Apple Ordered to Stagger E-Book Contract Negotiations, Refrain From 'Most Favored Nation' Clauses

[giantfan1224]

Also right there in your quote is you saying that settlement doesn't imply guilt. We are beyond that point already.

So? What does that have to do with your previous comment?

 

[BaldiMac]

I see a lot of people around here claiming bias, so I've got a question for you.

Why was Judge Cote biased? Who was she favoring? Amazon? Why would she favor Amazon over Apple in this situation? What would she have to gain by giving preferential treatment to one company over the other? How does it help the market by allowing one monopoly to survive while curtailing another before it became truly entrenched?

I can't speak for him, but I think that a certain amount of bias could have come in from overseeing the settlements with all the publishers. In addition to her famous quote about it being likely the DOJ would prove their case right before the trial started, she also stated the Apple colluded with the publishers a year before that.

Obviously, nothing presented during the settlement negotiations should have been considered at trial.

 

[bsolar]

Well, that completely misses the point. Obviously, Amazon made profits under agency pricing. That has nothing to do with the claim.

But we've had this conversation before.

And I still lack any reputable source backing up the claim that Amazon is not profitable in selling ebooks, or was not profitable selling ebooks before Agency came into play.

 

[giantfan1224]

I see a lot of people around here claiming bias, so I've got a question for you.

Why was Judge Cote biased? Who was she favoring? Amazon? Why would she favor Amazon over Apple in this situation? What would she have to gain by giving preferential treatment to one company over the other? How does it help the market by allowing one monopoly to survive while curtailing another before it became truly entrenched?

I think that the point that has been made before is Judge Cote conveyed bias by some of the statements she made pre-trial, as in she was pre-conditioned to rule one way before both sides had a chance to lay out the evidence. Bias doesn't just mean she wanted one side to win but that she held opinions that could have influenced her decision.

----------

So you didn't mean this?

I meant that their whole business model seems to be to sell anything and everything cheaply in order to stamp out competition. Of course they would never state this openly. And when asked by shareholders why yet again they failed to turn a profit during the most recent quarter, they point to things like "investment in infrastructure". Nevermind the fact that they don't price their goods in a way to turn a profit AFTER overhead and other expenditures.

 

[GQB]

DOJ sure seems to have a lot of free time on their hands... worrying about ebook sales and pricing...

So DOJ should only pursue issues that you personally find significant?

 

[BaldiMac]

And I still lack any reputable source backing up the claim that Amazon is not profitable in selling ebooks, or was not profitable selling ebooks before Agency came into play.

I'm not sure how that excuses trying to pass off unrelated information as relevant.

As far as my opinion as to whether or not Amazon was profitable selling eBooks, I'd lean towards no, despite the DOJ's claim. Apple claimed "high single digit" profits on eBooks with 30% margins.

 

[Renzatic]

I can't speak for him, but I think that a certain amount of bias could have come in from overseeing the settlements with all the publishers. In addition to her famous quote about it being likely the DOJ would prove their case right before the trial started, she also stated the Apple colluded with the publishers a year before that.

Obviously, nothing presented during the settlement negotiations should have been considered at trial.

I dunno if I'd call that bias so much as overzealousness. The question is, if there was bias before the trial, did Judge Cote skew the evidence in favor of her opinion, or was she at least fair and impartial during?

I'm of BC2009's opinion here. Any potentially unfair verdicts would be due to misinterpretations of how the ebook market works rather than outright bias.

 

[bsolar]

I agree that folks should make money on this business. Amazon supposedly makes money on eBooks if you calculate things traditionally, but some have argued that the DOJ's methods of calculating Amazon's revenue/profit are wrong for eBooks and that Amazon is indeed guilty of predatory pricing.

Basically, calculated as a physical good, Amazon's eBook business is profitable and therefore there are loss-leaders, but no predatory pricing. But calculated as what he terms a "public good" or "system good", they would certainly be considered guilty of predatory pricing by pricing the best sellers below cost.

