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Apple to appeal e-book decision, maintains company did 'nothing wrong' - Page 2

post #41 of 70
Quote:
Originally Posted by sac2dude View Post

As I posted back in June:  "Apple was price fixing, its an open and shut case. They helped organize an effort among top publishers to raise e-book prices. The government has a bunch of e-mail, phone calls, and key witnesses that seem to make this a done deal."  etc.

 

At the time, the response was that I was an Amazon shill, a one-post troll, etc.  

Actually all I did was read the news of the day and had a pretty good idea of what the DOJ was presenting.  It simply made sense to me, and obviously to every involved publisher as well, since they all ultimately settled.

 

I expected Apple to appeal, not because their case has merit or they were short-changed during the trial, but simply due to their corporate arrogance.   They have more than enough money to keep fighting, so its no big deal to them.  In the end, they won't acquiesce and they'll never admit wrong doing - they'll simply bow to the verdict and pay.  

 

It seems to me that Apple's main concern here is that its business model --- high margins --- is under attack, so I would expect the company to use all available legal tactics to defend that. Failing to do so could have rather drastic consequences so it makes sense in that scenario to fight to the bitter end.  It will be interesting to see their legal strategy unfold.

post #42 of 70
Quote:
Originally Posted by jungmark View Post


Wrong. If Amazon wanted to sell for less, Apple had the option to lower its prices too. Amazon sells ebooks at a loss while undercutting everyone.

no, under the new pricing models, apple made it a rule that if anyone else sold their books cheaper, apple would be allowed to buy their books for the discounted price minus 30 percent.  This means that the publishers would also have to change their dealings with amazon to force them under a similar contract.  if they simply kept amazon on the same terms, every time amazon offered a book with less than 30% margins (assuming amazon paid the same wholesale price as apple), the publishers would have to charge apple a lower wholesale price.  No company in their right mind would go along with that, and in general, under a free market, apple can't dictate what prices their competitors charge.  They can influence them (price wars, etc), but they can't go to a competitor and demand that they charge the same thing (that would be known as price fixing).

 

Phil

post #43 of 70
Maybe I am missing something here. Where was it that I read Eddie Cue having said, that bits are bits, it doesn't matter what those bits represent, be it an app or an epub, or a movie or a song? Apple doesn't fix the prices, it only takes 30% of every sale that goes through their system, basically their cost of handling payments, reversals and the hardware and software necessary to run the services. So why should epubs be treated any other way? Makes perfect sense to me.
The publishers could just as easily have priced their ebooks at $9.99 and sold millions of copies via iBooks and there would be no problems. They could have even raised their prices to Amazon keeping the wholesale model, but no they couldn't because Amazon too had an MFN clause, for which they are not being accused of any wrong-doing. But instead, they forced Amazon to accept the agency model, which wasn't really something Apple even asked them to do.
It is obvious that the DoJ doesn't understand the nature of doing business online at all... And of course, the Publishers are greedy to charge more than what is fair for an ebook, considering no printing, stocking and shipping are necessary.
post #44 of 70
Quote:
Originally Posted by philgar View Post

no, under the new pricing models, apple made it a rule that if anyone else sold their books cheaper, apple would be allowed to buy their books for the discounted price minus 30 percent.  This means that the publishers would also have to change their dealings with amazon to force them under a similar contract.  if they simply kept amazon on the same terms, every time amazon offered a book with less than 30% margins (assuming amazon paid the same wholesale price as apple), the publishers would have to charge apple a lower wholesale price.  No company in their right mind would go along with that, and in general, under a free market, apple can't dictate what prices their competitors charge.  They can influence them (price wars, etc), but they can't go to a competitor and demand that they charge the same thing (that would be known as price fixing).

 

Phil

 

I've read everything I could along the way for all this and I am dead positive that you do not understand the Agency Model that Apple had been using, nor do you understand what everyone has been calling the "most favored nation" clause.  I believe jungmark is spot on.

 

You're going to have to provide some proof.

post #45 of 70
Quote:
Originally Posted by crushed View Post
Apple doesn't fix the prices, it only takes 30% of every sale that goes through their system, basically their cost of handling payments, reversals and the hardware and software necessary to run the services. So why should epubs be treated any other way? Makes perfect sense to me.

