Legal Experts Suggest Justice Department Unlikely to Win Antitrust Suit Against Apple

[blow45]

You have proof of Apple's being complicit in the price-fixing scandal? I thought that was going to be determined by the courts. But since you already have it settled, I guess the DoJ should contact you for your insight into this case. As for the 30%, that's the distribution fee Apple charges for participating in its online store. It's the same cut for books, apps, etc.

When I read SJ's memos to the publishers about set prices and when I see 4 or so out of the 6 of them having already settled, I think I can make a rather good guess if they were or were not complicit. I don't need to have a case settled to form my own opinion if what is alleged did or did not take place.

The 30% cut in the app store does not imply pre-set book prices by publishers in tandem. If apple wanted to go with the agency model they should have managed the % cut on a per book basis according to their store management and not opt to allegedly collude with publishers to ensure both their 30% and higher profits for the publishers and make an illegal trust move against a competitor whose model of business is based on discounting books.

 

[vrDrew]

Apple has a lot to lose, first and foremost being their reputation..

Consumers don't care.

They don't care about Anti-Trust lawsuits any more than they care about Apple's legal fights over patents. And only a very tiny minority of consumers really care very much about Chinese Foxconn workers.

Consumers care about a company's reputation only to the extent that it might impact THEM (think cyanide in their Tylenol, or their Audi suffering "unintended acceleration") - but "social" issues like this: Its a noisy handful of malcontents (you know who you are..) who weren't buying a lot of e-books from Apple to begin with.

 

[JohnDoe98]

Educate yourself before repeating this. Btw, apple's strategy of setting artificially high and set prices with publishers to guarantee them a 30% per sale is a strategy that is supposed to benefit the consumer right and NOT drive out the competition?

The things you read in these forums...

Funny, for someone telling others to educate themselves before posting, you should have done the same. Apple's Agency Model was setup to let the Publishers set the price, just so long as whatever the price is, 30% goes to Apple. And don't try and twist things by saying that because Apple is guaranteed the lowest possible price, they are setting any fixed price. That's an obvious non-sequitur.

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When I read SJ's memos to the publishers about set prices

Source please.

and when I see 4 or so out of the 6 of them having already settled, I think I can make a rather good guess if they were or were not complicit. I don't need to have a case settled to form my own opinion if what is alleged did or did not take place.

Nice to see you employ and rely upon guilt-by-association reasoning.

The 30% cut in the app store does not imply pre-set book prices by publishers in tandem. If apple wanted to go with the agency model they should have managed the % cut on a per book basis according to their store management and not opt to allegedly collude with publishers to ensure both their 30% and higher profits for the publishers and make an illegal trust move against a competitor whose model of business is based on discounting books.

Source please.

 

[IJ Reilly]

Consumers don't care.

They don't care about Anti-Trust lawsuits any more than they care about Apple's legal fights over patents. And only a very tiny minority of consumers really care very much about Chinese Foxconn workers.

Consumers care about a company's reputation only to the extent that it might impact THEM (think cyanide in their Tylenol, or their Audi suffering "unintended acceleration") - but "social" issues like this: Its a noisy handful of malcontents (you know who you are..) who weren't buying a lot of e-books from Apple to begin with.

Oh, yes they do. Microsoft suffered a public relations nightmare fighting the DoJ in the way they did it. They came off looking arrogant, dishonest and totally self-serving. The results could be even worse in Apple's case, since it will look like Apple is colluding with publishers to raise prices to book readers, and are willing to go to the mat to defend the practice. People do care about that sort of thing. Apple will face waves of negative PR, and they will deserve it. Reputation is goodwill, and it's gold. Once lost it is hard to get back.

 

[BaldiMac]

Yeah of course, once we are talking foxconn we are talking cheaper, when we switch to ibooks cheaper isn't everyone's concern, but the interests of the reading public and independent bookstores that apple is safeguarding by .

Funny how different people have different opinions on different topics.

What does that have to do with their general clout and power they can leverage via the proliferation of their devices?

It has to do with putting the claim that I was responding to in context.

It's obvious that in two years they would have a 7% or so percentage because they have only been selling much (much) fewer titles and for only two years. Actually it's a testament to their clout that in two years they've managed to go up to 7% with as few as the books they sell in comparison to other outlets.

I have no idea what you were getting at here. The statistics were for the number of paid ebooks downloaded in the preceding 6 months.

This is bs that has been repeated here to the point of stupidity. Amazon isn't losing money on each sale. They have select loss leaders in ebooks. Educate yourself before repeating this.

Are you just being argumentative? Obviously, I was referring to the loss leader sales, not all sales.

