DoJ accuses Apple of prolonging price fixing suit for financial gain - Page 2

Quote:

Originally Posted by jragosta 


You just managed to negate your own argument. Amazon was well on their way to having a monopoly sufficient to control the market before Apple stepped in. Amazon was pretty clearly using predatory pricing - which is illegal 

What gave you the idea that I was making an argument? Are they clearly using predatory pricing? Perhaps in your opinion but they and the DoJ may disagree with you. I don't have an opinion.

Quote:

Originally Posted by RichL 

 

... and then Apple entered the market and prices went UP rather than DOWN. It's really no surprise that the DoJ are investigating. Competition is supposed to lead to lower prices. Any other scenario is highly suspicious. 

What a naive statement. Show me one industry, including the IT Industry where competition has driven down the pricing of consumer goods. Each revision of products miraculously keep their `current' products at the same or higher prices. You'll counter that consumers can buy one generation prior at a lower price and I'll counter that I could buy a 1980 Ford Mustang at a cheaper price but it's not a 2012 Ford Mustang.

An IBM PC 30286 in 1987 baseline was $3,000. It was not even top of the line. Top of the line was around $7500 from IBM, for a PC.

We had massive clones come out and to get a powerful system you shelled out the wazzu for them.

We have them today and people will argue `I can build a clone cheaper,' then when they build equivalent specs [down to the power supply and equivalent quality of casing, etc] they turn out to be nearly identical.

Automobiles give you worse gas mileage today and yet cost 3 to 5 times what they cost just 25 years ago. You have more `bells and whistles' with cool gadgets, but the car is still an efficient POS solution.

Competition doesn't drive down prices. Consumers refusing to buy what any competitor has to offer [at their prices] is what disrupts pricing. Some competitors will file bankruptcy, others will layoff staffing all before they reduce their profit margins.

Only a rare company will truly reduce their profit margins in order to get consumers to buy. Unfortunately, consumers have the attention span and will power of a gnat. They buy until the drive themselves into bankruptcy. Unlike corporations, they don't get to wipe the slate clean and start again without seeing credit screwed for well over 10 years.

Quote:

Originally Posted by Cash907 

 

So why were prices substantially lower when Amazon was leading the market, and didn't go up until after Apple joined the game?

 

I can agree that prices were perhaps too low initially, but things have gotten out of hand with eBooks retailing 2 dollars less than hardback copies in many cases. I'm sorry, but that's absolutely ridiculous.

You might feel differently if you were producing ebooks/books. Our cost to produce a printed book and DVD is quite small. Its the fixed costs and cost of preparing the books that is the big expense. 

Quote:

Originally Posted by jragosta 


If you don't have an opinion, then someone else has hijacked your account because there's another mstone who's expressing opinions all over this forum.

Props for that humorous reply. I guess I should have clarified for the those who clearly use the word clearly to mean that they clearly have a an axe to grind.

But just to further clarify: I don't have an opinion about whether or not Amazon is in violation of any laws.

Quote:

Originally Posted by jragosta 


Then you'd better do something about that fake mstone. He said:
"The philosophy that a company gives something away for less than cost or at break even prices in order to bring in more customers who might also purchase something considerably more expensive while retrieving their discounted item, has always been a valid business practice. Amazon is legally allowed to do this as long as the purpose is to sell other products and not to create a monopoly. Amazon also gives away the Kindle at less than cost for the same reason."
It sure sounds like you're claiming that what Amazon did was OK.

Not at all. I know it was a long post and written my second language but I am not at all apologizing for Amazon. The first paragraph which you have quoted is just laying the foundation as in this is the lay of the land of the situation nothing more. I did go on to suggest that it could be interpreted as legal but did not endorse it.  I am actually unsure of how it would be decided in court. Was Amazon trying to monopolize the the e-book market or were they simply trying to expand their ecosystem, just like Apple? That is a complicated question which I am certainly not qualified to answer.

Quote:

Originally Posted by RichL 

 

... and then Apple entered the market and prices went UP rather than DOWN. It's really no surprise that the DoJ are investigating. Competition is supposed to lead to lower prices. Any other scenario is highly suspicious. 

Except the DOJ isn't making public the sales data that those claims are based on. That is also suspicious. According to Apple the only prices that went up are the prices of some new releases. Many prices went down. The new releases is were Amazon was artificially lowered the price. It makes sense once real competition was implemented the price would go up there. 

Quote:

Originally Posted by mstone 

Not at all. I know it was a long post and written my second language but ....