 

I've got to say-- I've heard this argument over and over but I don't buy it.  Sure, it makes sense for music through iTunes where prices between commodities are relatively static (all songs are approximately $1), but book prices can vary wildly.

 

Imagine:

- a 30% cut could be anywhere from less than $1 (novella) up to $15 (textbook)

- primary variance in product is file size

- there is no direct correlation between price and file size

 

If you think about these things, I think it becomes obvious that there is no logical reason why the old 30% should make perfect sense.  That isn't to say that the numbers don't work out, either.  It may well be that Apple continues to make similar profits (supposedly breaking even), but we can only assume this to be true on faith.

post #46 of 70

Quote:
Originally Posted by Russell View Post
"Congress passed the first antitrust law, the Sherman Act, in 1890 as a "comprehensive charter of economic liberty aimed at preserving free and UNFETTERED COMPETITION as the rule of trade."

 

Please explain to me how preserving Amazon's monopoly serves the goal of "unfettered competition"? 

 

Apples "crime" here was offering a better deal to suppliers.  

 

So called "anti-trust" "law" (it isn't law, it's illegal, under the constitution) is just a political tool to pick favorites.   It is the essence of corruption in government. 

 

I'm certain at some point before this case was started, Apple got a call demanding they pay off some powerful political figure, just like a mafia style shakedown, because that's what it was-- and when they refused to corrupt themselves by doing so, the DoJ started going after them.

 

You have to be seriously naive (not to mention ignorant of the law) to think otherwise.  

post #47 of 70
Quote:
Originally Posted by brutus009 View Post

 

I've read everything I could along the way for all this and I am dead positive that you do not understand the Agency Model that Apple had been using, nor do you understand what everyone has been calling the "most favored nation" clause.  I believe jungmark is spot on.

 

You're going to have to provide some proof.

You're right.  Philgar's recent posts are full of errors and mischaracterizations.

 

Apple is never buying anything from the publishers; there is no wholesale price.  Amazon was never limited by the proposed agreement; the MFN clause just gave Apple the ability to implement a lower price under some conditions.

post #48 of 70
Quote:
Originally Posted by Jessi View Post

 

Please explain to me how preserving Amazon's monopoly serves the goal of "unfettered competition"? 

 

Apples "crime" here was offering a better deal to suppliers.  

 

So called "anti-trust" "law" (it isn't law, it's illegal, under the constitution) is just a political tool to pick favorites.   It is the essence of corruption in government. 

 

I'm certain at some point before this case was started, Apple got a call demanding they pay off some powerful political figure, just like a mafia style shakedown, because that's what it was-- and when they refused to corrupt themselves by doing so, the DoJ started going after them.

 

You have to be seriously naive (not to mention ignorant of the law) to think otherwise.  

 

Count me as seriously naive then.

 

I do believe this case wouldn't have been brought under a GOP administration, but I am fairly certain that there was no phone call extorting Apple to pay off "some powerful political figure."

 

I believe applying the anti-trust act in this case is bad for lots of reasons (including the irony of using the anti-trust act to protect the business practices of the market leader that demonstrably resorts to predatory pricing to protest that party power), but because the way the law is written it was very hard for Apple to defend its (perfectly reasonable) actions.  It's not a district court judge's job to determine whether a law is good policy, so I don't blame her for the ruling.  The appeals will be interesting though.

post #49 of 70
Quote:
Originally Posted by malax View Post

You're right.  Philgar's recent posts are full of errors and mischaracterizations.

 

Apple is never buying anything from the publishers; there is no wholesale price.  Amazon was never limited by the proposed agreement; the MFN clause just gave Apple the ability to implement a lower price under some conditions.

I'm trying to figure out which part of my logic didn't make sense (see http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/10/a-judge-says-apple-fixed-e-book-prices-this-chart-shows-how-they-did-it/ for information on this).  

 

Before apple was in the business, books were sold on a wholesale model.  Amazon paid $X for a book, and could sell the books for whatever price they want.  This meant that Amazon could choose to sell a book below cost to gain interest in their store (just as grocery stores often have Sales on items to drive traffic to the store where they'll pay higher prices for other goods to make up for the loss leaders that were on sale).  

