Apple ridicules ebook pricing conspiracy theory of class action lawsuit filing

2

Comments

  • gatorguygatorguy Posts: 14,131member
    Quote:
    Originally Posted by addabox View Post


    The thing you're linking to doesn't have anything to do with fixed pricing-- it involved allegations that Apple was using it's near monopoly position in digital music downloads to unfairly limit consumer choice by locking its software to the iPod.



    The mandated price lowering in the UK is also a bit ironic, since the music labels big complaint with iTunes pricing was that it was too low.



    At any rate, none of that has anything to do with price fixing.



    If it had nothing to do with UK iTunes pricing it's odd that price adjustments were offered by Apple to avoid possible EU charges. I'm sure you know the reasons better than I do so my apologies for offering it as an example of pricing scrutiny. Agreed that the California antitrust case wasn't specifically over prices and thus isn't what you were asking about.



    EDIT: a bit of research explained the UK price issue. Attached to the EU statement was this tho, which might give you a comparison showing why the books sales issue might get their attention more than songs did:



    "The Commission was satisfied that the price differential was not the result of collusion between Apple and the record companies. The probe "allowed the Commission to clarify that there is no agreement between Apple and the major record companies regarding how the iTunes store is organized in Europe. Rather, the structure of the iTunes store is chosen by Apple to take into account the country-specific aspects of copyright laws," the Commission said.
  • alnormalnorm Posts: 37member
    Quote:
    Originally Posted by addabox View Post


    At any rate, none of that has anything to do with price fixing. So again I ask: if other media on iTunes can legitimately be sold at a flat rate per category, why is doing that with eBooks a conspiracy?



    The way the allegations are being made, this is the issue (these are all allegations, not facts, so take them as such).



    Amazon used to purchase the rights to sell ebooks. Example: a publisher set a wholesale price at $12 and Amazon set the retail price at $10. The publisher received $12 no matter what Amazon sold the title for. Publishers disliked that Amazon was selling their titles at a discounted rate. The suggested reasons are many, but probably not relevant to what you are asking.



    A publisher by itself could not make Amazon change this practice of selling titles at a discounted rate. Amazon is a huge market, and if a publisher alone threatens to pull its titles if Amazon does not comply, Amazon may call the bluff and said publisher takes a huge financial hit.



    Now, get all these publishers in a room and get them to agree to make the same threat as a group, then you have collusion. Price-fixing is probably too specific in this case. However, the end result was higher ebook prices. If those prices are demonstrable as a result of this collusion, there is a case here.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Gatorguy View Post


    If it had nothing to do with UK iTunes pricing it's odd that price adjustments were offered by Apple to avoid possible EU charges. I'm sure you know the reasons better than I do so my apologies for offering it as an example of pricing scrutiny. Agreed that the California antitrust case wasn't specifically over prices and thus isn't what you were asking about.



    You lost me.
    1. Where is the proof there is causation?



    2. How does anything happing in the EU affect iTunes Store prices in the US?



    3. iTunes Store for music has variable pricing. As I recall this was established when they finally got the labels to finally agree to higher bitrate and DRM-free content. Something they were offering to Amazon long before. How is this different than the variable pricing that publishers can offer for books on iBookstore?

  • digitalclipsdigitalclips Posts: 15,025member
    Quote:
    Originally Posted by I am a Zither Zather Zuzz View Post


    Apple has not changed. Anything for a buck was and is their MO.



    As opposed to their competition that simply lose money.
  • gatorguygatorguy Posts: 14,131member
    Quote:
    Originally Posted by SolipsismX View Post


    You lost me.
    1. Where is the proof there is causation?



    2. How does anything happing in the EU affect iTunes Store prices in the US?



    3. iTunes Store for music has variable pricing. ....




    As Addabox said, apparently it didn't. My edit may help explain why iTunes passed muster for EU regulators while Apple and the book publishers might not.
  • jameskatt2jameskatt2 Posts: 515member
    Apple has billions to spend on the best lawyers. It would not be engaged in any antitrust activity with their advice.



    Realize that Apple cannot be sued on antitrust grounds in any market because it doesn't have a monopoly in any market.



    In books, an antitrust argument is going to be even more ridiculous.



    Amazon is the HUGE 800 POUND BOOK SELLING GORILLA. It sells books AT A LOST - something Microsoft was accused of doing.