Ah, that old chestnut "but, but..... that is not my first language" defense.  (Hope you don't have to use that one in a US court some time).

If you say something, regardless of whether it's your first language or nth language, either stand by it, or withdraw it.

Quote:

Originally Posted by anantksundaram 

Ah, that old chestnut "but, but..... that is not my first language" defense.  (Hope you don't have to use that one in a US court some time).

 

If you say something, regardless of whether it's your first language or nth language, either stand by it, or withdraw it.

Find something factually wrong with my post and we can discuss it. I was refering to grammar and syntax and possibly disambiguation as sometimes I misuse proper English. Or perhaps I should just say FU according to the American tradition. 

Quote:

Originally Posted by AppleInsider 

From the memo:

In reality,

what troubles Apple is that the decree returns pricing discretion not just to Apple, but also to its retail competitors — competitors which Apple fears may choose to exercise that restored authority in order to lower e-book prices. In that event, Apple's e-book customers might find less expensive alternatives. Apple's desire to avoid price competition for as long as possible is the unstated reason why it seeks to undo or forestall the settlements.
In short, Apple's own interests motivate its objections to the proposed decree, interests that are not in any way linked to the public interest inquiry mandated by the Tunney Act. (emphasis mine)

How exactly does the DoJ KNOW what is troubling Apple about this?

Quote:

Originally Posted by Chris_CA 

How exactly does the DoJ KNOW what is troubling Apple about this?

If a government body tried to get away with this crap in Australia then it would be raised in Parliament.

Maybe Apple should invest a few million into lobbying for a senate enquiry into the actions of the DoJ, get to the bottom of this unethical, unconstitutional behaviour.

Basically what the DoJ is saying is "We can't be bothered showing what Apple did or why but hurry up and pronounce them guilty so we we can do other things."

It seems like an absolute abuse of power, what next?

Judges saying "The police say YOU did this, we won't bother with a court case or letting you plea or all that longwinded boring, legal stuff, now hurry up and get into the prison van, I want to get nine holes in before sunset, btw you'll be out in a couple of years."

I still don't entirely understand the basis of these suits buy the DoJ...

It looked to me like Apple was busting up a "price fixing" scheme mostly kept in place by Amazon… Apple said to publishers
"charge what you want, charge more if you like"...

Yes, it led to slightly higher prices on eBooks… and what?

I don't get what they did wrong… "colluded" with publishers to get their support for their more liberal pricing structure? Is making ANY kind of "deal" now considered "collusion"? "Price fixing"? Is there now one price for all? And when a retailer negotiates with a publisher/wholesaler, they have to talk prices… 

I don't understand how it can be seen that Apple got together with multiple publishers and "fixed" prices… eBook prices are all over the place, just not constrained by the ceiling imposed by Amazon...

I prefer lower-priced books, but still… not sure where the lines were crossed here.

I'm not saying Apple is "innocent", just really don't understand what they're guilty of.

Quote:

Originally Posted by mstone 

The philosophy that a company gives something away for less than cost or at break even prices in order to bring in more customers who might also purchase something considerably more expensive while retrieving their discounted item, has always been a valid business practice. Amazon is legally allowed to do this as long as the purpose is to sell other products and not to create a monopoly. Amazon also gives away the Kindle at less than cost for the same reason. Keep consumers coming back to to the website where hopefully they will buy everything from computers to auto accessories for which Amazon has better profit margins. Apple is very experienced at this practice as well. It has been argued that Apple makes no profit on songs sold through iTunes - only enough to run the service at break even. Same with the App Store. Their cut has been justified by some as the overhead expenses of operating the service. All of which supports their main purpose of selling more devices. Clearly the end goal of Apple entering into the e-book market is to sell more iPads.

 

The difference in this case is that there is already a major competitor in the e-book market, where with iTunes, there were no competitors with a significant market share when Apple entered the music industry. Because Amazon has already forced the publishers to accept a lower than ideal price, there is no leverage for Apple to set up their system matching Amazon's price. People would not stop buying books from Amazon and switch to Apple unless there was some incentive. By designing a system that forces Amazon to raise their price, consumers will be inclined to make their purchasing decision on some other basis, something other than simply price. Forcing them to compare everything that the Apple ecosystem offers as opposed to everything that Amazon offers gives Apple a better marketing opportunity. Apple's slick integrated ecosystem is attractive to consumers and they may be more likely to consider it given that the rock bottom e-book prices are no longer available at Amazon.

