DOJ Says Publishers Are Again Colluding in Objecting to Proposed Apple Penalty in E-Book Case

[Rocketman]

Why is Amazon's business model a problem?

Fair question.

Apple

Market Cap : $413B (high)
P/E ratio : 11.3 (low) [15 is considered fully valued]
Sales : $180B
Margins : 19.53% (above average)

Sales/market cap= 0.435

Amazon

Market Cap : 134B (high) [very, very high for earnings]
P/E ratio : Infinity, was 250 (lottery high)
Sales : $44B
Margins : 0.03% (why even be in business?) [15% is considered a minimum target]

Sales/market cap= 0.328

Source: Latest 10-Q's

 

[Gasu E.]

I think it is time Obama have a WTF conversation with Eric H. Holder

Eric Holder, and even the head of the Anti-Trust Division, are political appointees. As such, they are not supposed to intercede in individual cases without serious justification. The political appointees are supposed to set general policies (in accordance with laws established by Congress), but it is up to civil servants to determine how they are carried out. Otherwise there would be a hue and cry about how the AG is politicizing the DOJ; and rightfully so.

 

[mdriftmeyer]

Don't you just LOVE the progressive perversion of the commerce clause being used as a tool to tell business what they can and cannot do?

You make it impossible for a corporation to conduct business in the United States and then bitch and moan when they offshore jobs and keep profits overseas.

Why would a corporation reward a population and the government it elects when that population/government does everything within its legal (and made up) power to prevent that corporation from doing business?

Fight the good fight Apple. Keep that ~$100 billion overseas and invest in companies in other countries!!!

Save your Neocon/Libertarian clap trap for a political site. It wreaks of historical ignorance.

 

[LordVic]

So this is a problem how exactly? The regulations are stricter but we also have stricter parliamentary rules including conflict of interest rules which help prevent certain types of corruption in the government.

In this case, it appears that the DOJ is trying to punish a smaller player for trying to destroy the monopoly that Amazon had. Prior to the introduction of the agency model which gave individual publishers the power to set prices instead of the retailer, Amazon had a virtual monopoly. Apple also was not the sole benefactor of the agency model as other parties were also able to enter the space.

The DOJ is trying to rebuild barriers to entry instead of pulling them down.

Also, Canada tends to have a tradition of having judges interpret legislation based on the preamble rather than making a subjective determination. If the crown tries to bring an anti-combines lawsuit against a company, they are going to be smacked down if their case rationale contravenes either the intent of the law or the wording of the law. The intent is usually spelled out in the preamble.

in other words, while corporatiosn are held in a lot more stricter guidelines, we attempt to make them fair and reasonable and uphold those rules and regulations accross all companies and not just play favourites

PS, have you heard the ridiculous commercials bell and Roger's have been working together to put out attacking the Fed's because they're opening up the Cell networks to the highest bidder. it's downright laughable. ("We like competition! but we dont want an american company to be allowed to buy in and compete with us")

 

[RiverCitySlim]

I seriously don't understand this at all.

I make a widget. I sell it to Walmart for $5, Walmart sells it for $10. Sometimes they put it on sale for $7, but it's usually $10 - it's up to Walmart.

Target comes along and says, 'We would like to sell your widget. We'll sell it for whatever price you want as long as we get 30%. Also, you can't sell it to anyone else who will price it for less than what you sell it for here.'

If you sell the widget to Target for $7, Target sells it for $10. You now tell Walmart that it must be sold for $10 or they can't sell it.

Walmart has the choice to (a) NOT sell your widget anymore, (b) agree to sell it for $10 and not put it on sale.

What is illegal about this? It seems more free market than anything.

Walmart can always counter the offer with a better deal. Walmart is not 'stuck' with Target's deal. They have nothing to do with that. Walmart is bigger, they can refuse to carry your widget if they wanted to, and you might lose sales. It's all the free market system at work.

Walmart likely would just stop selling your widget because they could still sell widgets from the other 4 leading widget makers. Unless of course you and Target were illegally colluding with the other widget makers to make this change across the board forcing Walmart to accept the change or be forced out of the widget market entirely.

 

[itguy06]

Ugh, what a mess. On one hand, Apple and the publishers did collude to bring up prices, which is bad for consumers. On the other, Amazon's loss leader strategy with ebooks would practically create a monopoly, which is bad for consumers and the publishers. Now that this thing could be pushed all the way to 2014 is even more aggravating.

I'm just waiting for Wall Street to wake up to the fact that Amazon has yet to make a consistent profit. It takes a loss more than it profits and it generally has not been a great profit when it makes one. Reminds me of the Dotcom bubble where it was volume over profits. We all saw how that worked out.

I know Amazon is usually the last place I shop just because I don't want to make the behemoth any bigger.

