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

[HenryDJP]

Cute
No, just an ebook reader actually, and one that was not too thrilled to be forced to be charged more because of these deals.

All good, it just seemed that you were pretty upset about it. I don't understand the whole price fixing thing still. I'm not en Ebook reader so it hasn't affected me but I can understand not wanting to be gouged into paying more.

 

[myamid]

All good, it just seemed that you were pretty upset about it. I don't understand the whole price fixing thing still. I'm not en Ebook reader so it hasn't affected me but I can understand not wanting to be gouged into paying more.

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.

 

[BaldiMac]

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

How is it cheating consumers to expect to sell a product above cost?

 

[576316]

Sounds like Apple showing their teeth and snarling. Good on them!

 

[rjohnstone]

How is it cheating consumers to expect to sell a product above cost?

It limited availability of certain books and essentially wiped out the possibility of any retailer other than Apple from having a "sale".
All while raising prices across the board.
I know it's hard for some to believe on this forum, but many people don't particularly care for the iBook app.

Apple wanted their 30% cut. The only way for publishers to do that and remain profitable themselves was to raise prices.

The wholesale model has been in use for nearly 100 years and let the retailer set the final sale price.
The publisher made money regardless of what the retailer sells an item for as they are paid upfront for a book.

 

[Plutonius]

Have you been paying any attention to this DOJ and administration? If the WH isn't going to do anything about benghazi, fast & furious, AP wire tapping, IRS scandal, journalist tapping etc, I don't think they're gonna give 2 jits about what the DOJ is doing with Apple.

I would take it even further. I believe the White House is still angry about how Apple will not bring it's money back to the US and pay taxes on it. I think all the actions so far were to punish Apple (the White House can be very vindictive).

 

[BaldiMac]

It limited availability of certain books and essentially wiped out the possibility of any retailer other than Apple from having a "sale".

Which was a result of agency pricing. Which the judge specifically called out as a legal business practice.

All while raising prices across the board.

Mainly, for titles that Amazon was selling below cost. Hence, my question.

I know it's hard for some to believe on this forum, but many people don't particularly care for the iBook app.

So?

Apple wanted their 30% cut. The only way for publishers to do that and remain profitable themselves was to raise prices.

No, publishers wanted to raise retail prices regardless of Apple's 30% cut. That was actually one of the key points in the judge's decision. The publishers actually took less money under the agency model.

 

[LordVic]

Fair, but, I thought publishers had no control over the prices amazon was selling digital books.

So the Apple Bookstore was the only digital store that gave publishers a say in what price their product was sold at. At which point, the "lowest price" rule was fundamentally a stopgap?

Or did that rule extend to the "wholesale" price amazon paid to the publishers?

Previously, when Amazon set their own prices, they did so after negotiating a deal for that book with the publisher. If amazon at that point decided to cut the price lower, it was on their own profits and revenues that took the hit. Not the publishers.

Amazon often did what was called "loss leader". they knew a book would sell amazing, so they discounted the price. Took a loss, but now had you at their storefront, with the hope that once you were there, you would then buy more books that did provide them profit. The book prices themselves were still variable and fit what the market would bear. But they were still able to negotiate better prices from the publisher to get better prices (or more margin) on those books.

Now, with the new way of doing it, the price that Amazon, or the likes got for their books from the publisher were fixed, with no ability to negotiate. whatever apple decided the price would be, that was the price.

for example a new book comes out. The market could bear the publisher selling it at 2.99 to the storefront, Obviously negotiations would have the publisher try for higher for more profit, and the retailer argue, and somewhere in the middle it comes to, and then the retailer adds their profits and a book comes out at a specific price that is priced for the market.

With apple's new system. that book price is going to be fixed at 9.99 no matter what. They've said this is the spot they want. NO questions asked. they turn around and tell the publishers, "if you want your books in our stores, which hits MILLIONS of people, you will sell it to us at 7.99. that is our price. And because of our deals, you are not allowed selling it at a lower price to anyone else". All the publishers agree, because well, they make more profit since their actual acceptible rate they can handle is lower anyways.

Despite the ability to actually charge less and come to better deals, these publishers now force that 7.99 price to all the other storefronts. there is no more room for negotiation. And we run into the situation i mentioned above, where Apple can now exclusively lock out other sales on their device, unless those other storefronts pay apple, or attempt to go it alone without devices of their own, or the expensive attempt to penetrate their own e-reader market.

in a regular market economy. Prices are supposed to be able to fluctuate to what the supply / demand of them deem. When all of a sudden all the publishers get together and say "we're charging exactly the same price, competition is irrelevant", you get into a huge issue and it is generally deemed anti-competitive and collusion and price fixing.

