Apple Files Brief Calling Department of Justice Remedy 'Draconian' and 'Punitive'

[0x0x0x0]

My wife's law firm worked on this case. And here's what's going on:

Apple wants publishers to set their own prices for their books.

Amazon on the other hand, wants to sell books below cost, thus strong arming writers and publishers into selling only to Amazon, since no one would wanna buy a book that costs more. Amazon in turn, will incur losses at first, but would later have established a greater monopoly and pushed away other online bookseller. Amazon can then reap profits by charging whatever they want.

It’s a dirty technique, and the DOJ sided with it. Just goes to show how corrupt lawyers and judges can be.

Perhaps someone from your wife's law firm can give you an unbiased explanation as to why the bit that I have highlighted in bold is highly speculative and could never work as a legal argument...

 

[Solomani]

I think Apple should exit the e-book market entirely. Focus on the software for reading the e-books, but don't get mixed up in this crazy low-margin business. It's not worth it.

You are right that it's a low-margin business and not a huge financial blockbuster for Apple.

But you are WRONG to dismiss it because this market (Books and e-Books) is a vital link to Apple's education dominance and success. You must be younger than 18 years old if you had little clue that Apple has been a huge (sometimes dominant) force in the Education sector, in the same way that Apple has been a huge factor in the Graphics/Design industry. Apple has been a huge presence in both the education and graphics/design markets since... the 1980s. Yes they lost some market share here and there to rivals, but Apple is still a force to be reckoned with in those markets.

So asking Apple to "walk away" from e-Books is bad advice, because it's like asking them to surrender their presence in the American education market.

 

[aristotle]

Amazon is not a viable alternative to iBooks for textbooks. Amazon is not interested in publishing anything other than ebooks with static pages.

Is the DOJ smoking crack? Why are they mixing music, tv and movies into this decision?

If I cannot get the content that I want legally through the channel that I want and at the quality and terms that I want then I will simply turn to piracy.

 

[RMXO]

As dirty as it is, it is not illegal and evidence has shown that even though Amazon sells *some* ebooks at a loss, their business model has been profitable for them.

This has nothing to do with corruption, acting on the contrary would show corruption.

Lot of people here have to learn to put their emotions aside and look at the cold facts.

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Oh and for those that think the Obama's administration is out there to destroy Apple:

http://www.theverge.com/2013/8/3/45...msung-patent-ban-on-iphone-4-and-select-ipads

I'm surprised this hasn't made the front page yet.

 

[1239689]

Go America, shoot yourself in the foot why don't you. Apple is a big American company that's making roads to bring industry back to its own country. This kind of crap would make me want to move further off shore. But hey when in Rome , strengthen the Asian giants. Go Samsung. What isn't that what American courts are cheering. Maybe I misheard?

Oh look we have a nice healthy fit limb here why not cripple it. That will help our failing economy. Oh got I could go on. But I'll probably get lunched by the courts or some android fan who would rather see Asian Samsung succeed instead of the American Apple.

Hey that was kind of fun.

 

[1239689]

And like all the "White House Petitions" it will be oh so effective...




Michael

Well just happens it might be. However this is a serious charge. Regardless of actual guild they have been found guilty and its actually hard to imagine they didn't have some involvement. I happen to disagree with the extent of the punishment. And doubt the Pres can really veto this without some personal backlash; bit of a hot potato. After all M$ didn't get away with all their anti-trust activity. Negotiations and appeals? start and then life goes on. I am of corse seroisely concerned about Amazon getting a hold again. I'd rather Appke had the monopoly than Amazon. I refuse to have an Amazon account for other reasons. It's a company I've rad a lot of horrible things about. Sickens me to consider they they will control the medium I love so much.

 

[jerirat]

I was really happy to see something come of this. After Apple entered into the agency agreement with most of the big publishing houses, the smaller independent ebook sellers were the ones who suffered the most. Back when Apple said nobody read books and would never make an ebook reader, the smaller ebook sellers were flourishing. But once they could no longer sell at a reduced price there was no way to differentiate themselves from Apple or Amazon.

The publishers don't care about enforcing retail prices on their pbooks. For popular stuff, I can easily find 40% off list price. While agency pricing was in effect it would anger me that I could walk into Costco and buy a book for less than the ebook. I stopped buying many books and looked to friends and the library.

Too bad that the end of agency pricing is too late to save the small online ebook sellers.

 

[Autosaver]

What's with this ridiculous notion that the higher ups in America hate Apple and don't defend them?

If I'm not mistaken, the president just vetoed an Apple ban.

 

[seedster2]

Come into a new market with an innovative product or with better prices and the customers will come.

They would rather collude w/ publishers. Zealots here are willing to excuse it because of amazon's dominant position in the e-book market.

I am actually quite pleased to see that the government is able to focus on such a critical item in our economy and business. This would indicate that all of the really big problems that impact our society are solved such that these minuscule items can get their needed focus.