 

[bsolar]

Just because you want to stick to a limited definition of predatory pricing, doesn't mean the rest of us have to. The idea that being profitable overall in eBooks excuses predatory pricing is the opinion of the DoJ.

I don't see how a predatory pricing accusation can be successful if your "predatory prices" still allow you to be profitable.

I believe that it ignores key facts about the specific market. Primarily, that eBooks are not a commodity. Best sellers are extremely important to operating a eBook store successfully. Competing against below cost pricing for best sellers is a significant barrier to new competition in the market.

That's an interesting point.

It also ignores that while Amazon may operate its eBook division at minimal profits, its operating costs are minimized through their enormous scale. Making it almost impossible for any new competition to be successful with similar pricing and margins.

I doubt you can accuse a company of unfair competition because they are "too good at minimizing operating costs".

 

[hockeyfanatic]

If Obama had a DOJ it would look like this

 

[TMay]

What I read was that Amazon's ebooks business is profitable, so it should not be making up the loss-leaders' losses with unrelated products, but with other ebooks. If as you say they make up the losses with unrelated product that would indeed be predatory pricing. Do you have any reference which backs up your claim?

To be more specific (and I did see the "estimated" profits you linked to ), Amazon hasn't delineated those profits, but given that Amazon has a long history of plowing income back into the company to minimize profits, how would anyone know?

Interestingly, each Publisher knew what Amazon paid for each title and what Amazon was selling each for. More than likely, each Publisher was tracking Amazon pricing to the customer in a very granular way. Perhaps that is why the Publishers' were so unhappy? They knew that Amazon was destroying the price of ebooks, especially best sellers.

 

[bmunge]

Interesting that the DOJ is so concerned about ebooks but completely comfortable letting cellular carrier and cable providers rake the public over the coals with absurd pricing models.

 

[BaldiMac]

I doubt you can accuse a company of unfair competition because they are "too good at minimizing operating costs".

Only if you are looking at it individually instead of in combination with the other strategies that I listed.

 

[Rocketman]

I'm just waiting for Wall Street to wake up to the fact that Amazon has yet to make a consistent profit.

That sounds socialist.

Good thing the principal gets a salary and LARGE bonus, despite the near zero margin and profits (negative). Amazon, of, by, and for, Bezos. At the public stockholder's expense!!

So much for the Amazon BoD who is tasked with stockholder interests. (P/E Infinity, oops)

Rocketman

 

[linuxcooldude]

My mistake, the publishers all settled out of court and agreed to change their business models in order to avoid going to court, being found guilty and given punitive fines. Not sure what the difference is. They're still guilty of price fixing whether they like to admit it or not.

Apple didn't settle so they will go to court, lose and end up with a big fine.

Its still a misconception. You don't plead guilty when you settle out of court and don't go to trial.

 

[TMay]

Why is Amazon's business model a problem? I'd easily bet $100 that the Apple fanatics criticizing Amazon are the same ones that will quickly take advantage of a sale on cereal, fruit, meat, etc at their local grocery store. Grocery stores sell some products at a loss ALL OF THE TIME in order to get customers into their stores. This is why they advertise lower prices on certain items on a weekly basis.

And Apple actually does the same, albeit not that often. I purchased a MBP in 2011 when Apple was offering a special on Epson printers. The price of the printer incentivized me to buy the MBP.

You fanatics really need to take off the blinders and turn off the RDF.

They are grocery stores. The bulk of their business is selling groceries. Walmart competes with not only groceries, but a department store, as does Target.

There's a story online about WINCO (Washington, Idaho, Nevada, California, Oregon) which is grocery store chain based in Boise and is an ESOP business which has shown the capability of bettering WalMart's business model in groceries while providing better service and better employee wages and benefits.

WINCO is expanding into Texas.

This is what competition looks like.

 

[Rocketman]

Its still a misconception. You don't plead guilty when you settle out of court and don't go to trial.

It's a plea bargain.

The alternative was a fine with no recourse to litigate it. Regulators have the presumption of correctness in administrative court (like a parole board). Shakedown was the most accurate term in this thread, and second place was extortion.

 

[ThisIsNotMe]

Save your Neocon/Libertarian clap trap for a political site. It wreaks of historical ignorance.

You are are arguing that it was not the 'king' progressive FDR who perverted the commerce clause via threatening to stack the supreme court?

 

[macUser2007]

A problem? Definitely. Just not a legal one.

Ah, but it is a legal problem, when it's combined with a price-fixing conspiracy.

 

[BaldiMac]

Ah, but it is a legal problem, when it's combined with a price-fixing conspiracy.

So is picking your nose.

 

[Ciclismo]

That guy buying a newspaper kinda reminds me of that guy in Italy that bought a TV station...

 

[macUser2007]

So is picking your nose.