 

Apple made agreements to change to the Agency model: "Apple got five of the six publishers to agree to an “agency model,” where publishers set the price and Apple got a fixed percentage of the sale price. And Apple’s contract with the five publishers included a “most favored nation” clause, stating that if Amazon offered books at a lower price, the publisher would match that price on Apple’s e-book store."  Because of the MFN clause, the publishers could not continue selling books to amazon under the old wholesale pricing model (under the wholesale model the publishers could not control the price that the resellers sold their books for).  From this same article:  "The fact that five of nation’s leading publishers had all accepted this “most favored nation” clause greatly strengthened their bargaining power with Amazon. Each of them gave the Kindle maker an ultimatum: accept an agency model, and higher prices, or Amazon would lose access to the publishers’ books. Amazon would have refused if any single publisher had made this demand. But with five publishers making the same demand simultaneously, Amazon was forced to capitulate."  

 

After these changes, Amazon could no longer choose what price they wanted to sell ebooks for.  The publishers saw to this.  What part of this doesn't make sense to you, and what part of my statements earlier didn't make sense?  Facts are facts, and this is how things happened.  

 

Phil

post #50 of 70

"the customer pays a little more, but that’s what you want anyway"

 

A direct quote from Steve Jobs

One of the most amazing entrepreneurs of our time

Embedded in the Apple culture

 

Is it any wonder they need alot of lawyers and get fairly frequent lawsuits?

Its why I own the stock...

post #51 of 70
Quote:
Originally Posted by Russell View Post

People can see I know it better than you.

The Judge's summary backs up what I posted.

 

People can see that the judge prejudged the case, that much is obvious. I'll repeat, based on your postings here, if you're a lawyer, find another career.

post #52 of 70
Quote:
Originally Posted by Victory2013 View Post

Take off your apple shaped and shaded glasses. The evidence was strong against Apple. The publishers knew it and settled but Apple was to arrogant and took a chance and Apple lost.

 

Quote:
Originally Posted by Victory2013 View Post

You are pretty full of yourself. Apple thought they could get away with price fixing and they failed. Now they have to accept their punishment. Hopefully it will be a severe punishment.

 

The evidence was embarrassingly flimsy, to the point of being virtually non-existent. The judge decided the case before it was heard and used the thinnest of pretexts to justify the "decision". This was the definition of a kangaroo court, and is a disgrace to the entire U.S. justice system. Cases like this that are brought because of corruption, and decided based on allegations, rather than evidence, undermine all confidence in our legal system, and rightly so.

post #53 of 70
Quote:
Originally Posted by Jessi View Post

... So called "anti-trust" "law" (it isn't law, it's illegal, under the constitution) is just a political tool to pick favorites.   It is the essence of corruption in government. ...

 

Anti-trust law is necessary and, of itself, has nothing to do with corruption. Unfortunately, like all laws, corruption can lead to abuse. This case was entirely driven by corruption, and it's clear that the source of that corruption is Amazon who found lawyers at the DoJ willing to do their bidding. And apparently a judge who doesn't belong on the bench to go along with it, regardless of the lack of actual evidence. It's a sad day when we see so clearly that the DoJ is bought and sold by those without scruples.

post #54 of 70
Quote:
Originally Posted by philgar View Post

I'm trying to figure out which part of my logic didn't make sense (see http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/10/a-judge-says-apple-fixed-e-book-prices-this-chart-shows-how-they-did-it/ for information on this).  

 

 

Phil

 

The part of your logic that doesn't make sense is that you are trying to use logic on Apple fanatics on a decision that went against Apple 


Edited by Frood - 7/11/13 at 3:29am
post #55 of 70
Quote:
Originally Posted by brutus009 View Post

 

I've got to say-- I've heard this argument over and over but I don't buy it.  Sure, it makes sense for music through iTunes where prices between commodities are relatively static (all songs are approximately $1), but book prices can vary wildly.

 

Imagine:

- a 30% cut could be anywhere from less than $1 (novella) up to $15 (textbook)

- primary variance in product is file size

- there is no direct correlation between price and file size

 

If you think about these things, I think it becomes obvious that there is no logical reason why the old 30% should make perfect sense.  That isn't to say that the numbers don't work out, either.  It may well be that Apple continues to make similar profits (supposedly breaking even), but we can only assume this to be true on faith.

 

There is nothing wrong with Apple wanting high margins or insisting on a 30% cut.  If they can deliver a superior product and/or convince people their products are worth more- that is super for them.