    Apple has a small minority share in the bookselling market.



    Any talk of antitrust against Apple in this market is simply not going to fly.
  • alnormalnorm Posts: 37member
    Quote:
    Originally Posted by jameskatt2 View Post


    Apple has billions to spend on the best lawyers. It would not be engaged in any antitrust activity with their advice.



    Realize that Apple cannot be sued on antitrust grounds in any market because it doesn't have a monopoly in any market.



    In books, an antitrust argument is going to be even more ridiculous.



    Amazon is the HUGE 800 POUND BOOK SELLING GORILLA. It sells books AT A LOST - something Microsoft was accused of doing.



    Apple has a small minority share in the bookselling market.



    Any talk of antitrust against Apple in this market is simply not going to fly.



    Antitrust regulations are neither limited to monopolies nor based upon marketshare. Antitrust covers anti-competitive practices, collusion being one such facet. Monopolization of a market falls under antitrust, not vice versa.
  • gatorguygatorguy Posts: 14,131member
    Quote:
    Originally Posted by jameskatt2 View Post


    Apple has billions to spend on the best lawyers. It would not be engaged in any antitrust activity with their advice.



    Realize that Apple cannot be sued on antitrust grounds in any market because it doesn't have a monopoly in any market.



    In books, an antitrust argument is going to be even more ridiculous.



    Amazon is the HUGE 800 POUND BOOK SELLING GORILLA. It sells books AT A LOST - something Microsoft was accused of doing.



    Apple has a small minority share in the bookselling market.



    Any talk of antitrust against Apple in this market is simply not going to fly.



    Read up on what antitrust laws actually do and what they prohibit here. They don't work like you think they do:

    http://www.atg.wa.gov/antitrustguide.asp



    Judicial interpretations of the Sherman (Antitrust) Act have long penalized businesses that engage in price fixing, no monopoly needed. The link I gave you is a really easy read, generally in layman's terms.
  • nasseraenasserae Posts: 3,118member
    Quote:
    Originally Posted by Gatorguy View Post


    Read up on what antitrust laws actually do and what they prohibit here. They don't work like you think they do:

    http://www.atg.wa.gov/antitrustguide.asp



    Judicial interpretations of the Sherman (Antitrust) Act have long penalized businesses that engage in price fixing, no monopoly needed. The link I gave you is a really easy read, generally in layman's terms.



    So why is Apple responsible for what the publishers do if the publishers got together and agreed to on price fixing?
  • alnormalnorm Posts: 37member
    Quote:
    Originally Posted by NasserAE View Post


    So why is Apple responsible for what the publishers do if the publishers got together and agreed to on price fixing?



    If it brought all the actors together, then it is party to the collusion.



    However, any damages levied on Apple will likely just be fines, probably in the low single millions range. They probably won't fight this too hard. To them, the worse that happens is they have to drop the agency model.



    The publishers, on the other hand, may end up paying out the wazoo.
  • gatorguygatorguy Posts: 14,131member
    Quote:
    Originally Posted by NasserAE View Post


    So why is Apple responsible for what the publishers do if the publishers got together and agreed to on price fixing?



    The allegation is that Apple representatives, perhaps Steve Jobs himself, met with a select group of publisher's to come to an agreement on fixed pricing(Steve Jobs admits to that in his biography). In essence there is the idea that Apple made the arrangements, brought each of the parties together on an agreement to set pricing and gave them a market to force the issue.



    There's been no determination that it's all true, but the DoJ apparently is convinced enough to warn Apple and 5 involved publishers that it's time to negotiate a settlement or face a Federal antitrust suit. According to reports there are some number of the parties, so far unidentified, that are willing to do just that.



    There's of course several sides to most stories and at least a couple of the publishers are going for "hearts and minds" as one put it, trying to convince the buying public they really had consumer' best interests in mind. They also plan to resist settling so as not to upset the business model Apple-cart.

    http://www.ft.com/cms/s/0/41d51ac6-6...#axzz1oaaHTPHL
  • tallest skiltallest skil Posts: 39,469member
    Quote:
    Originally Posted by jameskatt2 View Post


    Amazon is the HUGE 800 POUND BOOK SELLING GORILLA. It sells books AT A LOST - something Microsoft was accused of doing.



    It sells books on an island inhabited by an over-hyped TV show?



