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Apple Found Guilty of Conspiring to Fix Prices in E-Book Trial [Updated]
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It is exactly the government's screwed up "breakup" of AT&T in the 1980s that led to the oligopoly. They created "mini-monopolies" in regional phone markets that became today's Verizon (Nynex, Bell Atlantic, Qwest), and AT&T (SBC, Ameritech, BellSouth). In the early days, they set aside an "A" and "B" bands specifically so that there would be 2 operators in every market. Plus, they bungled the spectrum auctions.
This is an important point. While in some early antitrust cases you will find references to consumers, the basic purpose of the laws is to protect competition.
LOL. OK, I've taken Business 101. And Economics 101, 102, 103... If the markets worked as well as you say, well, we really wouldn't need Anti-Trust, would we.
But seriously, there are a lot of reasons markets become uncompetitive, one of the main being customer switching barriers. Once the customer buys in, it's hard to switch. You know that happened with Windows, right?
Currently Amazon doesn't have switching barriers anything like Windows, but it's large market share gives it the opportunity to create some. Let's try, for example, Kindle. How the heck do they manage to sell that great little devices at such an extremely low cost, huh? I have four of them, for my family, as well as my iPad. Now I want to buy an eBook. Boy, the iBook version looks good, but... it only runs on my iPad. But if I buy my eBook from azaon, it runs on both the Kindle and the iPad. So which would I buy? It will never run on my Kindle, which is a closed device-- and never will, as the whole point of the Kindle is to lock you in to Amazon's eBooks.
I see examples all over the place. Amazon Prime is a whole bundle of services-- the "pull" is cheap, fast shipping, but now you get their streaming services, which make the competitive streaming services an extra cost for the consumer-- I'm already getting one "free", why pay for another? Small business? You want an online retail presence-- Amazon, even if you have your own hosted site. These are just single examples, and none by itself overwhelmingly scary, but it adds up.
Maybe I see things different because I'm in the IT industry, and I'm seeing how Amazon is gobbling up share in IT services and logistics... they seem to be everywhere, andtheir presence is growing. I do not like to see so much concentrated economic power; this is where markets break down.
That's called economics, too; it's in the second half of the book, past the part you read, Sam.
Most thoughtful comment in the thread so far, excluding my brilliant positions, of course.
LOL. OK, I've taken Business 101. And Economics 101, 102, 103... If the markets worked as well as you say, well, we really wouldn't need Anti-Trust, would we.
But seriously, there are a lot of reasons markets become uncompetitive, one of the main being customer switching barriers. Once the customer buys in, it's hard to switch. You know that happened with Windows, right?
Currently Amazon doesn't have switching barriers anything like Windows, but it's large market share gives it the opportunity to create some. Let's try, for example, Kindle. How the heck do they manage to sell that great little devices at such an extremely low cost, huh? I have four of them, for my family, as well as my iPad. Now I want to buy an eBook. Boy, the iBook version looks good, but... it only runs on my iPad. But if I buy my eBook from azaon, it runs on both the Kindle and the iPad. So which would I buy? It will never run on my Kindle, which is a closed device-- and never will, as the whole point of the Kindle is to lock you in to Amazon's eBooks.
I see examples all over the place. Amazon Prime is a whole bundle of services-- the "pull" is cheap, fast shipping, but now you get their streaming services, which make the competitive streaming services an extra cost for the consumer-- I'm already getting one "free", why pay for another? Small business? You want an online retail presence-- Amazon, even if you have your own hosted site. These are just single examples, and none by itself overwhelmingly scary, but it adds up.
Maybe I see things different because I'm in the IT industry, and I'm seeing how Amazon is gobbling up share in IT services and logistics... they seem to be everywhere, andtheir presence is growing. I do not like to see so much concentrated economic power; this is where markets break down.
That's called economics, too; it's in the second half of the book, past the part you read, Sam.