 

The problem was that books were already market priced at 9.99 at which price point publishers were not making high margins.  If Apple sold books for 9.99 and took 30% the publishers would take a huge loss. Apple was free to sell its books for 12.99. If you look at the evidence and Steves comments, he quickly realized Apple would fail if everyone else was selling at 9.99. Since he evidently concluded that he couldnt convince Apple users that iBooks were somehow superior magical Apple books the only logical solution to get Apple 30% margins and sell well was to come up with a system that would force the competition to raise their prices as well.  He came up with a pretty good one.  Note that Apple wasnt heroically "saving publishers"    At 12.99, take out Apples 30% and publishers get the same 9.99 they make elsewhere.  Now publishers were essentially forced to raise prices to 12.99 everywhere.  They were free to sell for less, say 9.99, but they would be forced to allow Apple to match that price AND still guarantee Apple 30% (effectively selling at 6.00 and taking a big loss)  The plan worked, iBooks were born, and consumer prices for books rose overnight.  Unfortunately that pesky DOJ stepped in and prices dropped again.

post #56 of 70
Quote:
Originally Posted by anonymouse View Post

 

Anti-trust law is necessary and, of itself, has nothing to do with corruption. Unfortunately, like all laws, corruption can lead to abuse. This case was entirely driven by corruption, and it's clear that the source of that corruption is Amazon who found lawyers at the DoJ willing to do their bidding. And apparently a judge who doesn't belong on the bench to go along with it, regardless of the lack of actual evidence. It's a sad day when we see so clearly that the DoJ is bought and sold by those without scruples.

 

 

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Reply
post #57 of 70
Quote:
Originally Posted by Frood View Post

 

There is nothing wrong with Apple wanting high margins or insisting on a 30% cut.  If they can deliver a superior product and/or convince people their products are worth more- that is super for them.

 

The problem was that books were already market priced at 9.99 at which price point publishers were not making high margins.  If Apple sold books for 9.99 and took 30% the publishers would take a huge loss. Apple was free to sell its books for 12.99. If you look at the evidence and Steves comments, he quickly realized Apple would fail if everyone else was selling at 9.99. Since he evidently concluded that he couldnt convince Apple users that iBooks were somehow superior magical Apple books the only logical solution to get Apple 30% margins and sell well was to come up with a system that would force the competition to raise their prices as well.  He came up with a pretty good one.  Note that Apple wasnt heroically "saving publishers"    At 12.99, take out Apples 30% and publishers get the same 9.99 they make elsewhere.  Now publishers were essentially forced to raise prices to 12.99 everywhere.  They were free to sell for less, say 9.99, but they would be forced to allow Apple to match that price AND still guarantee Apple 30% (effectively selling at 6.00 and taking a big loss)  The plan worked, iBooks were born, and consumer prices for books rose overnight.  Unfortunately that pesky DOJ stepped in and prices dropped again.

 

That's a pretty good summary, but perhaps with the motivations wrong.

 

Apple literally didn't care what the prices were.  They simply wanted to sell box using their simple 70-30 model.  They didn't want to become a full-blown old-school retailer having Apple staff figuring out prices.  Like with the App Store, it's better for Apple if they let the providers of the content decide on pricing and Apple just takes 30% off the top.  That was their motivation, period.  If they could have signed up one publisher under those terms, they would have been happy to.  Two publishers, better.  Three? Sure.  So they went to each publisher and tried to convince them into adopting that model.  Obviously you don't pitch something by telling the party "here's why this is good from MY perspective" you figure out arguments that will be persuasive to them.  So obviously if the publishers are used to making $10 a book, you explain why it's a win-win if hey sell it at your store for $13.  If after the deals are signed, competition forces the book prices down to $10 or even $5 Apple wouldn't care.  They would be just as happy selling a million books at $5 as half a million at $10.  So that's the part about "conspiring to raise prices" that pissed Apple off when they were charged with it.  In their minds they literally had no interest in conspiring to raise prices; they just wanted a way to enter the market using the business model that works for them.  They worked with each publisher separately and tried for the best.  In retrospect, you wonder how the case would have gone (or if their would have been a case) if they had just published a statement on their Web site: "If anyone wants to sell books in the iTunes store where you set the price, give us 30% and agree that if someone else charges a lower price we can match it, let us know, we're ready to sign the deal."  That is exactly what Apple did, but less publicly.  And somehow that is illegal.

post #58 of 70
The red flag for me is why was Barnes & Noble was not pursued or included for doing the exact same thing as Apple.