Btw, apple's strategy of setting artificially high and set prices with publishers to guarantee them a 30% per sale is a strategy that is supposed to benefit the consumer right and NOT drive out the competition?

No, Apple's strategy is supposed to benefit Apple by appealing to consumers and publishers. Are you looking for a strawman to argue with?

 

[Huracan]

I stand corrected then. I thought Apple was using epub with DRM, I didn't realize only their software could read them.

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What makes you think Apple wants DRM? The second the Music industry allowed it, didn't they remove it from their music store? Also, I think a lot of us are basing ourselves on what Walter Isaacson reports in the Steve Jobs biography. If you have a better source, please share it with the rest of us.

Oh and for the record, you can strip the DRM and use the book on any device you want, legally. Just like we did with music when we ripped CDs.

I'm willing to stand corrected. I didn't imply that Apple likes DRM. I was just stating that I would prefer books not to have DRM. I would be much more willing to pay for an ebook if I knew I could strip the DRM and then read it wherever I want, legally as you say, not trying to do something illegal.

Answering to other criticism. Books costing less doesn't mean that we lose a lot in quality. We have a lot of open source code, or the apps themselves are sometimes inexpensive. I also didn't mean books costing 0, I meant cheaper by eliminating the overhead of the monopoly. I fully expect authors to make money, also publishers, or anybody who adds value to the product. However, I think we can easily agree that gouging, or gratuitous overhead in the price doesn't benefit the consumer. In the meantime I am quite happy reading a lot of classic free books and buying physical books or borrowing from the library for contemporary literature.

 

[vrDrew]

Oh, yes they do. Microsoft suffered a public relations nightmare fighting the DoJ in the way they did it.

With the result that Microsoft enjoyed hundreds of billions in profits and a comfortable two decades (and counting) as by far the dominant supplier of operating system and office productivity software.

Some setback.

Let me say it one more time: Normal people don't care. Its only the raging Applephobics who haunt this (and other) internet forums who are wallowing in what can only be described as Schadenfreude over this sort of news. And, judging from the quality of most of their posts, those people don't read too much to begin with.

 

[blow45]

Funny how different people have different opinions on different topics.

It's funny how when it comes to foxconn it's apple taking care of the customer by producing cheap, and when it comes to price fixing with books it's "price isn't all that's important"

It has to do with putting the claim that I was responding to in context.

What context did you put it in? That apple do not have clout and somehow 7% of ebooks sold in two years from a store with not that much content is somehow supposed to be low, and that apple are the underdog here who are fighting the big bully amazon?

I have no idea what you were getting at here. The statistics were for the number of paid ebooks downloaded in the preceding 6 months.

Don't worry others read the forums too and they have.

Are you just being argumentative? Obviously, I was referring to the loss leader sales, not all sales.

There is a downside to competing on price alone. (Especially when the market leader is willing to lose money on each sale to drive out the competition.)

Emphasis mine. Funny I thought on each sale might mean all sales.

@John Doe, John I won't reply to your comments to what I said, they speak for themselves, and it becomes pointless after a while, and I do not have to source current news items in commentary, this is not wikipedia, learn to google.

 

[IJ Reilly]

With the result that Microsoft enjoyed hundreds of billions in profits and a comfortable two decades (and counting) as by far the dominant supplier of operating system and office productivity software.

Some setback.

Let me say it one more time: Normal people don't care. Its only the raging Applephobics who haunt this (and other) internet forums who are wallowing in what can only be described as Schadenfreude over this sort of news. And, judging from the quality of most of their posts, those people don't read too much to begin with.

Yeah, Microsoft is doing great. They've released lots of new and successful products and consumers just love them. Sure. AND, I never said "setback," I said bad PR.

Let me say this one more time: Normal people care. PR matters in any business and even more so in a consumer products business. In fact, the less a person pays attention to the details, the more they will be influenced by the general tone of what they hear on TV and read in online media. The narrative will be that Apple conspired make consumers pay more for ebooks. In fact, it already is. The only question is how long that headline will run and how much damage it does.

 

[JohnDoe98]

@John Doe, John I won't reply to your comments to what I said, they speak for themselves, and it becomes pointless after a while, and I do not have to source current news items in commentary, this is not wikipedia, learn to google.

That's ok. But typically when people ask for the sources it's because they have done the searching and came up empty. The implication is that no such source exists. But we are willing to give you the benefit of the doubt, hence the request. But hey, if you don't want to defend what you spew, that's cool. That behavior will speak for itself too, just as the tendency to accept whatever a news source tells you, without evaluating its merits.