Because the DOJ have all of their AUSAs on this one case...

The ruling isn't meant to prevent a monopoly. The ruling is to punish Apple for colluding.

Collusion was the crime.

Thank you. This will probably go ignored because most comments are based on emotion and less on the evidence presented

What upsets me is people blindly defending a company that so blatantly try to cheat them... That annoys me.

Look at the article I posted above, it's pretty good and should help you understand the logic behind the price fixing part.

It happens in every sector. These zealots think owning the products and a couple share makes them part of the "team". Even when some new product releases are underwhelming you can always come here and find fanatics exclaiming the value, while begrudging other companies for being greedy (e.g. AT&T, Cable companies, peripheral makers, etc.)

No, it's not. Colluding with the other publishers to threaten Amazon together was the legal issue.

I believe Apple execs were cognizant of their collusive nature of their agreements with publishers. In the long term, this may be worth the penalty considering they may have persuaded some to think the prices will always be the same.

Both the DOJ in the US and the EC in the EU seem to think there was a problem with this Apple instigated "cartel" arrangement, and the publishers already backed down.

Why do you keep posting that there was no problem, when the parties involved implicitly and explicitly acknowledged that there was an issue?

Apple's attempt to muscle out Amazon through collusion with the publishers hurt all of us. As far as I am concerned, there should be punitive measures, since there was a major market disruption which will take years to correct itself (because independent competitors were driven out of the market and comparison shopping was made pointless) and consumers will be stuck with dramatically higher prices in the near term.

Agreed. I went back to print once i saw the prices went up. This was exactly what publishers hoped would ultimately be a byproduct of this deal.

The judge is the culprit... She entered this case with prejudice. It is a clear and known fact.
The case was not tried by jury. She was the judge jury and executioner .. Hardly comes close to justice!

Now the same prejudice judge has to decide punishment?... Lol
This whole case has to be tossed out and retried in front of jury and an unbiased judge presiding.

Yikes! you need to start living in reality.

Whereas Apple gets convicted of peripherally aiding in price collusion with booksellers and they get ten years of monitoring and the entire rules of the app store rewritten.

DOJ is only recommending a penalty. A judge will ultimately decide. "Peripherally aiding in price collusion" is still collusion no matter how you attempt to minimize their role.

If I'm not mistaken, the president just vetoed an Apple ban.

Seriously, the executive branch just vetoed the ITC ban. First it was apple doesn't lobby, so the govt is against. That nonsense was disproved, so it's they are not "lobbying enough" and pissed off the gov't. Conspiracy theorists come out of nowhere when a decision goes against their "team"

 

[Urbanscrawl]

Come on, I'm tired of seeing this tirade about how unfair this is.

Did Apple sign contracts with MFN clauses in them? Yes
Did these clauses force prices to go up? Yes
Are higher prices a benefit to consumers? No
Did Apple knowingly do this with the cooperation of publishers to increase the prices? Yes
Did all these publishers settle and essentially admit guilt? Yes

So over all, it's pretty clear Apple did engage in a form of price fixing, and they were cough in the act. Wanting to get into a new market is all good, but the way they did it was wrong, and they should get punitive damages for it.

Come into a new market with an innovative product or with better prices and the customers will come. Try to force your way into it by forcing existing players to price higher because you took part in a mafia-like agreement to ensure other players can't price below you? That's dishonest, period.

I'm not sure I agree - using your own points

Are MFN clauses illegal? No.
Prices increased - but so did competition.
Are higher prices a benefit to consumers?
Actually yes - and we'll see more of this in time. We all buy something from someone, we are the market as well as consumer. Ultimately if you push prices down too far you start lowering real wages. Authors get very little from sales made through Amazon relative to other sales channels.
Did Apple knowingly do this with the cooperation of publishers to increase the prices?
Unlike Amazon everyone else's shareholders demand a profit. Amazon operates in its own nihilistic little economic bubble, wherein the shareholders are basically relying on the fact that in the long run Amazon will wipe out the competition (and they are probably right).
Did all these publishers settle and essentially admit guilt?
Maybe - but then they did have a meeting at which they agreed prices (price fixing) - apple wasn't at that meeting.

Ultimately whether this is good or bad should come down to point three - is it good that Amazon is sucking the profit out of every market by not making any profit itself. The answer has to be no. I know too many people that are forced to sell through amazon to make up the volume of sale that they have lost to it, but for whom those sales make very little profit relative to what they would once have made. We are consumers - but we are the market too.

 

[stockscalper]

Go America, shoot yourself in the foot why don't you. Apple is a big American company that's making roads to bring industry back to its own country. This kind of crap would make me want to move further off shore. But hey when in Rome , strengthen the Asian giants. Go Samsung. What isn't that what American courts are cheering. Maybe I misheard?

