what for that and yes it makes perfect sense, you have claimed: "(this has not been proven by any honest measure)"
So yes, a 160 pages ruling disagree with your claim
I never implied that it was. As far as I know, I'm allowed to use the popular definition of terms.
No, it gives you an actual definition of what predatory pricing is.
I simply disagree with the DOJ in regards to Amazon. Mostly because of their seemingly arbitrary treatment of the market.
(For example, after going after the 5 publishers that made up under 40% of the market for collusion, they still approve the merger of the top two publishers that control upwards of 30% of the market. But that's not collusion because..???)
Lots of reasons. For example:
1. All books are not the same. Best sellers are what get people in the door. And that is where Amazon is operating below cost.
2. Amazon's massive scale allows them to operate their eBook division at lower margins than smaller operations can profitably sustain. (And the below cost pricing of best sellers, makes it hard for a new competitor to scale naturally.)
3. Amazon's refusal to collect sales tax in most states gives them addition pricing advantage over most significant competitors.
Because they price best sellers below cost in order to hinder competition.
While you may think you can predict the future, I didn't base my claim on ESP.
My God, he is talking about the ebook division, nothing more. And yes, ebooks are products
And you know this because...you're him? Her?
Regardless, Amazon's whole business model is questionable, as they continue to operate AT A LOSS, while moving massive amounts of inventory of all kinds of PRODUCTS. They haven't figured out how to make a profit doing it? While undercutting all their competition?
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Which is unfair unless they set that rule for all retailers. Otherwise other parties can freely undercut Apple and gain an advantage. Especially during this period when Apple can't sell certain titles because they aren't allowed to talk to that company just yet.
Now if this 'you can lower the price up to the full amount of your cut and lose said cut' is a universal rule then fine. Because it's unlikely the publishers will offer vastly different prices to various retailers or vastly different commissions. So it's unlikely that anyone can really go that far below each other.
What is also unfair is allowing any one company to have an extended exclusive deal on any item. If the DOJ really is looking out for us consumers they should put a limit on these deals so we have a choice.
Say you're a book seller. I buy 2000 ebooks licenses of a New York Times bestseller from you at $9.99 each, 2000 licenses of a popular older ebook at $7.99, and 2000 hardcover copies for $10.99. You now have a goodly chunk of change in your pocket.
Now I turn around and start selling my bestseller ebooks at $8.99, slightly less I bought them for, sell the older ebook at $10.99, and sell the hardcovers for $24.99. Well over double what I paid for them.
Now since I sell a popular e-reader, the prices of my ebooks draws attention to that product. I sell a ton of the readers, along with all my licenses of my ebooks I bought from you. Now, I only sell half of my hardcovers, but since I had them priced over double their wholesale cost, I've already made my money back, and a tiny bit of a profit (which was probably used for paying for the shelf space and rental costs of the store I host them at).
My e-reader becomes absurdly popular, both because of the convenience of the product, and due to the low prices I'm selling my ebooks at. Paper book sales suffer as a result, but they're hardly a money sink. At least not yet.
Is what I'm doing illegal or immoral in any way?