 

[blow45]

With the result that Microsoft enjoyed hundreds of billions in profits and a comfortable two decades (and counting) as by far the dominant supplier of operating system and office productivity software.

Some setback.

Having come to be known as the most despised software company and paving the way for apple to overtake them...No it wasn't really a set back...

Let me say it one more time: Normal people don't care. Its only the raging Applephobics who haunt this (and other) internet forums who are wallowing in what can only be described as Schadenfreude over this sort of news. And, judging from the quality of most of their posts, those people don't read too much to begin with.

So it's just applephobics with reading comprehension problems... I hope you understand how inadvertently you have exposed your elitism and your disdain for "normal" people who couldn't care less if major corporations are involved in price fixing trusts to their detriment, because after all they are just "normal" people how could they understand enough to care...

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That's ok. But typically when people ask for the sources it's because they have done the searching and came up empty. The implication is that no such source exists. But we are willing to give you the benefit of the doubt, hence the request. But hey, if you don't want to defend what you spew, that's cool. That behavior will speak for itself too, just as the tendency to accept whatever a news source tells you, without evaluating its merits.

One last time I am humouring you although your level of posting does not merit it:

Jobs’ own email to a publisher proves to be quite damning with Jobs stating that the publishers could work with Apple or pursue one of two other choices: “Keep going with Amazon at $9.99” or “hold back your books from Amazon.”

http://idealab.talkingpointsmemo.com/2012/04/apple-publishers-sued-for-e-book-price-fixing.php

He wrote one of the publishers in an email published by the DOJ, "Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99

http://www.dailytech.com/article.aspx?newsid=24447

 

[BaldiMac]

It's funny how when it comes to foxconn it's apple taking care of the customer by producing cheap, and when it comes to price fixing with books it's "price isn't all that's important"

The problem is that I'm not the same person that made the comments about Foxconn that you made up. Nor do I agree with them.

What context did you put it in? That apple do not have clout and somehow 7% of ebooks sold in two years from a store with not that much content is somehow supposed to be low, and that apple are the underdog here who are fighting the big bully amazon?

Amazon is currently dominating the ebook market two years after Apple entered the market, despite Apple's "huge advantages". Please stop trying to make this a fanboy argument.

Don't worry others read the forums too and they have.

That's very helpful.

Emphasis mine. Funny I thought on each sale might mean all sales.

You were incorrect.

 

[itickings]

This idea is silly. If the business model is to pay by the word or by the letter, this will drive writers to write longer books with little decent content in an attempt to make more money.

Already happening. While at university, I found that the more words a textbook used to describe something (without really adding anything of value), the more likely it was that the author was american. Sad but true. Most likely paid based on the amount of text.

Editors would go thesaurus crazy to replace short words with similarly defined longer ones. Then society will start to speak in long, verbose gibberish because that's what they're reading.

Don't be silly. It's not like people are reading books anyway.

It's the quality of the content that should be the overwhelming reason to purchase a particular book, not the price per word ratio. Shakespeare shouldn't be on the same level as a Harlequin romance novel.

By your logic, I take it you want everyone to speak as if they were part of a Harlequin romance novel (or to utter ancient gibberish á la Shakespeare, it is not entirely clear which one you consider to have the highest quality of content or which direction the value scale should go).

No, the quality of the content should certainly not be the overwhelming reason to purchase a book. It is better to buy a book you'll actually read and like than to buy one with amazing quality content that will never be read.

 

[BaldiMac]

Jobs’ own email to a publisher proves to be quite damning with Jobs stating that the publishers could work with Apple or pursue one of two other choices: “Keep going with Amazon at $9.99” or “hold back your books from Amazon.”

http://idealab.talkingpointsmemo.com/2012/04/apple-publishers-sued-for-e-book-price-fixing.php

He wrote one of the publishers in an email published by the DOJ, "Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99

http://www.dailytech.com/article.aspx?newsid=24447

I'm at a loss as to what you could find to be illegal about either of these statements.

 

[JohnDoe98]

One last time I am humouring you although your level of posting does not merit it:

Based on the level of your posts, I could say I'm glad you don't think my posts merit responses. In any case, thanks for those links. Sadly they don't reveal very much, nor do your quotes. The evidence is scarce and in a truncated form. I believe in innocence until proven guilty, and the lack of appropriate context here, i.e. the full email in context, dams the evidence. There are multiple reasonable explanations that could be offered so absent the full disclosure, I don't think there is sufficient evidence to warrant a conjecture of guilt. I guess we'll see what happens in the courts soon enough. You seem content with allegations, where for my part, I think one should restrain from jumping on bandwagons and painting too liberally with the guilt brush.