Wikipedia defines public good in the following way:

In economics, a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

It seems to me that most ebooks cannot be considered public goods because they are excludable:

In economics, a good or service is called excludable if it is possible to prevent people (consumers) who have not paid for it from having access to it. By comparison, a good or service is non-excludable if non-paying consumers cannot be prevented from accessing it.

Kohn seems to argue that since piracy allows free consumption of ebooks they are not excludabe. To me it makes no sense: if you include illegal means in the test for excludability basically nothing remains excludable... the article even mentions pay tv as an excludable good, and pay tv can definately get pirated.

 

[BaldiMac]

I dunno if I'd call that bias so much as overzealousness. The question is, if there was bias before the trial, did Judge Cote skew the evidence in favor of her opinion, or was she at least fair and impartial during?

I'm of BC2009's opinion here. Any potentially unfair verdicts would be due to misinterpretations of how the ebook market works rather than outright bias.

I'm not talking about bias as in "favoritism". I'm talking about bias as a result of being exposed to information not presented at trial. As far as skewing the trial as a result of any bias, I have no idea how to prove such a thing. But this particular judge has been accused multiple times of pre-judging the case and issuing rulings based on that opinion.

 

[bsolar]

I'm not sure how that excuses trying to pass off unrelated information as relevant.

The unrelated information is actually whether they use Agency or not. The claim was that Amazon is not profitable in selling ebooks, what they are using is irrelevant. Even if they switched back to wholesale it does not imply they are not profitable anymore.

 

[kbfr08]

Government is overreaching here, by telling a corporation what they can and cannot do.

If the law is clear, Apple has to abide by it and if they don't they should get fined every time they break it until they do.

Anything else is not the DOJ's or a judges business.

You're absolutely right, except in cases where a company decides it's more profitable to break the law and pay a fine rather than following the law in the first place.

 

[BaldiMac]

The unrelated information is actually whether they use Agency or not. The claim was that Amazon is not profitable in selling ebooks, what they are using is irrelevant. Even if they switched back to wholesale it does not imply they are not profitable anymore.

No, the claim is that they weren't profitable in eBooks before Apple entered the market in early 2010.

 

[bsolar]

No, the claim is that they weren't profitable in eBooks before Apple entered the market in early 2010.

Our discussion was about the post-sentence market, not the pre-collusion one. It started from this post, with emphasis mine:

Why would Apple want to use iBooks as a loss-leader? To get people to buy iPads? Doesn't make sense. No, Apple has always intended for iBooks to be a money maker. That's why this case is so interesting, because it appears to protect a monopoly like Amazon in the eBooks business, and prevent others from entering the market.

My opinion is that Amazon is still profitable in selling ebooks (and always was), so others are not prevented from entering the marked excluding for their own superior costs or unwillingness to operate on thin (but existing) margins.

If Amazon is actually not profitable in selling ebooks my opinion is that they are indeed most likely engaged in predatory pricing, but the "if" at the beginning of the sentence is not a detail.

 

[BaldiMac]

Our discussion was about the post-sentence market, not the pre-collusion one. It started from this post, with emphasis mine:

I disagree with your interpretation of the other poster's comment, but I agree it could be read your way. But, Amazon's profitability under agency pricing has nothing to do with the post sentence market either.

My opinion is that Amazon is still profitable in selling ebooks (and always was), so others are not prevented from entering the marked excluding for their own superior costs or unwillingness to operate on thin (but existing) margins.

Again, if you pretend that all eBooks are the same. And have a myopic view of what it means to prevent competition from entering the market.

If Amazon is actually not profitable in selling ebooks my opinion is that they are indeed most likely engaged in predatory pricing, but the if at the beginning of the sentence is not a detail.

Obviously, I disagree and have presented multiple cites that overall profitability is not a defense against predatory pricing.

 

[GadgetDon]

Do you really think that Amazon makes a loss/thin margin because it sells some of ebooks as a loss leader or the fact that it reinvests all profit into infrastructure, growth and blanketing the world with shipping warehouses?

No, I think Amazon makes a loss/thin margin because it sells all of its ebooks at a massive discount, usually near if not below wholesale cost. During the period of the Agency Model, Amazon did make more from its eBook sales.

 

[bsolar]

Obviously, I disagree and have presented multiple cites that overall profitability is not a defense against predatory pricing.