In the IT industry as well - but on the pr/marketing side. I don't disagree with what you wrote. I just think that those that think Amazon is just going to take over and no competition will ever exist and ebook cost will sky rocket are claiming the sky is falling. It's a stretch. No doubt Amazon has and will continue to have great influence - but they will not be able (in my opinion) to be the only game in town.
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To make money?
If there's only place to go and people don't like paying high prices - someone will come along and provide those services or goods for less.
Amazon didn't explode overnight. They built their business and have grown it.
Also there are law which protect consumers from price gauging and also from one company having complete control over a market.
How about you tell me why another company couldn't compete if Amazon did raise their prices. Or hypothesize why Apple chose to collude with publishers instead of entering the market and simply taking less than 30%. I'm not asking for facts - clearly you can't provide them. I'm asking for your opinion.
For people who think Apple did nothing wrong, here's an anti-trust lawyer explaining things:
http://www.reddit.com/r/technology/...pple_to_trial_over_ebooks_pricefixing/caatz4t
http://www.reddit.com/r/technology/...pple_to_trial_over_ebooks_pricefixing/caatz4t
Yeah, it's certainly a strange graph. What I get out of it is the obvious, that the big publishers started setting prices where they wanted to, rather than having them being artificially controlled by a retail monopoly. Some of the publishers wanted to set their prices higher. The fact that average prices actually dropped makes me think that smaller publishers were better able to enter the market with a new retail channel available to them, and they priced their books lower. What it looks like is a healthy market.
The fact is, publishers setting their prices is how things should be anyway. It's the publishers competing with each other. If they colluded, and they probably did, that's not good and they should be punished. I really don't get how it's Apple's fault if/that they did that. Apple simply told the publishers that they were creating a new retail location, that the publishers could set the price they wanted, and that Apple wanted a fair price compared to other retailers. Where did Apple do something illegal?
Cant a company make money for it self anymore
cant it help other companies eat the cake too
cant it stop amazon from becoming the only store that sells books for ..... cheap
cant it help other companies eat the cake too
cant it stop amazon from becoming the only store that sells books for ..... cheap
I think it is obvious that Apple did not work so hard to make prices LOWER. They only wanted to be certain that overs could not under cut Apple's price.
Apple's gaol was to make sure no one else could sell lower than Apple, That is technical not fixing a price but it is certainly agreeing not to price compete.
I really do hope Apple looses this one. THese is no reason an e-book shouod cost even $5. You don't own the book even after you buy it and it has ZERO resale value.
I'd say an e-book that can't be resold or even given away is worth about what you'd pay to rent a movie. Certainly it sold cost LESS then a paper back edition.
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Yes Apple could offer to "price match" and sell you any book at 10% less then the lowest price. But no, they went and got everyone to agree never to do those kinds of things.
e-books should sell for less then the paperback editions.
Apple's gaol was to make sure no one else could sell lower than Apple, That is technical not fixing a price but it is certainly agreeing not to price compete.
I really do hope Apple looses this one. THese is no reason an e-book shouod cost even $5. You don't own the book even after you buy it and it has ZERO resale value.
I'd say an e-book that can't be resold or even given away is worth about what you'd pay to rent a movie. Certainly it sold cost LESS then a paper back edition.
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...
cant it stop amazon from becoming the only store that sells books for ..... cheap
Yes Apple could offer to "price match" and sell you any book at 10% less then the lowest price. But no, they went and got everyone to agree never to do those kinds of things.
e-books should sell for less then the paperback editions.
Thanks to you and the other commenter back on page 5 for the feed back.
Both of you, reminded me of a couple of comments I wanted to make in the beginning which slipped my mind, namely commoditization and fungiblity or vice versa.
I'm not sure what someone knowledgeable on the topic would say, but I would think F creates C and C ensures F.
Are books a fungible commodity? They don't, for the most part, seem like it to me. People pick certain titles and authors for very specific reasons, so a replacement with a like book rarely makes sense (and even less sense if replacement is done due to price considerations.)