 

[Plutonius]

I believe apple will settle

I doubt it. In most cases, the DoJ wins because the defendant doesn't have the money, lawyers, and will to fight. Apple can and has the will to fight and the DoJ is losing this fight.

 

[blow45]

I'm at a loss as to what you could find to be illegal about either of these statements.

Oh absolutely nothing, a direct request to publishers to "hold back books from amazon" has no illegal trust connotations whatsoever, and apparently the DoJ apparently hires pole dancers instead of lawyers that's why they are using it as evidence.

 

[IJ Reilly]

I doubt it. In most cases, the DoJ wins because the defendant doesn't have the money, lawyers, and will to fight. Apple can and has the will to fight and the DoJ is losing this fight.

Wrong. Microsoft had plenty of money to fight, and lost -- because they'd actually broken the law. In the process of fighting the charges, the people who ran Microsoft came off looking like a bunch of arrogant, smarmy punks. Most companies settle antitrust complaints without going to trial, not simply because they would probably lose if they fought, but because they can lose even if they win.

 

[BaldiMac]

Oh absolutely nothing, a direct request to publishers to "hold back books from amazon" has no illegal trust connotations whatsoever, and apparently the DoJ apparently hires pole dancers instead of lawyers that's why they are using it as evidence.

That's just bull. Jobs didn't request publishers hold back books from Amazon. He presented that as one of three options that the publishers had to to deal with their concern with their increasing reliance on Amazon. He stated a fact.

 

[techkidd4400]

I thought it was due to the "Most Favored Nation" clause?

Thank god someone made a comment AFTER reading the damn complaint.

 

[itickings]

That seems very elitist. Did you go to one of those fancy Eastern Ivy League universities?

Hmm, now that you mention it, I think you're actually on to something again.

Packing a book with many short words will deliver far more content per page than the equivalent number of longer words. More content per page is obviously better both for the consumer and for the environment. Less trees are annihilated in case of traditional books, and less electrons wasted for delivery and storage in case of e-books.

Note that none of the suggested measures for finding what book (and where) to purchase that provides the best value per amount of money is doing anything to counter illegal price fixing. If the publishers and/or resellers conspire, you'll get the best valued book but even that one will be more expensive than it should.

 

[blow45]

That's just bull. Jobs didn't request publishers hold back books from Amazon. He presented that as one of three options that the publishers had to to deal with their concern with their increasing reliance on Amazon. He stated a fact.

an "option" to withhold products from the competition and align with the business practice you are demanding is the very definition of collusion.

 

[MacDav]

You don't have your own spin?

QFT. The CNET article is heavily spun, which is not surprising considering who wrote it. Legal analysts are going to be all over the map at this point, if only because they've seen only the government's complaint, not Apple's or the publisher's responses. But if you quote libertarian think tanks you are going to get predicable results.

Obviously it's the publishers who are at the pointiest end of the stick, but I don't think Apple needs to have been present at any meetings to be found a party to price fixing. It's going to be difficult to claim that all of these publishers came to the same terms with Apple by mere coincidence. The one quoted email from Jobs pretty much refutes that theory anyway.

All antitrust cases are difficult for the government to prosecute. Citing the DoJ's failures in recent history isn't telling close to the whole story, since most of these cases never make it to trial. They are overwhelming settled out of court by consent decrees, in which the government typically gets at least some of the changes they are seeking. Mr. McCullagh doesn't share that little factoid with us because it doesn't make the government look blithering.

Scott Turow president of the Authors Guild says:

Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open... Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90 percent to roughly 60 percent... Brick-and-mortar bookstores are starting to compete through their partnership with Google, so loyal customers can buy e-books from them at the same price as they would from Amazon. Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition... The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.

 

[BaldiMac]

an "option" to withhold products from the competition and align with the business practice you are demanding is the very definition of collusion.

No, it's not. Collusion, in the context of price fixing, is an illegal agreement between suppliers or between buyers. The presentation of options between a single buyer and a single supplier is called "negotiation".

 

[zaphon]

Scott Turow president of the Authors Guild says:

Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open... Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90 percent to roughly 60 percent... Brick-and-mortar bookstores are starting to compete through their partnership with Google, so loyal customers can buy e-books from them at the same price as they would from Amazon. Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition... The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.

There's not a whole lot of competition involved when everyone is selling the same item for the same price. Prior to this "agency" model, e-books we're sold via a "wholesale" model and than each individual company could choose how much they sold the book for. They could adjust their profit margin accordingly in order to compete and draw people to their stores (B&M or electronic). That all went away with the "agency" model.