Two things. First, your first sentence doesn't mean the same thing as the second. For instance, if the publisher sets the price they get that is different then them setting the retail price. Second, you may be right about the agency model at question, and if so, I apologize. I generally do read the complaints, but this time I regrettably hadn't when I first posted. I read a summary from someplace, which never does one more justice than getting the information first hand. You do appear to be correct at least about what the government is accusing Apple of doing.
With that said, agency like models aren't per se illegal. Take for instance Apple's other products. Apple sets the price, retailers like Target, Best Buy, and Walmart fall in line on price. You might get a dollar variation here and there, but it is rare. There can only be one reason for that. Further, you can't honestly tell me the oil companies aren't getting together on pump pricing.
I think Scott Turow (Harvard law grad, famous author, and President of the Author's Guild), sums the issue up nicely. He states, The irony of this bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition. This would be tragic for all of us who value books and the culture they support.
Amazon was killing competition by using its market dominance in selling traditional books to force pricing on e-books by denying publishers the ability to sell hard copies if Amazon didn't agree to undervalue the selling price of e-Books. Considering Amazon's dominant market position, that was anti-competitive. It used it's dominant position in one market to further advance its position in another market. That is what Microsoft got in trouble for doing when it used its Windows dominance to advance Internet Explorer at the expense of Netscape. That is the essence of how anti-competitive behavior works. Using one's dominance in one area to gain an advantage in another area.
Assuming everything the government says is true, how was what Apple did anti-competitive?Apple didn't use its market dominance in any area to force the publishers on board. If anything, the opposite is true. Publishers originally were hesitant to make a deal with Apple (go back and read the news stories prior to ibooks being announced). Apple simply gave publishers what music companies have wanted a long time from Apple: the ability to set their own prices. Amazon could have blown this up by simply refusing to deal with the publishers. This is what it originally did. Some publishers, however, jumped from Amazon. Amazon blinked first after a short period of time.
Let us look at other facts. Apple makes its money selling hardware and very little on selling e-Books. On its hardware, Apple allows competitors like Amazon to offer applications like the Kindle that compete with Apple's own offerings. Amazon has something like 70 percent of the e-Book market (largely because of its former shady practices that it used to tie people into the Kindle), and it recently announced it sold more e-books than traditional books. Last I checked Apple had around 20 percent of the e-Book market.
If things go back to Amazon's preferred method, publishers will really be hurting as Amazon will again force the price of e-Books down below the profitability margin to further try and solidify its lead in the e-Book market at the expense of competitors like Apple and the paper based book market. This will be a bigger problem now that traditional book sales are really hurting.
In the world of music, musicians used to make money on the sale of their music. Except for a few artists, this is no longer the case. They make no money on the sale of music. They, however, can afford to lose money on music sales because the sale of music is largely used to promote concerts where the real money is made. In the world of books, authors cannot afford to lose money on the sale of books as book authors typically don't do concerts. Amazon's model will likely put the hurting on authors like Turow.
Originally Posted by philgar
uh, no, I don't know what you're reading, but from the complaint itself
This says in black and white that the price paid to the retailer MUST be the same. This is how the agency model works, the retailers must sell their book at a set retail price. Granted, the book publishers could agree to sell books to a retailer for less money than someone else, but the RETAIL price that consumers pay on the books had to be the same.
This is limiting competition.