 

The trick that Apple is trying pull is to make Amazon's clientele, consumers in general, the publishers and current Apple iDevice owners to all believe it was their own idea to start buying books from Apple. It is a brilliant strategy. Amazon doesn't like the idea one bit and has lobbied the government, arguing that the publishers were in collusion to fix prices. In my opinion that argument doesn't really hold water because under Apple's model the publishers would be able to set whatever price they want. The ball is really in the publishers' court. If they want to force the prices higher at Amazon they have the power to do so. Too bad they are wussies and caved in. Now that some have settled with DoJ, it is a win for Amazon and they feel empowered and are no doubt urging the DoJ to continue to go after Apple to entirely kill Apple's plan to enter the e-book market as a means to an end of selling more iPads. Apple is also looking at a similar scheme with the iBooks Author introduction to try to leverage the textbooks/education market for the same goal of selling more iPads.

 

The only issue that the DoJ can present is that consumers would have to pay more for e-books under Apple's model. They are not taking into consideration that consumers were getting the prices for less than cost and that the new higher price is actually the fair and reasonable price.

To me the problem here is that they give away the kindle and ebooks below cost to control the market. If it was just about having loss leaders which we all agree is legal, they would do this with other merchandise. However, all I am aware that they do this for ebooks and kindle readers. That is obviously so they do not loose their position in the market as the transition from paper to e-books takes place.This is exactly what they are not supposed to be doing with their loss leaders.

Quote:

Originally Posted by Phone-UI-Guy 

 

To me the problem here is that they give away the kindle and ebooks below cost to control the market. If it was just about having loss leaders which we all agree is legal, they would do this with other merchandise. However, all I am aware that they do this for ebooks and kindle readers. That is obviously so they do not loose their position in the market as the transition from paper to e-books takes place.This is exactly what they are not supposed to be doing with their loss leaders.

The problem is, as well as selling eBooks Amazon also sells physical books, by pricing the eBooks lower it made physical book prices seem too high and turned traditional brick and mortar bookstores into browsing parlours where you could go get ideas on what to buy from Amazon.

Once most of them are gone then it's open slather for Amazon, their "loss leaders" contribute to the death of physical books.

So Apple comes along and instead of Amazon's competitors having 10% of the market they now have 30% of the market to divide up between themselves.

The DoJ is against fair competition and it looks like they are doing anything they can to avoid scrutiny as to the reason behind this, including abusing their powers in order to deny Apple a fair trial.

And obviously, oil, railroads, law and healthcare are such healthy, non-concentrated and efficient systems in the USA.

Why they would want to flaunt these examples is beyond me...

Quote:

Originally Posted by tribalogical 

I still don't entirely understand the basis of these suits buy the DoJ...

 

It looked to me like Apple was busting up a "price fixing" scheme mostly kept in place by Amazon… Apple said to publishers
"charge what you want, charge more if you like"...

 

 

I'm not saying Apple is "innocent", just really don't understand what they're guilty of.

Working with publishers, I can tell you the problem is simple.

You're selling ebooks for X. You want to sell also on iDevices (same product to you, right?). You're strong-armed in accepting "special conditions". It's Apple terms or no iDevices, and no respect for your previous engagements.

Suppose you have a Y-years old contract going on with Z company that you can distribute to others, but only at a equal or higher price. To distribute with Apple... you can ONLY if your margin was more than 30% AND you cut that margin. Businesswise, it's never going to work, which means you've effectively three choices:

1- drop quality to drop costs

2- break your existing contracts hoping to make more with Apple

3- boycott Apple

Apple's big enough that 3 doesn't work out, 1 is never a good solution. Looks like evil to me, looks like evil to the DoJ.

I would however be more inclined to see the DoJ as benevolent here if Amazon.com, like some scary herdmaster of monsters, wasn't hovering behind them...

Quote:

Originally Posted by lightknight 

Working with publishers, I can tell you the problem is simple.

You're selling ebooks for X. You want to sell also on iDevices (same product to you, right?). You're strong-armed in accepting "special conditions". It's Apple terms or no iDevices, and no respect for your previous engagements.

 

Suppose you have a Y-years old contract going on with Z company that you can distribute to others, but only at a equal or higher price. To distribute with Apple... you can ONLY if your margin was more than 30% AND you cut that margin. Businesswise, it's never going to work, which means you've effectively three choices:

 

1- drop quality to drop costs

2- break your existing contracts hoping to make more with Apple

3- boycott Apple

 

Apple's big enough that 3 doesn't work out, 1 is never a good solution. Looks like evil to me, looks like evil to the DoJ.

