DoJ seen as unlikely to win antitrust e-book suit against Apple

Posted:
in General Discussion edited January 2014


Experts who have reviewed the U.S. Department of Justice antitrust case against Apple over alleged price fixing of e-books believe that the government will likely lose.



The justice department "has a far better case against the publishers than Apple," Dominick Armentano, professor emeritus of economics at the University of Hartford, said in an interview with CNet. He's not alone, as others believe it will be hard to prove that Apple took part in a "conspiracy" to raise the prices of e-books, as the DoJ has asserted.



The defendants are seen as aided by a series of rulings by the U.S. Supreme Court in the 1970s. Specifically, the court ruled in the 1979 BMI vs. CBS case that "not all arrangements among actual or potential competitors that have an impact on price are per se violations."



Georffrey Manne, an antitrust professor at the Lewis and Clark Law School in Oregon also agreed that the government will have a harder case against Apple than it will against book publishers.



"The government will have to show that Apple had some kind of involvement in the original arrangement," he said.



Complicating matters even further is the fact that Amazon has dominated e-book sales for years, with some going as far as to say that Amazon held a "monopoly" in the market. Publishers were frustrated that Amazon frequently sold e-book titles well below their retail price, and sometimes even at a loss, which would cut out competitors like retail bookstores.



One of the two publishers standing with Apple and fighting the justice department is Macmillan. Responding to the lawsuit filed on Wednesday, Macmillan CEO John Sargent issued a public letter stating that his company did not act illegally or collude in agreeing to switch to an "agency model" for book sales.











"I am Macmillan's CEO and I made the decision to move Macmillan to the agency model," he wrote. "After days of thought and worry, I made the decision on January 22, 2010 a little after 4:00 AM, on an exercise bike in my basement. It remains the loneliest decision I have ever made, and I see no reason to go back on it now."



Sargent said he has chosen to fight the lawsuit from the justice department because the terms demanded by the DoJ were "too onerous." He feels they would allow Amazon to return to a "monopoly position" that the online retailer was building before most publishers switched to the agency model.



"When Macmillan changed to the agency model we did so knowing we would make less money on our e book business," he said. "We made the change to support an open and competitive market for the future, and it worked. We still believe in that future and we believe the agency model is the only way to get there."



Late Apple Chief Executive Steve Jobs himself said publishers aligned with Apple and chose the agency model for pricing because they "hated" Amazon's methods. Jobs said that Amazon had "screwed it up," and drove away publishers.



Speaking with biographer Walter Isaacson, Jobs said Apple courted publishers by offering them the ability to set the price, while Apple would take a 30 percent cut of sales through its iBookstore for iOS. Apple also asked for a guarantee that the iBookstore could match prices if books were sold cheaper elsewhere.



The publishers agreed, and then, according to Jobs, told Amazon that it, too, had to sign a contract to sell books under the agency model.



"Give the situation that existed, that was best for us to do this aikido move and end up with the agency model," Jobs said. "And we pulled it off."



[ View article on AppleInsider ]

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Comments

  • apple ][apple ][ Posts: 7,835member
    Eric Holder is a clown. I hope that he's out of a job soon.
  • isheldonisheldon Posts: 570member
    BHO's Obamacare is also weak as to its Constitutionality so why are we not surprised here?
  • island hermitisland hermit Posts: 6,217member
    Quote:
    Originally Posted by iSheldon View Post


    BHO's Obamacare is also weak as to its Constitutionality so why are we not surprised here?



    Oh, fuck... here we go with this crap!
  • isheldonisheldon Posts: 570member
    Quote:

    "Give the situation that existed, that was best for us to do this aikido move and end up with the agency model," Jobs said. "And we pulled it off."



    I say BS. Imagine if when Microsoft announced their Zune player and with the music industry made Apple up their per song price to $5.

    SJ was a master at spinning BS- the biography shows this over and over. He wanted eBook share in line with Apples digital music share hence the iBook store.

    The fact that Amazon had to drive their prices up must have given no end to his glee.
  • cmvsmcmvsm Posts: 204member
    Quote:
    Originally Posted by iSheldon View Post


    BHO's Obamacare is also weak as to its Constitutionality so why are we not surprised here?