The company is certainly more vested in the book selling and publishing industry than Apple.

Why did Amazon and the DOJ omit them? To suggest they were not visible is a farce. To selectively go after a new player for restrictive practices when Amazon as the market leader with 80% were using predatory price stinks of corruption in the system.
post #59 of 70
Quote:
Originally Posted by Victory2013 

Take off your apple shaped and shaded glasses. The evidence was strong against Apple. The publishers knew it and settled but Apple was to arrogant and took a chance and Apple lost.


You do know that this was all started by Google who preempted Amazons own look at this model in 2009?
Also many forums within amazon on them hiking prices even before Apple entered the market!
Most have been deleted but you may find via search-engine:

http://www.amazon.com/forum/kindle/ref=cm_cd_search_res_ti?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdPage=1&cdSort=oldest&cdThread=TxBY0I92SPJUXL#Mx23STMA0NBRBLJ


http://www.mobileread.com/forums/showthread.php?t=6645


http://www.amazon.com/forum/kindle/ref=cm_cd_search_res_ti?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdPage=1&cdSort=oldest&cdThread=Tx28MXH5V1SE8X2#Mx2WU1UTSHE7RGQ

http://www.amazon.com/forum/kindle/ref=cm_cd_search_res_ti?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdPage=1&cdSort=oldest&cdThread=TxBY0I92SPJUXL#Mx23STMA0NBRBLJ
post #60 of 70
Quote:
Originally Posted by philgar View Post

maybe the reason you found the books cheaper on amazon is because the publishers of those books admitted they were guilty of price fixing, and have since reverted to their previous pricing agreements.  Under the agreement signed with apple, Amazon was NOT ALLOWED to price their books less than a fixed price, and apple would be able to buy their books for 30% less than that fixed price.  As apple charges a 30% premium on content, that would mean the CHEAPEST amazon could sell their books was at the same price apple was selling their books.  Under the old agreement, amazon could sell their books at whatever price they wanted to (you know... competition), which meant they could accept a 20% margin and sell their books for less than apple.  

 

The book publishers admitted they were breaking the law almost immediately when the government went after them, so the illegal price fixing scheme wasn't in effect for very long.  The funniest part about this case is watching the apple zealots defend apple here when at the end of the day this will make next to NO difference in apple's bottom line.  Apple has no change of changing to the favorable pricing agreements they wanted, and if they admitted to being guilty at first, there would have been a small slap on the wrist, and a fine (which would likely be so small that it wouldn't remotely impact apple's profits).  Now they're spending millions fighting this case, and they really have no hope of winning (where winning is defined as using the pricing they want).  I just don't see why they're bothering, and I hope that if they're found guilty (assuming it goes to appeal) the judges slap down a far harsher punishment on apple for their arrogance in this matter.

 

Phil

 

You asked where you "logic" is wrong after I said that you were factually wrong.  So here are the things that you assert as facts that are wrong or misleading.

 

"Under the agreement signed with apple, Amazon was NOT ALLOWED to price their books less than a fixed price"   This is not true (capitalization or not).  Point to any "agreement signed with apple" that says what other retailers are allowed to do.

 

"As apple charges a 30% premium on content"  Except that Apple doesn't set the price and therefore doesn't "charge a premium" of any type.  I sell a few apps through the App Store and Apple takes 30%.  They aren't charging a premium.

 

"Under the old agreement, amazon could sell their books at whatever price they wanted to (you know... competition), which meant they could accept a 20% margin and sell their books for less than apple."  They still could.  But Apple would have the right to lower their prices too (you know... competition).  And as clearly shown in the DoJ case, Amazon wasn't accepting a 20% margin.  In every example the DoJ showed, Amazon was selling books for LESS than they were paying the publishers.  They were selling books for a loss.  Wonder why.  Must be their charitable mission.  Or perhaps they had an interest in maintaining their defacto monopoly on eBooks.  Funny that Barnes and Noble got out of the eBook reader business recently because their Nook couldn't compete.  Huh.

 

"The book publishers admitted they were breaking the law almost immediately" Technically they didn't admit that.  They agreed to accept a long list of terms to avoid a trial.  Obviously they weren't optimistic about their chances in court, but they didn't "admit" that they were breaking the law.