 

I would however be more inclined to see the DoJ as benevolent here if Amazon.com, like some scary herdmaster of monsters, wasn't hovering behind them...

So like say, the Harry Potter series?

So, the DoJ wants the court to deny the accused due process and have the court declare them guilty on the basis of "secret evidence"? Are they invoking national security to keep the evidence secret? Where's Judge Koh when we need her to ask the government's lawyers if they are smoking crack?

The only conclusion that can be drawn from this is that the DoJ knows their "secret evidence", spoon fed to them by Amazon, won't hold up for a second if they have to defend it at trial, and this is basically a Hail Mary to avoid looking like complete idiots when their case falls completely apart.

Although, I'm becoming more and more convinced that this case may be the outcome of corruption rather than just stupidity.

Quote:

Originally Posted by lightknight 

Working with publishers, I can tell you the problem is simple.

You're selling ebooks for X. You want to sell also on iDevices (same product to you, right?). You're strong-armed in accepting "special conditions". It's Apple terms or no iDevices, and no respect for your previous engagements.

 

Suppose you have a Y-years old contract going on with Z company that you can distribute to others, but only at a equal or higher price. To distribute with Apple... you can ONLY if your margin was more than 30% AND you cut that margin. Businesswise, it's never going to work, which means you've effectively three choices:

 

1- drop quality to drop costs

2- break your existing contracts hoping to make more with Apple

3- boycott Apple

 

Apple's big enough that 3 doesn't work out, 1 is never a good solution. Looks like evil to me, looks like evil to the DoJ.

 

I would however be more inclined to see the DoJ as benevolent here if Amazon.com, like some scary herdmaster of monsters, wasn't hovering behind them...

Yes, well, there are a couple of problems with your scenario, especially for the DoJ. The biggest problem of course is that while, even if we were to assume it to be true, it's evidence of coercion, entirely legal coercion, it actually contradicts the entire premise of the DoJ's accusation of collusion.

However, I prefer to think of Amazon as more the puppeteer. In fact, the whole thing is starting to remind me of "Being John Malkovich", the part where John Cusack has been inside Malkovich for a while and is controlling him controlling life-sized puppets. (You have to love a movie with recursion as a theme.)

Quote:

Originally Posted by jragosta 


It's called 'speaking out of both sides of your mouth' 

As opposed to talking out your ass in your case.

Does wholesale/retail even mean anything in E-books? I know it does, in that Amazon pays a certain amount to the publisher (wholesale), and charges a certain amount to the customer (retail). But, other than that, there is no cost of inventory sitting on the shelves gathering dust when too much was ordered, or loss of sales opportunity because Amazon or Apple didn't order enough. There is just an ePub file which gets distributed over the Internet and some numbers in a database for how many copies were sold to which customer accounts. 

Also, you can buy a physical book from anyone. You can only buy E-books from a supplier that is compatible with your E-book reader. I buy E-books from Amazon because I can read them on my iPad, but I could still switch to an Amazon Kindle when their eInk gets better. Actually, I prefer the Sony E-Reader, but I don't want to be tied to their platform. 

The DoJ lawsuit is just getting at the wrong problem. Apple taking a 30% cut of its sales is reasonable, and publishers setting the price to sell through its store is reasonable. It is an issue that they are requiring that a book not have a lower electronic price elsewhere, though that is a long-established practice in music and video games, so it is a stretch to argue that it is illegal. 

The real problem is DRM and the resulting lack of device portability. A secondary problem is Apple's requirement that any App that runs on its platform either process all sales through Apple (with its 30% cut) or process all sales entirely outside of the App. That is long established practice in the video game industry, so I really doubt is illegal, but it still heavily distorts the market. 

Maybe some good will come of the lawsuit, even if the basis for it is questionable, if it results in a change to DRM portability or forcing Apple to relax in-App purchasing restrictions. Hopefully, if Apple loses we won't just go back to an Amazon monopoly. Perhaps alternate platforms are now well enough established that an Amazon monopoly is no longer possible. Or, if Apple does lose and Amazon does go back to its obviously predatory pricing, hopefully the DoJ goes after them with equal voracity. 

THIS IS FOR ANYBODY THAT THINKS APPLE IS IN THE RIGHT.

Take Steve Jobs bobblehead out of your a** and go here http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm

For over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the BENEFIT OF THE CONSUMERS, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up....

The Sherman Act outlaws "every contract, combination, or conspiracy in restraint of trade," and any "monopolization, attempted monopolization, or conspiracy or combination to monopolize."...These include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids. These acts are "per se" violations of the Sherman Act; in other words, NO DEFENSE OR JUSTIFICATION ALLOWED....