    Yeah, bi-partisan healthcare legislation passed by Congress is so much like the eBook controversy. Flush your head gear out new guy. You want to bash Obama, this is not the forum to do it.
  • freckledbruhfreckledbruh Posts: 520member
    Quote:
    Originally Posted by iSheldon View Post


    I say BS. Imagine if when Microsoft announced their Zune player and with the music industry made Apple up their per song price to $5.

    SJ was a master at spinning BS- the biography shows this over and over. He wanted eBook share in line with Apples digital music share hence the iBook store.

    The fact that Amazon had to drive their prices up must have given no end to his glee.



    Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.
  • jcdinkinsjcdinkins Posts: 28member
    Quote:
    Originally Posted by freckledbruh View Post


    Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.



    This post will bring no significant value to it's readers. It is just to say freckledbruh hit that nail right on the head. Period.
  • christophbchristophb Posts: 1,366member
    Quote:
    Originally Posted by Apple ][ View Post


    Eric Holder is a clown. I hope that he's out of a job soon.



    Well, I'm gonna wait to see the evidence that backs up the complaint. DoJ thinks they have a case; I'd like to see it go to trial instead of a settlement. If there are illegalities, let's get the courts to review and rule. Regardless who runs Justice, there seems to be this method to threaten suit and getting a settlement somewhere below the cost of litigation instead of having rulings that set legal precedent.



    Edit: I'm pleased that Apple and some publishers have the stones to take it to trial.
  • isheldonisheldon Posts: 570member
    Quote:
    Originally Posted by cmvsm View Post


    Yeah, bi-partisan healthcare legislation passed by Congress is so much like the eBook controversy. Flush your head gear out new guy. You want to bash Obama, this is not the forum to do it.



    Bipartisan? Not one Republican vote cast for it in the House. Get your facts straight. Facts speak for themselves. No bashing required.
  • solipsismxsolipsismx Posts: 19,566member
    While this is what I and many others have been saying since this came up I'm sure we'll see another article shortly saying how DoJ has a strong case against Apple.





    Quote:
    Originally Posted by freckledbruh View Post


    Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.



    Don't forget they also offered Amazon a higher bit rate, too.
  • Quote:
    Originally Posted by ChristophB View Post


    Well, I'm gonna wait to see the evidence that backs up the complaint.







    Did you read the complaint? It looks like they have plenty of evidence. It does not paint a pretty picture, and I did not fully understand the basis for some of the allegations until I read it.



    If the allegations are proven, what will you conclude?
  • isheldonisheldon Posts: 570member
    Quote:
    Originally Posted by freckledbruh View Post


    Replace Microsoft with Amazon and that actually did happen with music. Apple wanted to strip drm from its tracks and music companies refused. They then went to Amazon and allowed them not only to sell drm free tracks but for a lower price than Apple. When they allowed apple to strip the drm, apple had to raise its prices. No DoJ involvement there.



    Quote:
    Originally Posted by jcdinkins View Post


    This post will bring no significant value to it's readers. It is just to say freckledbruh hit that nail right on the head. Period.



    No comparison - Amazon wasn't selling a music device as a disguise to sell music.
  • lkrupplkrupp Posts: 3,841member
    Quote:
    Originally Posted by ChristophB View Post


    Well, I'm gonna wait to see the evidence that backs up the complaint. DoJ thinks they have a case; I'd like to see it go to trial instead of a settlement. If there are illegalities, let's get the courts to review and rule. Regardless who runs Justice, there seems to be this method to threaten suit and getting a settlement somewhere below the cost of litigation instead of having rulings that set legal precedent.



    Edit: I'm pleased that Apple and some publishers have the stones to take it to trial.



    It will NEVER go to trial. There are only two possibilities.



    1. Apple will realize it can't win and settle.



    2. The DOJ will realize it can't win and withdraw the suit, just like they did with IBM.



    I predict #2
  • Quote:
    Originally Posted by iSheldon View Post


    No comparison - Amazon wasn't selling a music device as a disguise to sell music.



    You may go too far in your allegation - Apple made plenty of money on the hardware too.



    But your point is interesting. Apple seems to increasingly rely on the potential for ecosystem sales when designing products. I saw the Apple TV in an Apple Store, and the demo was all about buying more shit (entertainment content, specifically) from Apple.



