P.S. For those who actually understand this case, I know I made quite a few shortcuts. I apologize.
well said. i was going to say Apple should be reamed by DOJ, what they did is called collusion, price fixing.
P.S. For those who actually understand this case, I know I made quite a few shortcuts. I apologize.
A bit of context might help, like reading the linked article instead of just the excerpt on MR. The allegation is that Apple and several of the publishers ganged up on Random House to force them to go along, an allegation that seems to be supported by the chat between Apple and the publishers. This is serious stuff, and the fact that 31 state Attorneys General are already on board spells real trouble for Apple.
I don't get why the design of a successful business model that only applies to those who participate, is couched in terms like conspiracy, ringleader, screwsville, liable, etc. I know this country has become socialist and very over regulated and over enforced to the point checkpoints and random searches have become a prevalent fact of life, but at what point is a business allowed to create a business so it can pay taxes to support all those government leeches?
Procter and Gamble (the soap opera folks) recently moved their HQ from Cincinnati, OH, USA to Singapore. It was the right and rational thing to do. I wonder who is next? I wonder how many are next?
Rocketman
I expressed concerns on both political extremes. I didn't ascribe it to one or the other party or person. Who is responsible is self-evident by researching enabling legislation and regulations and executive orders. I am concerned about the fact it is occurring at all and hope for change.It's a shame your checkpoints and random searches all stem from far right wing ideologies and legislation, and then always blame it on socialist or socialism. At what point?
1)
The law is about preserving or allowing competition, not competitors. The end goal is about letting the regulated market generate benefit for consumers. Apple did become a new competitor, but DOJ asserts that Apple eliminated / prevented price competition. There are other companies trying to jump into the ebook market as well, but only Apple tried preventing competition on price. This is what they are in trouble for.
2)
The laws are not anti-monopoly. Monopolies are seen as a reward, in legal and economic fields, as a reward for doing well in the competition -- which Amazon did in this case. The reason why monopolies are the ones that run afoul of anti-trust laws, is because you need a big enough market power in order to succeed with unfair market practices. There's no fear, in a market with lots of small competitors, for one of them to unfairly limit competition or competitors.
Amazon, even if they had a monopoly, was winning the market fair and square. It kept driving down prices to a point that was still profitable for them but others couldn't keep up. Consumers kept benefiting from the low prices, and given Amazon's success, it meant that's what consumers wanted. And this, making the market generate value for the consumer, is the goal of competition law.
3)
Apple, on the other hand, killed off price competition in the market (if the DOJ is correct). They forced competition to be on a narrower set of product attributes. What Apple did was not to compete better, but to prevent competition in the product attribute they couldn't. Rather than let consumers choose between Kindle and a lower price vs iBooks and a higher price -- Apple made it so you had to choose between Kindle vs iBooks at the same higher price.
Given that Amazon was winning the ebooks market, and Apple's own memo, it means that consumers care about price more than other product qualities. Because of Apple, consumers can't benefit from price competition. 1 competitor, or 300 competitor, you will always get the same price. No matter how many competitors, there is no competition on the thing customers cared the most about -- price. So then what's the point of having these competitors?
Sounds like the DOJ has a lovely smoking gun in a case against Apple. Not the best email to come out in court for Apple. It really hurts Apple defense.
31 State Attorneys General are on board because almost every state in the US is broke and they smell money. This has nothing to do with consumer protection.
It seems you have misunderstood the complaint DOJ is making as well. First of all, Apple's agreements puts a ceiling on bestseller prices, so the publishers are free to compete against each other.1) The law is about preserving or allowing competition, not competitors. The end goal is about letting the regulated market generate benefit for consumers. Apple did become a new competitor, but DOJ asserts that Apple eliminated / prevented price competition. There are other companies trying to jump into the ebook market as well, but only Apple tried preventing competition on price. This is what they are in trouble for.
No, actually, I don't think DOJ calls it "price fixing". As I've said above, the agreements set a price ceiling for books, not a floor. The publishers and Apple agree to a new pricing mechanism, which they openly hope would lead to higher average prices, but that is not necessarily illegal. Steel manufacturers get together to complain to the government about Chinese companies dumping their products onto the US market and ask for punitive steel tariffs for example. Their aim is obviously a rise in prices and they are allowed to coordinate their efforts through lobbying firms or associations.3) Apple, on the other hand, killed off price competition in the market (if the DOJ is correct).
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Anyhow, this whole thing is called price fixing. A fundamental element behind it is that there are multiple "competitors" who don't compete on price. (If there weren't multiple "competitors" then you wouldn't need to "fix" the price.)
I'm missing something here. Jobs gives an alternative to publishers to break the monopoly Amazon had on the market and now he's a criminal? Isn't that called competition?
A bit of context might help, like reading the linked article instead of just the excerpt on MR. The allegation is that Apple and several of the publishers ganged up on Random House to force them to go along, an allegation that seems to be supported by the chat between Apple and the publishers. This is serious stuff, and the fact that 31 state Attorneys General are already on board spells real trouble for Apple.