The Clayton Act addresses specific practices that the Sherman Act does not clearly prohibit, such as mergers and interlocking directorates (that is, the same person making business decisions for competing companies). Section 7 of the Clayton Act prohibits mergers and acquisitions where the effect "may be substantially to lessen competition, or to tend to create a monopoly."...

Steve wanted to enter the ebook market, but the profits were too low for his liking. So he colluded with publishers to increase prices, thus violating both laws.
Some people (mostly booksellers), feel Amazon is a monopoly and that was enough justification for increasing prices. The law says NO.

Quote:

Originally Posted by lkrupp 

Can we stop with the bovine excrement about how e-book pricing should be a fraction of the print edition. It has NOTHING to do with how much it costs to distribute either form. It's about compensating the author for their intellectual work and artistic endeavor. It is the height of stupidity to equate how much the paper and ink costs with the value of the content. It's not about the book or electronic file, its about what's in it.

You're aware that actual production costs of a hardback book make  up roughly 20-35% of the retail price, correct? What's more, as a physical medium, I am free to lend it to anyone I wish, and there is added value in that as well. What's more, when I purchase a physical book, I own it, DRM free, to with it as I wish for as long as I wish, as long as I'm not copying or digitizing it, and then selling those copies. Books have much more value than an eBook, and pricing them so closely is asinine, as is your rant.

Quote:

Originally Posted by jragosta 


Blah, blah, blah.
Instead of just ranting about things you obviously don't understand, why don't you tell us specifically what law Apple has violated and provide evidence to support your position? So far, no one (not even the DOJ) has been able to do that.

In my post I included the link to the FTC's website, the pertinent laws regarding this case and the evidence.

The FTC's mission is to prevent business practices that are anticompetitive, deceptive, or unfair to consumers.

Apple is showboating. They are trying to get sympathy and draw attention away from the true meaning of the laws. They have no case.

Quote:

Originally Posted by Russell 

 

In my post I included the link to the FTC's website, the pertinent laws regarding this case and the evidence.

 

The FTC's mission is to prevent business practices that are anticompetitive, deceptive, or unfair to consumers.

 

Apple is showboating. They are trying to get sympathy and draw attention away from the true meaning of the laws. They have no case.

If Apple have no case why don't they just settle?

If the DoJ has a case why are they trying to avoid having to present it?

Apple is innocent, the DoJ has no case.

Apple are guaranteed the presumption of innocence under the constitution of the United States of America,

Allowing the DoJ to override these fundamental rights sets a very dangerous precedent, reminiscent of a police state.

Who will be next on the DoJ hitlist, who will influence them behind the scenes, who will jockey to control this power?

Be careful what you wish for you might just get it.

Quote:

Originally Posted by hill60 

 

If Apple have no case why don't they just settle?

 

If the DoJ has a case why are they trying to avoid having to present it?

 

Apple is innocent, the DoJ has no case.

 

Apple are guaranteed the presumption of innocence under the constitution of the United States of America,

 

Allowing the DoJ to override these fundamental rights sets a very dangerous precedent, reminiscent of a police state.

 

Who will be next on the DoJ hitlist, who will influence them behind the scenes, who will jockey to control this power?

 

Be careful what you wish for you might just get it.

Apple is arrogant and will do anything to not admit guilt. They didn't settle for these lawsuits, why do you think they would do it now?

Misleading Customers on Warranties in 11 Countries

The DOJ is not trying to avoid a trial for the reasons you think. They have an iron clad case against Apple and are trying to avoid the time and costs of a trial when the outcome is obvious.

There is a legal term for what they are doing. They are asking for a summary judgment, a court order ruling that no factual issues remain to be tried and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts WITHOUT A TRIAL.

Quote:

Originally Posted by Russell 

The DOJ is not trying to avoid a trial for the reasons you think. They have an iron clad case against Apple and are trying to avoid the time and costs of a trial when the outcome is obvious.

There is a legal term for what they are doing. They are asking for a summary judgment, a court order ruling that no factual issues remain to be tried and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts WITHOUT A TRIAL.

How about I make a complaint about you to the DoJ, giving them an "iron clad case" i.e. tell them anything I want, and they convict you without any trial because there is no need for you to defend yourself.

A VERY dangerous precedent is being set here.

Quote:

Originally Posted by Russell 

Steve wanted to enter the ebook market, but the profits were too low for his liking. So he colluded with publishers to increase prices, thus violating both laws.

No he/they didn't.