Hmmm... Maybe I should stop here and ask the experts if I have inadvertently made the govts case by trying to make apples case. Because if books are not fungible, and the prices on those books go up as seen in this case, maybe something anticompetitive did happen. The only remaining hole in that theory is:
If prices went up, but people didn't buy, except at discounts, that kept the average price flat, did the tree falling in the forest really make a sound? (Ie really disadvantage any end customers?)
Apple getting together with a publisher is not collusion. Apple isn't competing with publishers. If that was collusion, then all business between any two companies would be illegal. Your local brick and mortar bookstore, if any still exist, would be colluding with publishers illegally, because they have a deal with publishers to buy and sell their books. All Apple did was come up with a contract, propose it to various companies, and they all agreed to sign the deal.
Publishers getting together with each other and deciding on set prices is collusion, and is illegal. Whether this happened or not, we'll never really know because they all settled with the government rather than go through a lengthy and expensive court battle.
Apple didn't tell companies what prices to set their products at, Apple said it was up to the companies themselves to set prices, as long as Apple got its fair cut. It's really no different from the App Store, and the net result is that Amazon could no longer sell at a loss to drive out competition from the market. In the short term, authors, publishers, and retailers are all getting a fair profit on their labors. In the long term, there's no retail monopoly which is good for the consumer.
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I think the real mistake is thinking that competition existed before Apple entered the market with the agency model. Amazon was selling ebooks at a loss, which may have been nice in the short-term for buyers, but in the long-term Amazon dominated the market and wiped out most other retailers.
If the end result is competition where there wasn't any before, how did Apple violate the spirit of the law?
Does it really need to be spelled out for you?
What the publishers did was COLLUSION. What Apple did was help get the dicussion rolling on Collusion. Everyone was involved.
Apple may have not said set it at these prices but they basically told the publishers to set the prices higher. Together, that is price fixing.
I have no ther way to make it simpler for you to understand.
They were found guilty for a reason.
Why did the publishers settle out? Because they knew they knew they got caught.
In your scenario, Amazon just spent 20 years driving all of their competitors out of business. I don't think any companies are going to make a significant investment in the market when Amazon can resume the strategy that put everyone out of business at any time.
That's a loaded statement.
I'll hypothesize why they chose to move forward with the agency pricing and 30% margins. They didn't want to enter a business to lose money. I think Cue said as much. They have established that they can operate the iTunes store with minimal margins when they receive a 30% cut and were comfortable with that strategy. The alternative was not to enter the market.
In your scenario, Amazon just spent 20 years driving all of their competitors out of business. I don't think any companies are going to make a significant investment in the market when Amazon can resume the strategy that put everyone out of business at any time.
That's a loaded statement.
I'll hypothesize why they chose to move forward with the agency pricing and 30% margins. They didn't want to enter a business to lose money. I think Cue said as much. They have established that they can operate the iTunes store with minimal margins when they receive a 30% cut and were comfortable with that strategy. The alternative was not to enter the market.
Well I would argue they chose to enter the market by stacking the deck. And it backfired.
In regards to the first issue. Amazon didn't always exist. One can not predict the future in where another company can rise and wind up putting Amazon out of business and/or in check. 20 years ago - no one would predict Apple being the juggernaut they are in regards to media and the mobile market. One can simply not predict. One can live in fear. I choose not to.
You're wrong, Apple FACILLITATED the collusion. It does not matter that Apple was not a book publisher. An anti-trust lawyer explains it here:
http://www.reddit.com/r/technology/...pple_to_trial_over_ebooks_pricefixing/caatz4t
Evidence? I don't know, you defending Apple for price fixing?
I don't think ANYONE dominating the world is good. Which is why I don't think Apple should be allowed to price-fix ebooks so that EVERYONE IN THE ENTIRE WORLD has to pay out the ass for them.
Steve Jobs forbid that Apple competed with Amazon's low prices.
You know, Apple, the literally richest entity on the entire planet.
Yep.
Sure, but we were talking about your hypothetical scenario where Amazon succeeds in establishing a monopoly over the next 20 years.