If it's the only way to deal with the itch and if all the fingers collude to demand a diamond ring for each, then you either have to pay up, or are left with the thumbs.

Or you can "borrow" someone else's finger and be accused of piracy....

 

[linuxcooldude]

It's a plea bargain.

The alternative was a fine with no recourse to litigate it. Regulators have the presumption of correctness in administrative court. Shakedown was the most accurate term in this thread, and second place was extortion.

From I've been reading it was a settlement and not a plea bargain. While I'm no lawyer, isn't plea bargaining for criminal trials while this one is a civil trial?

 

[PracticalMac]

I bet judge uses Samsung S4 and Kindle Fire, with Win8 at home

 

[benspratling]

We're living Atlas Shrugged.

Apple is Rearden Steel.
It's just, Tim isn't standing up for it like Hank did.
There is no morally-acceptable reason to coerce someone to change their price, and thus no reason to allow the government to force someone to change their price. To do so is to legalize mob slavery.

 

[macs4nw]

.....Of particular interest is a letter from DOJ attorney Lawrence Buterman arguing that an objection to the proposed penalties by the publishers that were part of the case is direct evidence of why the penalties are needed to protect consumers.....

Update: Associated Press reports that Judge Denise Cote has denied Apple's request for a stay of the case pending appeal.

Article Link: DOJ Says Publishers Are Again Colluding in Objecting to Proposed Apple Penalty in E-Book Case

Sounds to me like the DOJ is worried that shifting public opinion, may undermine their chances of 'punishing' APPLE for not 'rolling over and playing dead'. This looks like the clearest evidence yet, the DOJ has it in for APPLE.

Not to mention, the conduct of judge Cote throughout this, has left me wondering if she is as objective and unbiased in this case, as she should be.

The DOJ is having a temper tantrum. This is what judges are for, if they have any authority remaining whatsoever. The constitution and judiciary is supposed to protect us against an overzealous government. This government is clearly overzealous.

We haven't seen zeal like this since McCarthyism in the 50's.

So the publishers collude, with or without Apple and yet Apple is the one who has to be punished. What a joke.

Wow, the DOJ is looking more and more pathetic. I'm glad that the DOJ is showing its true colors in this new accusation: paranoid and incompetent.

"Banded together"? Banded together?! Really?!
So any time more than one entity shares an opinion it's a conspiracy? Good lord.

They're looking more and more like bullies, who want to curb free speech by a group of people, opposing the DOJ's witch-hunt.

Don't you just LOVE the progressive perversion of the commerce clause being used as a tool to tell business what they can and cannot do? You make it impossible for a corporation to conduct business in the United States and then bitch and moan when they offshore jobs and keep profits overseas. Why would a corporation reward a population and the government it elects when that population/government does everything within its legal (and made up) power to prevent that corporation from doing business? Fight the good fight Apple.....

Well put! I'm not saying, that some limits aren't needed, but looking at all angles of this case, there's clearly something fundamentally wrong here.

The publishers didn't fight the case and have already paid the damages awarded against them. Only Apple chose to fight the case.

Then, why is their speaking out now, an argument for fines against APPLE?

How about DOJ investigate
- Amazon's predatory monopoly
- high health care price in the US
- Google / Samsung using SEPs as weapons

Good one!

It's been said that APPLE's lack of political contributions, may have something to do with this whole seemingly one-sided attack on free enterprise, and I can't help but wonder if there's merit in that idea. On the one hand, we have a huge company dumping books, in some instances below cost, and thereby all but eliminating small independent bookstores, while putting (by their sheer size) the squeeze on authors and publishers, all the while receiving tacit approval for these practices from our government, while on the other hand we have APPLE and the five big publishers saying, this is an unsustainable model for the long term, and we need to increase the prices somewhat, so the industry as a whole, can thrive into the future.

I'm not saying, APPLE's solutions were totally altruistic, admittedly they wanted their 30% cut, and they were also anxious to break up AMAZON's stranglehold on book sales, but in addition to that, I believe they also wanted a healthier overall marketplace for books, where not only they, but also authors as well as publishers could thrive. AMAZON clearly had no interest in the long term interests of either publishers or authors.

Political contributions of all kind, and especially super Pacs, while being an accepted and arguably necessary part of our political system, are really grease money, and in essence, a form of corruption. Money paid to support candidates/parties/ideologies now, with the expectation of political goodwill, or special considerations later, hopefully.

Good on APPLE, that they have largely resisted such 'corruption' until now, however it looks like they are now being punished for not playing 'nice' with the big boys.

 

[mudman2]

Apple should just kill iBooks going forward and dump any other book reader apps.

That way "some" can continue for free and anyone who wants a reader can buy a google type tablet

People don't buy iPad for its book reader