Oh look we have a nice healthy fit limb here why not cripple it. That will help our failing economy. Oh got I could go on. But I'll probably get lunched by the courts or some android fan who would rather see Asian Samsung succeed instead of the American Apple.

Hey that was kind of fun.

Absolutely. Let's just let Apple take us back to the Robber Baron era when railroads and oil barons fixed artificially high prices that gouged the consumer and ran competitors out of business. That was American too wasn't it?

And what jobs are Apple supposedly creating here? They employ 500,000 Communist Chinese workers. And if you're referring to their making the Mac Pro here the only reason they're doing that is after years of frustration trying to get that design made in China Apple gave up and had to bring it here or give up on the design.

 

[StrudelTurnover]

How much of a bonus do you think corporate lawyers get every time they break out "draconian"?

My wife's law firm worked on this case. And here's what's going on: Apple wants publishers to set their own prices for their books.
Amazon on the other hand, wants to sell books below cost, thus strong arming writers and publishers into selling only to Amazon, since no one would wanna buy a book that costs more.

Uh, thanks for the scoop, Mr. Throat. Doesn't quite explain how "digital books for below cost" works. I think you might be confusing "cost" with "list price"? In which case, yes of course Amazon wants to sell below list price so they can have "dat strikethrough" text. Here's two examples:

• Digital List Price: $14.99 What's this?
• Print List Price: $25.00
• Kindle Price: $9.72

• Print List Price: $19.99
• Kindle Price: $19.95 includes applicable taxes & free international wireless delivery via Amazon Whispernet You Save: $0.04
• Sold by: Random House LL ; This price was set by the publisher

Anything below list is a selling point. Even if it's a penny, or even if they artificially increase their database list price. Both of which happen frequently. I've published and been involved with publishing of about half a dozen physical and digital books. I'm quite familiar with the Amazon policies for selling both formats in their marketplace versus from their inventory. There's no particular disadvantage with having e-books on both Apple and Amazon. Generally with iBooks you can calculate profit based on sales numbers. With Amazon, less so when they fluctuate, but they do so in a way to drive attention to the listing.

The advantage with Amazon is it's easier to get conversions to print editions which are also sold on Amazon (unprofitably if your cost is >50% of your list price). And the advantage with iBooks is it's easier to get conversions to print editions that aren't sold on Amazon, because bookbuyers with iDevices take pride in their book collections and willing to pay a bit more.

And with both services you risk e-book piracy in about equal measure. Where Amazon outshines Apple is of course picture erotica. At least in quantity.

Amazon in turn, will incur losses at first, but would later have established a greater monopoly and pushed away other online bookseller. Amazon can then reap profits by charging whatever they want.

You do realise this has been Amazon's business model since 1995? Hardly an industry secret.

 

[BaldiMac]

Doesn't quite explain how "digital books for below cost" works. I think you might be confusing "cost" with "list price"?

Nope. Amazon sells most best sellers below cost.

 

[firewood]

In other news, Amazon CEO buys the Wash Post. Of course. this has nothing to do with the Post's unbiased reporting on Presidential politics, Bezo's political contributions, and Obama's high-profile visit an Amazon warehouse.

 

[jimbobb24]

Obama admin probably wants a pay off. Amazon is a big donor, this is the way you send a message that if your not going to play in Obama's crony capitalist America you need to play ball. Nice company you got here, wouldn't want anything to happen to it, would you?

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They would rather collude w/ publishers. Zealots here are willing to excuse it because of amazon's dominant position in the e-book market.



Because the DOJ have all of their AUSAs on this one case...



Thank you. This will probably go ignored because most comments are based on emotion and less on the evidence presented



It happens in every sector. These zealots think owning the products and a couple share makes them part of the "team". Even when some new product releases are underwhelming you can always come here and find fanatics exclaiming the value, while begrudging other companies for being greedy (e.g. AT&T, Cable companies, peripheral makers, etc.)



I believe Apple execs were cognizant of their collusive nature of their agreements with publishers. In the long term, this may be worth the penalty considering they may have persuaded some to think the prices will always be the same.



Agreed. I went back to print once i saw the prices went up. This was exactly what publishers hoped would ultimately be a byproduct of this deal.



Yikes! you need to start living in reality.



DOJ is only recommending a penalty. A judge will ultimately decide. "Peripherally aiding in price collusion" is still collusion no matter how you attempt to minimize their role.


Seriously, the executive branch just vetoed the ITC ban. First it was apple doesn't lobby, so the govt is against. That nonsense was disproved, so it's they are not "lobbying enough" and pissed off the gov't. Conspiracy theorists come out of nowhere when a decision goes against their "team"

Even Gruber, a slavishly ridiculous fan of Obama and Apple could explain this. Obama still favors US companies over foreign. Also, it's not only conspiracy theorists, major non Apple websites believe this.