    The Kindle Fire seems to directly fit the model of a product being in large part a conduit for future sales. Some people have spoken badly of it due in large part to that perception.



    Will Apple run into any backlash if it increasingly markets hardware that is primarily useful to access more stuff that to be bought from apple?
  • freckledbruhfreckledbruh Posts: 520member
    Quote:
    Originally Posted by SolipsismX View Post


    While this is what I and many others have been saying since this came up I'm sure we'll see another article shortly saying how DoJ has a strong case against Apple.





    Don't forget they also offered Amazon a higher bit rate, too.



    Totally forgot about that extra advantage as well. Thanks!

    Quote:
    Originally Posted by I am a Zither Zather Zuzz View Post


    Did you read the complaint? It looks like they have plenty of evidence. It does not paint a pretty picture, and I did not fully understand the basis for some of the allegations until I read it.



    If the allegations are proven, what will you conclude?



    I read the complaint and it seems like a slam dunk against the publishers but not apple. Nowhere did it state that apple was present when the publishers set the price nor any evidence that apple even suggested a price point.

    Quote:
    Originally Posted by iSheldon View Post


    No comparison - Amazon wasn't selling a music device as a disguise to sell music.



    Um, this case has nothing to do with device sales period. The complaint mentioned profit from the ebooks themselves and nothing at all about the devices. Also, since you can use kindle on the iPad, what difference would it make anyway? And one last point, you have it backwards. The device isn't the disguise. The content is the disguise. Do you really think apple made billions of dollars selling 99 cent tracks? Puh-leeze.
  • christophbchristophb Posts: 1,366member
    Quote:
    Originally Posted by lkrupp View Post


    It will NEVER go to trial. There are only two possibilities.



    1. Apple will realize it can't win and settle.



    2. The DOJ will realize it can't win and withdraw the suit, just like they did with IBM.



    I predict #2



    Would be a darn shame. If 2, I wonder if DoJ will have to pay the defendants' costs. After filing, do judges have to sign off when a suit is dropped as the do when there's a settlement?
  • isheldonisheldon Posts: 570member
    Quote:
    Originally Posted by freckledbruh View Post


    Um, this case has nothing to do with device sales period. The complaint mentioned profit from the ebooks themselves and nothing at all about the devices. Also, since you can use kindle on the iPad, what difference would it make anyway? And one last point, you have it backwards. The device isn't the disguise. The content is the disguise. Do you really think apple made billions of dollars selling 99 cent tracks? Puh-leeze.



    No they just sold millions of iPods.
  • gwlaw99gwlaw99 Posts: 134member
    ""The government will have to show that Apple had some kind of involvement in the original arrangement,."



    I am pretty sure the Anti-trust division of justice knows what the law is and probably has some evidence of this.
  • aaarrrggghaaarrrgggh Posts: 1,519member
    There was a precedent set 100 years ago regarding a manufacturer's ability to enforce retail prices being a restraint of free trade. All a manufacturer could do is set a "suggested" retail price, and the retailer was free to price as they saw fit. That changed in 2008:

    Quote:

    The decision does not make a resale price agreement automatically legal; it requires that any party challenging a resale pricing agreement has to show that the agreement adversely affects competition. To avoid legal exposure, the manu- facturer must consider all the circumstances surrounding the agreement to ensure that it does not unreasonably restrict competition. Such cir- cumstances may include the number of manu- facturers in a given industry, the manufacturer?s or retailer?s size or market power, and whether the agreement is used to facilitate an otherwise illegal pricing agreement among manufacturers or retailers.



    For manufacturers or producers of goods, the Leegin decision creates some advantages. A manufacturer that wants to ensure a high price and high margin for its goods at retail can now, in the appropriate circumstances, openly negoti- ate and agree with the retailer about the mini- mum retail price to be charged.



    (Copied from http://www.lanepowell.com/wp-content...ovichm_007.pdf)



    So, if that is correct, the manufacturer has the power to control price of their products at retail, within reason.
  • isheldonisheldon Posts: 570member
    Quote:
    Originally Posted by gwlaw99;2094574,."




    I am pretty sure the Anti-trust division of justice knows what the law is and probably has some evidence of this.



    If the government loses it's because Steve Jobs is dead.
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