Apple basically bullied the publishers into price fixing for Apples ebook sales benefit. Then locked out competition. There's a reason when this came to the DOJ attention, virtually all the publishers admitted to it and willingly aided the DOJ.

 

[SouthernEFI]

A big part of the problem in all this actually is that publishers, after having signed with Apple, turned around and told others, like Amazon, that they had to adopt the same rules as Apple or they risked loosing the content....

So they leveraged their deal with Apple to strongarm 3rd parties into the same business model (where apple was promised the "best price").

That part wasn't necessarily Apple's fault, but they weren't innocent in this either.

So to continue to play devils advocate here...

So Apple gave publishers an alternative model. Which publishers took to other third parties and said "change to this model or else we're leaving".

In and of itself, that's not illegal. Publishers have every right to choose who sells their product, correct? A publisher is allowed to pull out of a channel if that channel is killing them, no? I liken this to the stories we hear about WalMart strong arming suppliers into insane agreements.

Basically, the issue was the fact that Apple got the lowest price offered throughout the entire industry.

Correct me if I'm wrong.

 

[otismotive77]

bad for consumers, good for investors.

 

[lleyts]

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.

******** try being a publisher and amazon will only sell at x price and no higher how do i make money? i dont apple allowed me to sell for my price yes, higher so if consumer doesnt want to pay it fine but when they do i stay in biz and my writers make money if you want your books for free go read at big box store and walk out empty handed sounds like thats what you do already

 

[bluespark]

Don't do the crime if you can't do the time.

But seriously - I do think there are things that are over-reaching or harsh about the judgement in total. Hopefully there's wiggle room or it can be adjusted accordingly.

There seems to be a great deal of confusion in this thread about what actually is happening here. The DOJ is not the court. Rather, this is a civil suit and the DOJ is the plaintiff. All that has happened today was that the DOJ has filed a brrief urging the court to impose certain penalties, and Apple has criticized those proposed penalties. To be clear, the DOJ's proposals are not a "judgment" and (to use a term others have been using in this thread) they are not a "settlement." We have yet to see whether the parties settle (yes, they still can) or, if not, what penalties are assessed by the court.

 

[samcraig]

******** try being a publisher and amazon will only sell at x price and no higher how do i make money? i dont apple allowed me to sell for my price yes, higher so if consumer doesnt want to pay it fine but when they do i stay in biz and my writers make money if you want your books for free go read at big box store and walk out empty handed sounds like thats what you do already

What?

The publisher has always been able to set the price to AMAZON. It's Amazon that has been discounting.

The publishers were making MORE money with Amazon's model.

 

[Tinmania]

No arguments from me... we don't have a "Death Star" yet.

I saw the link on Cult of Mac and I though that the heck, I might as well put my name down... I know that it won't really go anywhere.

Jeff

I'd be happy if it worked just for the petition on the Westboro Bap.... oops won't go there.



Michael

 

[LordVic]

So to continue to play devils advocate here...

So Apple gave publishers an alternative model. Which publishers took to other third parties and said "change to this model or else we're leaving".

In and of itself, that's not illegal. Publishers have every right to choose who sells their product, correct? A publisher is allowed to pull out of a channel if that channel is killing them, no? I liken this to the stories we hear about WalMart strong arming suppliers into insane agreements.

Basically, the issue was the fact that Apple got the lowest price offered throughout the entire industry.

Correct me if I'm wrong.

I agree. Publishers are allowed to pull content if they wish from anywhere. they have complete perojative to do so. I dont if that happened alone, this would have gone this far.

it was the entire package, all put together, that painted a picture of a salacious act to force out competition and fix prices.

"if we do this and this, and this, and then get them to do this and this and this on our behalf, we can eliminate the competition, then raise our prices all together and make more profit"

price fixing cartels have always been illegal. when All the companies who produce 90% of the material get together and do it in a concerned effort all at once and targeted, it is extremely anti competitive.

 

[samcraig]

There seems to be a great deal of confusion in this thread about what actually is happening here. The DOJ is not the court. Rather, this is a civil suit and the DOJ is the plaintiff. All that has happened today was that the DOJ has filed a brrief urging the court to impose certain penalties, and Apple has criticized those proposed penalties. To be clear, the DOJ's proposals are not a "judgment" and (to use a term others have been using in this thread) they are not a "settlement." We have yet to see whether the parties settle (yes, they still can) or, if not, what penalties are assessed by the court.