 

" this will make next to NO difference in apple's bottom line"   This is true.  Most of us just think it's bogus that Apple got called on the carpet for making reasonable agreements with the publishers.  It's pretty clear that the publishers did any conspiring that happened on their own using Apple as a tool.

 

"Apple has no change of changing to the favorable pricing agreements they wanted"   We'll see.  Agency models are explicitly still allowed; it's the MFN part that's a no-no.

 

"Now they're spending millions fighting this case, and they really have no hope of winning (where winning is defined as using the pricing they want)."  Three parts to that.  A. "millions" will make "next to NO difference in apple's bottom line" so who cares, right?  B. They have a non-trivial chance of winning on appeal.  C. Winning is not defined as using the pricing they want; it's defined as not losing and being forced to accept a bunch of restrictions that the DoJ would insist on.

 

I hope that if they're found guilty (assuming it goes to appeal) the judges slap down a far harsher punishment on apple for their arrogance in this matter.   Fortunately for all of us, the justice system doesn't work that way.  "You can appeal your manslaughter conviction Mr. Falsely Accused, but if you lose your appeal, it'll be upgraded to 2nd degree murder and then 1st degree if you persist in your arrogance."

 

If your facts were more accurate, your logic would be worth considering.

post #61 of 70
Quote:
Originally Posted by sac2dude View Post

Yep, you must be right.   We're all simply Apple-haters.  Obviously myself, the judge, the DOJ...  (Does this mean I'll have to sell my Macbook?)  1wink.gif

 

Or perhaps you're the one in denial and everyone else is making an educated decision based on the presented evidence in the case?

 

It's okay to like the products a company makes, yet be critical of decisions that seem short-sighted or surprisingly daft given the pay-grade of the executives that work at the company.    You don't have to be "all in" (aka. "a fanboy"),  having perspective is a healthy thing.

Quote for the year. Should be on the front of every Apple Insider Article.

post #62 of 70
Quote:
Originally Posted by malax View Post

 

That's a pretty good summary, but perhaps with the motivations wrong.

 

Apple literally didn't care what the prices were.  They simply wanted to sell box using their simple 70-30 model.  They didn't want to become a full-blown old-school retailer having Apple staff figuring out prices.  Like with the App Store, it's better for Apple if they let the providers of the content decide on pricing and Apple just takes 30% off the top.  That was their motivation, period.  If they could have signed up one publisher under those terms, they would have been happy to.  Two publishers, better.  Three? Sure.  So they went to each publisher and tried to convince them into adopting that model.  Obviously you don't pitch something by telling the party "here's why this is good from MY perspective" you figure out arguments that will be persuasive to them.  So obviously if the publishers are used to making $10 a book, you explain why it's a win-win if hey sell it at your store for $13.  If after the deals are signed, competition forces the book prices down to $10 or even $5 Apple wouldn't care.  They would be just as happy selling a million books at $5 as half a million at $10.  So that's the part about "conspiring to raise prices" that pissed Apple off when they were charged with it.  In their minds they literally had no interest in conspiring to raise prices; they just wanted a way to enter the market using the business model that works for them.  They worked with each publisher separately and tried for the best.  In retrospect, you wonder how the case would have gone (or if their would have been a case) if they had just published a statement on their Web site: "If anyone wants to sell books in the iTunes store where you set the price, give us 30% and agree that if someone else charges a lower price we can match it, let us know, we're ready to sign the deal."  That is exactly what Apple did, but less publicly.  And somehow that is illegal.

 

Someone had a link to the DOJ evidence and each piece individually may not say much, but the overall picture is clear.  They all knew exactly what they were doing.  I was a little surprised by the verdict as Apple was pretty crafty all along the way with a few major flubs from all parties -Steve, the publishers, Eddy.

 

Apply this to another market...  Apple decides to sell cars at its new iCar store.  They insist car dealers give them 30 percent.  Dealers who sell a car for 50000 would now have to sell it for 57500 in order to make the same profit.  Pundits might laugh at Apple and ask the CEO how he expected to sell any cars for 57500 when one click away the car was selling for 50000.  His response of 'they won't be' taken in the context of him already taking steps to ensure they have to raise prices everywhere would be a pretty big mistake by itself.  A manufacturer saying 'I cant believe he just said that on public TV, how dumb, we're going to get caught'   Obviously if only Ford  raised its prices by 30 percent and no one else did, Ford would sell very few cars.  There is no way they would sign up for that unless Apple got every other major car manufacturer on board.