    Also, if Amazon is selling their hardware at a loss and expecting to make the money up in their store and then selling their STORE content at a loss, wouldn't that raise at least one red flag somewhere?
  • ljocampoljocampo Posts: 657member
    Quote:
    Originally Posted by ALNorm View Post


    It also has much to do with how technology has changed the way antitrust and anti-competition regulations are enforced. Certain practices used by technology companies are almost fruitless to pursue in court. Competition is so quick to change in this digital age that by the time anyone has a case, something new has come along that has replaced the ability of said company to exploit the aforementioned advantage.



    The government antitrust regulators have practically narrowed their scope to one question, which they can pursue: did the actions of said company affect the consumer in a negative way? (higher prices are usually the smoking gun).



    True. However you can have higher prices as long as it also has value and innovation. That's why Apple commands the high end of the market. The problem of all the lawsuits, and those who bring them, boils down mostly to envy. Some people are envious of those who succeed, so they try to take success down. That's why envy is one of the seven deadly sins. (btw: I'm not religious... so I'm just saying)
  • alnormalnorm Posts: 37member
    Quote:
    Originally Posted by Tallest Skil View Post


    It sells books on an island inhabited by an over-hyped TV show?



    Also, if Amazon is selling their hardware at a loss and expecting to make the money up in their store and then selling their STORE content at a loss, wouldn't that raise at least one red flag somewhere?



    Absolutely. Predatory pricing. But that's also one of the hardest antitrust claims to support.



    It's hard to sustain. It's also one of the easiest anti-competitive practices to combat (if it is unilateral, which in Amazon's case, it was).



    I wonder why the publishers simply didn't purchase the titles Amazon sold at a loss. They were digital formats, so the publishers could have bought them from now until the end of eternity, turning Amazon's loss into their profit.
  • alnormalnorm Posts: 37member
    Quote:
    Originally Posted by ljocampo View Post


    True. However you can have higher prices as long as it also has value and innovation. That's why Apple commands the high end of the market. The problem of all the lawsuits, and those who bring them, boils down mostly to envy. Some people are envious of those who succeed, so they try to take success down. That's why envy is one of the seven deadly sins. (btw: I'm not religious... so I'm just saying)



    I'll partially disagree with you on envy being the driving force behind this class-action lawsuit, as I would with any class-action lawsuit.



    Envy may have brought forth the original claimants, but the money aspect for the lawyers is what drives these monsters. Successful class-action lawsuits have retired many a litigator, while the actual victims get a coupon for a $1 off their next Big Mac meal.
  • ljocampoljocampo Posts: 657member
    Quote:
    Originally Posted by ALNorm View Post


    I'll partially disagree with you on envy being the driving force behind this class-action lawsuit, as I would with any class-action lawsuit.



    Envy may have brought forth the original claimants, but the money aspect for the lawyers is what drives these monsters. Successful class-action lawsuits have retired many a litigator, while the actual victims get a coupon for a $1 off their next Big Mac meal.



    Point taken and accepted.
  • suddenly newtonsuddenly newton Posts: 12,932member
    Quote:
    Originally Posted by SolipsismX View Post


    It's great that realitycheck got booted for trolling but I see a couple others that do nothing but try to stir up trouble.



    Yeah, with names like "realitycheck" and "reasonandlogic" you know they're here to argue against those irrational, kool-aid-drinking Apple fanbois.
  • kpomkpom Posts: 515member
    Quote:
    Originally Posted by ALNorm View Post


    I don't think this defense is going to fly. The alleged conspiracy was to make ebooks the same price across the board. When all ebook prices are identical, the Kindle app on the iPad would actually make the iPad more desirable and the Kindle less desirable. There would be no pricing benefits of the content on the Kindle, so why buy a Kindle when you can do what the Kindle can on an iPad, which has more features? The cost of the unit then becomes the consumer's major concern.



    That would be a concern if Amazon sold the Kindle for a profit. They sell it essentially for cost and make their money on content. The Kindle App and Kindle ecosystem can still compete on the depth of its content.





    Quote:
    Originally Posted by ALNorm View Post


    The loss leader strategy appears to have buoyed Kindle sales. The short-term impact of raising prices may have increased Amazon profits, but the loss in market-share of the Kindle, if demonstrable and relevant, may render moot the defense's point.