Yes. Exactly. And sorry if my post confused that matter (the use of the word judgement).

 

[rjohnstone]

Which was a result of agency pricing. Which the judge specifically called out as a legal business practice.

True, but forcing all the other retailers to switch by threatening to withhold their product is legally questionable.

No, publishers wanted to raise retail prices regardless of Apple's 30% cut. That was actually one of the key points in the judge's decision. The publishers actually took less money under the agency model.

So in their desire to change Amazon's practices, they actually ended up screwing themselves. Brilliant!

 

[BaldiMac]

Now, with the new way of doing it, the price that Amazon, or the likes got for their books from the publisher were fixed, with no ability to negotiate. whatever apple decided the price would be, that was the price.

You keep saying this. It's simply not true. The publishers set prices (not Apple). They could set different prices in different stores. They could even allow other stores to continue on the wholesale model.

Again, the judge specifically said that agency pricing is legal.

 

[charlituna]

Don't do the crime if you can't do the time.

But seriously - I do think there are things that are over-reaching or harsh about the judgement in total. Hopefully there's wiggle room or it can be adjusted accordingly.

According to Apple they didn't do the time so it's no shock they are objecting to this.

As for the second comment I agree. It's way over the top. If they want to set limits on allowable terms like how MFN can be applied etc for the whole market fine. If they want to cut the right to make exclusive deals that block content from other stores, great (or at least limit it to no more than a week or two).

But they are basically destroying Apple's store and not just books. And it doesn't help consumers to remove a choice in such a way

Guilty or not.

 

[BaldiMac]

True, but forcing all the other retailers to switch by threatening to withhold their product is legally questionable.

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

So in their desire to change Amazon's practices, they actually ended up screwing themselves. Brilliant!

Yep. Call it a calculated risk.

 

[John.B]

I agree. Publishers are allowed to pull content if they wish from anywhere. they have complete perojative to do so. I dont if that happened alone, this would have gone this far.

it was the entire package, all put together, that painted a picture of a salacious act to force out competition and fix prices.

"if we do this and this, and this, and then get them to do this and this and this on our behalf, we can eliminate the competition, then raise our prices all together and make more profit"

price fixing cartels have always been illegal. when All the companies who produce 90% of the material get together and do it in a concerned effort all at once and targeted, it is extremely anti competitive.

But publishers didn't have the power to pull only ebooks. Amazon's terms said if a publisher pulled their ebooks then Amazon would refuse to sell their deadtrees books as well.

And it's Apple that gets tried for anti-competitive behavior?

Hopefully, Mr. Obama gets a warm reception in Chattanooga next Tuesday, after all, he's "earned" it.

 

[a.gomez]

And right now the publishers are so happy they settled and did not go to trial

 

[rjohnstone]

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

That's what I was talking about... sorry. Trying to work and read/reply on the forum makes for short and sometimes incomplete responses.

 

[Yojimbo007]

Umm... ok.
So we should throw out the Sherman Act and anything else like it because they're tyrannical right??? That is unless of course they're used against companies like Microsoft or Google. Then those laws are great!
Pick a stance and go with it.

The stance is when a ruling becomes totally absurd.. Let it be for google Ms or amazon or apple.. There is something huge to worry about!
This case was not tried by jury.. Rather conducted by a judge with prejudice! Which is a clear fact know to every one! The case was decided before it even went to court. That is tyranny and absurdness not justice!
2nd .the ruling and its bias and oneway ness and the fact the government wants to extend its tentacles in privet business to this extent is infuriating and dangerous.
That is my stance..
. And my stance is not Seeing us destroy itself through driving every good business away through this tyrannical stance it is adopting more and more everyday.
I guess we have Obama and Obama lovers to thank for this...

 

[charlituna]

Do you really think this will lower media prices?

Not necessarily. Yes the DOJ just voided every publisher deal on ebooks but who is to say that the publishers won't just demand the same terms again. Judge Cote did say that there is nothing illegal about agency style terms or an MFN.

Even if the publishers consent to a wholesale model they might do so on the condition that they can set limits in low the retail price can go.

And when Amazon says no to such things the publishers will deny them sales rights even when Amazon pulls stunts like removing print titles from sales.

So how do we win. We can't get the books from Amazon and possibly others who didn't agree to the requested terms. Can't get them from Apple cause the DOJ shut down the shop. Have to go the publishers directly who will have nothing stopping them from jacking up prices