Cannot Apple simply sue Amazon? It would not affect the collusion sentence but if there are so many arguments supporting a predatory pricing claim it seems a no-brainer to me.

 

[fredaroony]

Government is overreaching here, by telling a corporation what they can and cannot do.

If the law is clear, Apple has to abide by it and if they don't they should get fined every time they break it until they do.

Anything else is not the DOJ's or a judges business.

Erm no...the government is 100% correct, Apple broke the law.

----------

Well, it's pretty clear now and they will get fined [again] if they break it again. In fact it was clear the first time around.

There is a zero percent chance Apple did not know this behavior was illegal to begin with.

----------

If Apple were smarter they would sell books dirt cheap so that people would buy more iPads, Apple's model is to sell hardware so they should break even on the content.

If they were smarter they wouldn't have broken the law in the first place...

 

[giantfan1224]

Erm no...the government is 100% correct, Apple broke the law.

There is a zero percent chance Apple did not know this behavior was illegal to begin with.

You don't deal in absolutes all the time, do you?

 

[fredaroony]

I wouldn't say it's overreaching - it is quite appropriate, but only after the judge made a completely wrong decision. There was no evidence that the publishers colluded, and there was even less evidence that Apple colluded with the publishers.

The result is that Amazon's eBook monopoly is strengthened.

Apple should use your MacRumors thread post to try to appeal!! yeah but but but gnasher729 said you were wrong judge!!!!

----------

You don't deal in absolutes all the time, do you?

Only when something is extremely clear which just happens to be this case.

 

[giantfan1224]

Cannot Apple simply sue Amazon? It would not affect the collusion sentence but if there are so many arguments supporting a predatory pricing claim it seems a no-brainer to me.

Because it would no doubt be difficult to prove. I've stated that I believe they're guilty of predatory pricing but I recognize that it's just an opinion and that I can't prove it. There's a thin line between loss leader and predatory pricing.

----------

Only when something is extremely clear which just happens to be this case.

Despite the fact that there are quite a few differing opinions with pretty substantial and convincing arguments to the contrary?

Are you also right 100% of the time?

 

[BaldiMac]

Cannot Apple simply sue Amazon? It would not affect the collusion sentence but if there are so many arguments supporting a predatory pricing claim it seems a no-brainer to me.

Sure they can sue. What's your point?

(We've already established that it's notoriously difficult to prove a predatory pricing claim in court.)

 

[fredaroony]

Despite the fact that there are quite a few differing opinions with pretty substantial and convincing arguments to the contrary?

Are you also right 100% of the time?

Hrmm let me see, on one hand we have the DOJ and an established judge and on the other hand we have a bunch of thread posters in a Apple forum who think Apple did nothing wrong...who will I trust??

lol thats a tough one for sure!

By the way, while I was thinking about this I was putting my finger to the bottom of the chin while looking up to give the realistic impression of actually considering this for more than half a millisecond I guess you had to be there but it was quite convincing!!

 

[Renzatic]

I can't speak for him, but I think that a certain amount of bias could have come in from overseeing the settlements with all the publishers. In addition to her famous quote about it being likely the DOJ would prove their case right before the trial started, she also stated the Apple colluded with the publishers a year before that.

Obviously, nothing presented during the settlement negotiations should have been considered at trial.

Ahh. Gotcha. I'm arguing against the more standard term of bias that usually gets thrown about around here.

 

[BaldiMac]

Hrmm let me see, on one hand we have the DOJ and an established judge and on the other hand we have a bunch of thread posters in a Apple forum who think Apple did nothing wrong...who will I trust??

lol thats a tough for sure!

Where did the judge say that "there is a zero percent chance Apple did not know this behavior was illegal to begin with." Or was that a "thread poster" that made that up?

 

[fredaroony]

Where did the judge say that "there is a zero percent chance Apple did not know this behavior was illegal to begin with." Or was that a "thread poster" that made that up?

Actually you might have just got me on that one...maybe Apple aren't as smart as I thought they are since they have broken the laws in several countries.

Could be time for a restructure of Apple's legal dept....