The gist of this all along is that it doesn't work without Apple's agency model driving the entire process, without Apple acting as the ringleader. It begins to look like Apple pulls while the agreeing publishers push, leaving any publisher that doesn't go along in screwsville.
If it allowed them to continue to sell on Amazon for $9.99, while selling on Apple for $12.99, then yes, that would be competition; however, Apple said that a publisher cannot sell their books cheaper anywhere else if they want to sell on iBooks. This is the part that is price fixing and is illegal.
It seems you have misunderstood the complaint DOJ is making as well. First of all, Apple's agreements puts a ceiling on bestseller prices, so the publishers are free to compete against each other.
Amazon has agreements with some publishers that gives it total exclusivity. Other retailers cannot compete with Amazon on anything, not just price, for those books.
There is one major publisher whose agreement with Apple is not being called into question, as apparently it did not "collude" or "coordinate" its moves with the other publishers.
There are many products where publishers set the price. If you read the 50 page document DOJ has put out, it does not call this arrangement illegal, either. It just calls it "unusual".
In the end, there is still price competition between retailers. A more efficient retailer or one that can live with smaller margins in the hope of selling customers other items can compete with Apple on price by offering a 20% cut rather than 30%. Such a retailer can even become the exclusive retailer for a publisher using this tactic.
I am listing these to show that DOJ is not arguing that the business model Apple has proposed is illegal. It is actually quite mild compared to Amazon's exclusive content arrangements.
No, actually, I don't think DOJ calls it "price fixing". As I've said above, the agreements set a price ceiling for books, not a floor. The publishers and Apple agree to a new pricing mechanism, which they openly hope would lead to higher average prices, but that is not necessarily illegal. Steel manufacturers get together to complain to the government about Chinese companies dumping their products onto the US market and ask for punitive steel tariffs for example. Their aim is obviously a rise in prices and they are allowed to coordinate their efforts through lobbying firms or associations.
DOJ needs to prove that the communications between Apple and publishers is part of a conspiracy to raise prices by switching to an "unusual" pricing mechanism, one that is not unheard of in general, but historically unusual for books. The pricing mechanism used is not illegal. Agreeing to contracts that call for price ceilings for sellers, rather than collective price floors is not illegal, either. Emails between CEOs are not necessarily illegal, either. DOJ has to prove that these elements, each of which does not seem illegal by itself, form an illegal act when combined.
There is one more road block for DOJ: the average ebook prices has reportedly come down since these agreements were announced more than a year ago. The bestsellers as a sub-sub-market (ebooks being a submarket of books in general, now we add one more layer to define an even more limited market) has seen price increases, but it is not clear to me whether DOJ has the complete freedom in defining a market.
2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.
Obviously you have a solid understanding of the case, but I believe your arguments are flawed.
In the beginning, there were no other competitors.
Several of the publishers have already settled. Apple is choosing to duke it out, to what end I have no idea, since the agency model is effectively dead now anyway. Shades of Microsoft charging into the valley of death, out of some misguided principle.
Apple is a lot more sympathetic than a book publisher which is why they're pushing for a jury trial.
All they need is some Apple fans or Amazon haters on the jury and they'll be totally vindicated.
Publishers just don't engender the same level of blind emotion that Apple does.
I'm hoping this is the one lawsuit Apple loses and loses badly.
They sent the ebook pricing back five years with their power.
And I would say to Jobs, 3 choices.
Publishers, do #1 and guess what? #3 is going to happen anyway.
Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.
Yes, you are missing lots. You misunderstand the situation in at least 3 ways:
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It is not like DOJ is offering a "judge" trial. It is only offering a settlement on its own terms and without even asking for an admission of any wrong doing. The red flag is in your imagination where Apple is already convicted before it got a chance to put up an official defense.Trial lawyers will tell you that they ask for jury trials when they are certain that they'd lose if the verdict was handed down by a judge. This is the other red flag in Apple's approach.
By its own account, Amazon does not let any other retailer sell 16% of the bestseller titles at any price. It is the exclusive retailer. If not letting another retailer sell at a lower price were illegal, being an exclusive retailer would get you to Guantanamo.If it allowed them to continue to sell on Amazon for $9.99, while selling on Apple for $12.99, then yes, that would be competition; however, Apple said that a publisher cannot sell their books cheaper anywhere else if they want to sell on iBooks. This is the part that is price fixing and is illegal.
It is not like DOJ is offering a "judge" trial. It is only offering a settlement on its own terms and without even asking for an admission of any wrong doing. The red flag is in your imagination where Apple is already convicted before it got a chance to put up an official defense.
If it allowed them to continue to sell on Amazon for $9.99, while selling on Apple for $12.99, then yes, that would be competition; however, Apple said that a publisher cannot sell their books cheaper anywhere else if they want to sell on iBooks. This is the part that is price fixing and is illegal.
It seems you have misunderstood the complaint DOJ is making as well. First of all, Apple's agreements puts a ceiling on bestseller prices, so the publishers are free to compete against each other.