 

So after the success and proven model of iBooks, Apple launches iCars with the same 30 percent margin and MFN clause.  Overnight all car prices jump up roughly 30 percent everywhere.  Apple would be a hero for doing this?  Apple would be making more.  Check.  Car manufacturers would be making more.  Check.  Consumers would be paying more, but hey, thats what we all want, right?

post #63 of 70
There's no way this will not be upheld on appeal, it would give Apple and everyone else licence to engage in antitrust behaviour via a third party. Rightly or wrongly, Apple are going to be made an example of for this. Maybe they should just have settled along with everyone else - now they are the public face of this scandal.
post #64 of 70
Quote:
Originally Posted by anonymouse View Post

 

The evidence was embarrassingly flimsy, to the point of being virtually non-existent. The judge decided the case before it was heard and used the thinnest of pretexts to justify the "decision". This was the definition of a kangaroo court, and is a disgrace to the entire U.S. justice system. Cases like this that are brought because of corruption, and decided based on allegations, rather than evidence, undermine all confidence in our legal system, and rightly so.

 

The judge offered guidance. This is normal practice. You make wild accusations about corruption despite having a limited understanding of how the US legal system works. I guess that's par for the course on the internet though.

post #65 of 70

Apple said they created more competition. The judge said Apple was anti-competitive.

Apples actions restricted options for pricing, but increased other options.

 

The judge seems to think the only competition on price counts. 

Apple is not allowed to compete any other way.

post #66 of 70
Quote:
Originally Posted by RichL View Post

 

The judge offered guidance. This is normal practice. You make wild accusations about corruption despite having a limited understanding of how the US legal system works. I guess that's par for the course on the internet though.

 

There's no way this case would have ever come to trial without someone at DoJ being bought by Amazon. The so-called "evidence" in this case is absurdly weak. The "facts" presented by the DoJ are an alternate reality. There is no possible doubt that Amazon twisted arms and paid for this DoJ action. The only question is whether the judge was also bought or just stupid.

post #67 of 70
Quote:
Originally Posted by Scaramanga89 View Post

There's no way this will not be upheld on appeal, it would give Apple and everyone else licence to engage in antitrust behaviour via a third party. Rightly or wrongly, Apple are going to be made an example of for this. Maybe they should just have settled along with everyone else - now they are the public face of this scandal.

 

The example made here is that the DoJ can be bought and made to do the bidding of anyone willing to do so, like Amazon.

post #68 of 70
Quote:

Originally Posted by Frood View Post

 

So after the success and proven model of iBooks, Apple launches iCars with the same 30 percent margin and MFN clause.  Overnight all car prices jump up roughly 30 percent everywhere.  Apple would be a hero for doing this?  Apple would be making more.  Check.  Car manufacturers would be making more.  Check.  Consumers would be paying more, but hey, thats what we all want, right?

 

Except that's not how markets work.  Prisoners' Dilemma and all that.  It's hard for collaborators/conspirators to avoid the temptation to compete and it's even harder to prevent outsiders from coming in an exploiting the opportunity created by artificially high prices.  (Except in heavily regulated markets with high barriers to entry, such as airlines.)

 

Also, I'm not saying that everyone (or even consumers) would be better off it Apple gets its way on all things.  I just don't like that heavy handed government bureaucrats get to selectively second guess reasonable business practices.  And inviting publishers to sell their works via an agency model with a MFN clause seems reasonable.

 

Ironically, based on the settlement agreement I read last night at least, it appears that Apple first came to the publishers proposing a wholesale model.  It was the publishers who suggested to Apple that an agency model would be a win-win.  In that version of the story Apple is a sap who would duped into a conspiracy not of their own making.  So that sucks for them.

post #69 of 70
Quote:
Originally Posted by anonymouse View Post

 

There's no way this case would have ever come to trial without someone at DoJ being bought by Amazon. The so-called "evidence" in this case is absurdly weak. The "facts" presented by the DoJ are an alternate reality. There is no possible doubt that Amazon twisted arms and paid for this DoJ action. The only question is whether the judge was also bought or just stupid.


You're the one that's living in an alternate reality.

Apple admitted they could not compete with Amazon so they colluded with publishers to raise prices. The DOJ lawyers proved it.