    Except that Amazon has the dominant market position. Antitrust law is somewhat shaky, but I don't think it exists for the benefit of the dominant players in a market.





    Quote:
    Originally Posted by ALNorm View Post


    This lawsuit will boil down to one simple question. Did Apple conspire with the publishers, by putting them all on the same page, in order to implement a sweeping change in the way ebooks are priced by all companies, e.g., the agency model? If the plaintiff can show this, the motivations of Apple--or inanity thereof--will not matter.



    The agency model itself is pretty common. Amazon uses it in other services, as the article points out. Proving that Apple attempted to build up its own bookstore by getting publishers to accept an agency model is not the same as proving that Apple engaged in price fixing.



    Quote:
    Originally Posted by ALNorm View Post


    Unfortunately for the defense, the DOJ and European Regulators are also investigating these claims of collusion. The Plaintiffs in this lawsuit may potentially receive access to records and files that are not typically available in these types of lawsuits.



    And this is a big reason why I don't like antitrust law. I didn't like it when the DOJ and EU went after Microsoft over bundling of Internet Explorer, and I don't like the DOJ and EU going after Apple now.



    On top of that, antitrust action is usually ineffective at accomplishing its intended goal, and often attacks the "wrong" issues. In the end, Netscape lost out, and Microsoft also continued to bundle Windows Media Player with Windows. That didn't prevent Chrome from being developed, nor did it prevent Apple from achieving dominance with iTunes (and I don't think it's because the EU forced Microsoft to sell Windows XP/Vista/7 "N" editions).





    Quote:
    Originally Posted by ALNorm View Post


    My prediction: Expect to see Apple and the Publishers settle on the DOJ and EU complaints. This will deprive the class-action plaintiffs of extra evidence, thus also reaching a settlement. The agency model will become more limited in scope, perhaps allowing retailers leeway on their profit margins, i.e., the publisher will set an MSRP and receive the 70% of that price, but the retailer can lower the retail price by cutting down their 30%.



    It depends on how important this is to Apple and the publishers. My guess is it will mean more to the publishers than Apple as far as actual book sales are concerned, but Apple will defend it vigorously if it sees a DOJ or EU settlement as a "back door" to a subsequent action against its App Store model, since the latter is key to its strategy for selling iPhones and iPads.
  • nasseraenasserae Posts: 3,118member
    Quote:
    Originally Posted by Gatorguy View Post


    The allegation is that Apple representatives, perhaps Steve Jobs himself, met with a select group of publisher's to come to an agreement on fixed pricing(Steve Jobs admits to that in his biography). In essence there is the idea that Apple made the arrangements, brought each of the parties together on an agreement to set pricing and gave them a market to force the issue.



    SJ did not admit on price fixing. His statement was no where near admission of price fixing. He basically said Apple don't care how much your charge as long as we get our 30%. How is that price fixing? :roll eyes:



    Quote:

    There's been no determination that it's all true, but the DoJ apparently is convinced enough to warn Apple and 5 involved publishers that it's time to negotiate a settlement or face a Federal antitrust suit. According to reports there are some number of the parties, so far unidentified, that are willing to do just that.



    There's of course several sides to most stories and at least a couple of the publishers are going for "hearts and minds" as one put it, trying to convince the buying public they really had consumer' best interests in mind. They also plan to resist settling so as not to upset the business model Apple-cart.

    http://www.ft.com/cms/s/0/41d51ac6-6...#axzz1oaaHTPHL



    These are claims. No one knows what the DoJ is doing. All the talk is about publishers negotiating for settlement and the DoJ "suspecting" not convinced.
  • nasseraenasserae Posts: 3,118member
    Quote:
    Originally Posted by ALNorm View Post


    If it brought all the actors together, then it is party to the collusion.



    However, any damages levied on Apple will likely just be fines, probably in the low single millions range. They probably won't fight this too hard. To them, the worse that happens is they have to drop the agency model.



    The publishers, on the other hand, may end up paying out the wazoo.



    Apple brought them together to offer them better deal. Last time I checked negotiating by itself is not a crime. Apple gains nothing by increasing eBook pricing. In fact, when Apple announced iBookstore everyone thought it will fail because the prices are higher than what Amazon.



    This lawsuit and DoJ investigation is going nowhere. It seems all what Apple is guilty of is offering publishers an alternative.
Sign In or Register to comment.