DoJ: Apple considered 'illegally dividing the digital content world with Amazon'

Posted:
in General Discussion edited January 2014


In its newly filed lawsuit against Apple, the U.S. Department of Justice asserts that the iPad maker considered a content partnership with Amazon that would have allowed Apple to "own" digital delivery of audio and video.



The justice department's complaint doesn't go into detail, but does suggest that Apple considered forging a deal with Amazon. The sentence in the lawsuit, noted by All Things D, suggests Amazon would have retained control of the e-book market while Apple stuck to video and audio.



"in addition to considering competitive entry at that time, though, Apple contemplated illegally dividing the digital content world with Amazon, allowing each to 'own the category' of its choice — audio/video to Apple and e-books to Amazon," the lawsuit reads.



Because the Department of Justice doesn't explain this accusation, author Peter Kafka noted that "it's not uncommon for lawsuits to contain big helpings of theatrics, with accusations and context that won't end up having any bearing in court."



Though the alleged deal between Apple and Amazon never came to pass, the department still believes that Apple colluded with book publishers to fix prices of digital content. It filed suit against Apple and the publishers on Wednesday in a New York district court.



Named in the suit in addition to Apple are Hachette, HarperCollins, Simon & Schuster, Penguin and Macmillan. Filings in court revealed that Simon & Schuster, Hachette and HarperCollins have already settled with the department to avoid the suit, while Macmillan and Penguin intend to fight the complaint.











Now, the government is seeking a settlement from the hold-outs — Apple, Macmillan and Penguin — that would allow Amazon and others to return to a "wholesale model." That would allow retailers to set the prices for the books they sell.



A total of 16 states have also joined the fray against Apple and book publishers by filing their own lawsuits. They claim that the agreements made with Apple have cost consumers $100 million.



Connecticut Attorney General George Jepsen said that settlements reached with Hachette and HarperCollins will pay out $52 million in "consumer restitution." States involved in the complaint are Alaska, Arizona, Colorado, Illinois, Iowa, Maryland, Missouri, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Vermont, and West Virginia.



With the launch of its iBooks platform, Apple convinced e-book publishers to switch to an "agency model" for sales, allowing them to set prices. Previously, Amazon used a "wholesale model" in which it would set its own prices, sometimes even at a loss, and upset publishers.



[ View article on AppleInsider ]

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Comments

  • nagrommenagromme Posts: 2,834member
    ?Apple convinced e-book publishers to switch to an "agency model" for sales, allowing them to set prices. Previously, Amazon used a "wholesale model" in which it would set its own prices, sometimes even at a loss, and upset publishers.?



    Which is it? Did Apple have to convince publishers to switch away from the agency model to a model Apple wanted, or were the publishers themselves upset by the agency model?
  • theunfetteredmindtheunfetteredmind Posts: 494member
    Quote:
    Originally Posted by AppleInsider View Post


    Connecticut Attorney General George Jepsen said that settlements reached with Hachette and HarperCollins will pay out $52 million in "consumer restitution."



    And this 52 million will obviously go back to the consumers and not the government.



  • mbarriaultmbarriault Posts: 237member
    Apple convinced publishers to switch to their model, which has made it impossible for Amazon to compete.



    Apparently this is better than Amazon's model which made it impossible for anyone else to compete?
  • macvictamacvicta Posts: 346member
    Yeah right. That accusation is just tripe for the NYTimes to splash across its front page, further painting Apple as a big bad bully.
  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by AppleInsider View Post


    Because the Department of Justice doesn't explain this accusation, author Peter Kafka noted that "it's not uncommon for lawsuits to contain big helpings of theatrics, with accusations and context that won't end up having any bearing in court."



    That's the most important sentence in the article. Lots of theatrics.



    Quote:
    Originally Posted by mbarriault View Post


    Apple convinced publishers to switch to their model, which has made it impossible for Amazon to compete.



    Apparently this is better than Amazon's model which made it impossible for anyone else to compete?



    Let's see if we can follow this:



    1. Amazon had a strong majority (something like 80% or more) of the eBook market.

    2. Amazon says that Apple's pricing model means that consumers have to pay more.

    3. Amazon was known to be selling many items at a loss.



    So if Amazon simply matches Apple's pricing model, they'd be making MORE money, not less. So why can't Amazon compete?
  • Quote:
    Originally Posted by TheUnfetteredMind View Post


    And this 52 million will obviously go back to the consumers and not the government.







    I can't wait to get my check for 1/7 of $1.
  • feynmanfeynman Posts: 1,087member
    Quote:
    Originally Posted by TheUnfetteredMind View Post


    And this 52 million will obviously go back to the consumers and not the government.







    Yeah just imagine what the public schools could do with 52 million.
  • christophbchristophb Posts: 1,366member
    Quote:
    Originally Posted by Feynman View Post


    Yeah just imagine what the public schools could do with 52 million.



    Football stadiums.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Feynman View Post


    Yeah just imagine what the public schools could do with 52 million.



    Hire 10 super-intendents at 520k per year for 10 years?



    Hire Bain Capital for $52 million to see how they can save money by getting rid of teachers and books?
  • christophbchristophb Posts: 1,366member
    Quote:
    Originally Posted by SolipsismX View Post


    Hire 52 super-intendents at 520k per year for 10 years?