No matter what type of media...movies, music, books, photos and web pages

look better and sound better on the Kindle Fire HD and HDX than any iPad

Reply

No matter what type of media...movies, music, books, photos and web pages

look better and sound better on the Kindle Fire HD and HDX than any iPad

Reply
post #70 of 70
Quote:
Originally Posted by malax View Post

 

That's a pretty good summary, but perhaps with the motivations wrong.

 

Apple literally didn't care what the prices were.  They simply wanted to sell box using their simple 70-30 model.  They didn't want to become a full-blown old-school retailer having Apple staff figuring out prices.  Like with the App Store, it's better for Apple if they let the providers of the content decide on pricing and Apple just takes 30% off the top.  That was their motivation, period.  If they could have signed up one publisher under those terms, they would have been happy to.  Two publishers, better.  Three? Sure.  So they went to each publisher and tried to convince them into adopting that model.  Obviously you don't pitch something by telling the party "here's why this is good from MY perspective" you figure out arguments that will be persuasive to them.  So obviously if the publishers are used to making $10 a book, you explain why it's a win-win if hey sell it at your store for $13.  If after the deals are signed, competition forces the book prices down to $10 or even $5 Apple wouldn't care.  They would be just as happy selling a million books at $5 as half a million at $10.  So that's the part about "conspiring to raise prices" that pissed Apple off when they were charged with it.  In their minds they literally had no interest in conspiring to raise prices; they just wanted a way to enter the market using the business model that works for them.  They worked with each publisher separately and tried for the best.  In retrospect, you wonder how the case would have gone (or if their would have been a case) if they had just published a statement on their Web site: "If anyone wants to sell books in the iTunes store where you set the price, give us 30% and agree that if someone else charges a lower price we can match it, let us know, we're ready to sign the deal."  That is exactly what Apple did, but less publicly.  And somehow that is illegal.

 

 

What you say makes a lot of sense, but it has one fatal flaw.  No publisher could give Apple the most favored nation clause without first changing their agreement with Amazon.  While you can argue otherwise, there is no way to guarantee that competing stores don't undercut apple's prices while the competitors were buying books on the wholesale model.  Amazon had no interest in switching from the wholesale model to the agency model, and if any single book publisher told amazon they had to change their pricing model, amazon would likely have told the publisher to take a hike. Amazon knew that the publishers needed amazon's book store more than amazon needed any individual publisher.

 

The only way the publishers could change their agreement with amazon was by conspiring together to do this at the same time.  Amazon couldn't afford to lose all the publishers at once, as that would be highly detrimental to their business model.  It was clear from the case that the publishers did this conspiring (and the publishers backed off the second the DOJ went after them).  Apple was in a position to encourage the publishers to work together, as Apple's book store could not get off the ground (with apple's 30% cut) unless the publishers conspired together.  The judge looked at the evidence, and it was clear that Apple helped arrange this, and facilitated the transition of the publishers to the agency model.  Whether or not Apple directly communicated between the publishers allowing them to know how the others were acting would be highly damning to apple, however without direct evidence of this, it is clear that the conspiracy between the publishers helped apple out tremendously (as their bookstore couldn't exist without it).  Apple had everything to gain by allowing the book publishers to conspire, and if nothing else, they did not work to prevent the book publishers from conspiring together, and in fact encouraged it.  Apple knew what the book publishers would have to do to use their model, and apple encouraged those actions (remember if you are with friends who rob a store, and you don't actively participate but are with them, don't stop them, and stay by them, you are also guilty).  You can try to deny it all you want, but the courts have evaluated the case and made their ruling against apple already.  

 

While everyone here wants to shout that what amazon was doing was also unfair, that point is completely irrelevant.  If you think someone else is breaking the law, it does not give you the right to break the law in retaliation.  If Apple really thought Amazon was pursuing unfair practices, they could have taken them to court over it.  What apple did instead was to provide a means for the publishers to conspire against Amazon.  All arguments about amazon cheating etc are completely irrelevant to the case at hand.  All whining about the law being wrong/unfair are also irrelevant.  Just because a law is wrong doesn't give a company the right to blatantly ignore it.  If you really believe so strongly against the law, attempt to do something about it, and don't argue that the law should apply to amazon, or apple's competitors (such as microsoft) but not apply to apple.

 

Phil

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