    Hire Bain Capital for $52 million to see how they can save money by getting rid of teachers and books?



    $52 million is ~1/20th of Austin ISD's 2011 - 2012 adopted budget.
  • mbarriaultmbarriault Posts: 237member
    Quote:
    Originally Posted by jragosta View Post


    That's the most important sentence in the article. Lots of theatrics.







    Let's see if we can follow this:



    1. Amazon had a strong majority (something like 80% or more) of the eBook market.

    2. Amazon says that Apple's pricing model means that consumers have to pay more.

    3. Amazon was known to be selling many items at a loss.



    So if Amazon simply matches Apple's pricing model, they'd be making MORE money, not less. So why can't Amazon compete?



    I think you just further proved my point, that the lawsuit is ridiculous and is designed to favour Amazon.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by ChristophB View Post


    Football stadiums.



    I wonder how much a HS football stadium costs. Is $52 million enough?
  • john.bjohn.b Posts: 2,617member
    God forbid anyone impinges on Amazon's monopoly...
  • solipsismxsolipsismx Posts: 19,566member
    In other news, the DoJ retroactively files suit against Netscape for selling their browser at a profit when MS's Internet Explorer was given away, thus customers pay less.
  • isheldonisheldon Posts: 570member
    Sounds to me like this was retaliation of Apple going after Amazon for pushing $69cent songs and taking away market share. But in this case Apple coludes with the publishers to drive up the price of eBooks. Bad Apple.

    This is some serious sheet.
  • [greg][greg] Posts: 78member
    Quote:
    Originally Posted by SolipsismX View Post


    Hire 52 super-intendents at 520k per year for 10 years?



    Hire Bain Capital for $52 million to see how they can save money by getting rid of teachers and books?



    52*520k*10≠52MM



    Anyway, those both sound like marvelous options, but how beautifully ironic would it be if they bought iPads for students?
  • charlitoscharlitos Posts: 2member
    Quote:
    Originally Posted by jragosta View Post


    That's the most important sentence in the article. Lots of theatrics.







    Let's see if we can follow this:



    1. Amazon had a strong majority (something like 80% or more) of the eBook market.

    2. Amazon says that Apple's pricing model means that consumers have to pay more.

    3. Amazon was known to be selling many items at a loss.



    So if Amazon simply matches Apple's pricing model, they'd be making MORE money, not less. So why can't Amazon compete?



    If Amazon were to set their prices at the level of what Apple charges through their iBooks plattforms customers will have very little incentive to get the content off Amazon as iOS makes it easier and more intuitive to get it off Apple. Amazon can only compete by having the option to sell for the same content cheap(er).
  • correctionscorrections Posts: 1,110member
    DoJ hasn't batted an eye at the banking institutions that conspired to destroyed the US economy through fraud, but it sees a case in publishers selling ebooks on the open market for $13 rather than $10.



    WTF.



    What an incompetent bunch of morons. Or perhaps just tools of the system. It's getting hard to take America seriously anymore.



    Maybe the $52 million can be invested into the domestic army seeking to invade citizens' homes looking for marijuana. It would probably buy two paramilitary tanks or a set of flack jackets and rocket launchers for the ATF to pursue its policy of prohibition via domestic terrorism.



    Next up: investigate the Facebook conspiracy to sell virtual farmland for nonsense points. Then take down the tech cabal offering free email accounts in an effort to bankrupt the US Postal Service.



    Maybe rig the election for Romney and send the US from quasi-fascist republic to a full on military theocracy where you get thrown in prison unless you tithe the mormons.
  • gerbintogerbinto Posts: 12member
    Quote:
    Originally Posted by jragosta View Post


    That's the most important sentence in the article. Lots of theatrics.







    Let's see if we can follow this:



    1. Amazon had a strong majority (something like 80% or more) of the eBook market.

    2. Amazon says that Apple's pricing model means that consumers have to pay more.

    3. Amazon was known to be selling many items at a loss.



    So if Amazon simply matches Apple's pricing model, they'd be making MORE money, not less. So why can't Amazon compete?







    OK, lets explain this again because some of you are not getting the point.







    Amazon is competing by offering a lower price. Now when the top 6 publishers collude with Apple, set a e-book price, and tell Amazon to accept the same terms or lose their business, then that is illegal. Amazon could not lower prices in order to force competition. How come Apple just couldn't follow Amazon's suit and take a loss? Are you really defending the corporations bottom line? So you would rather pay more, and line the companies pocket, instead of saving money?





    Please do not be blinded because this is Apple. Every corporations bottom line is to get as much money as they can. We should all be on the side of the consumer, not the company. If Google colluded with the RIAA, set the price of MP3 songs and then forced Apple to raise their price, I would assume everyone would be up in arms against this.



    Apple, Google, Amazon, MSoft are all great companies, however that doesn't mean I want to be screwed out of my hard earned money by them.
  • isheldonisheldon Posts: 570member
    Quote:
    Originally Posted by mbarriault View Post


    Apple convinced publishers to switch to their model, which has made it impossible for Amazon to compete.



    Apparently this is better than Amazon's model which made it impossible for anyone else to compete?



    Right- just like Steve Jobs and Apple convinced the music industry to let it sell using a $99 cent per song model.

    Who could compete with that?

    Tower?

    Virgin?

    All gone.
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