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Apple's loss in e-book antitrust case likely to give advantage to Amazon - Page 2

post #41 of 85
Nice work by the US Justice Department, they just made 'dumping' legal.
post #42 of 85
Quote:
Originally Posted by jragosta View Post


They were selling best sellers at below their cost. Since a small competitor would be unable to do that, it meets the requirements for predatory pricing laws to come into play.

It's pretty much an open and shut case - if the government were to pursue it.

 

Open and shut only if you consider best sellers as markets onto themselves. Otherwise a bit murkier I think. Or are you suggesting that it's also illegal for my local grocery store to sell a few items at below cost to get people to shop there? Because guess what, that happens, too.

Yes, perhaps Amazon should be investigated, but I'd hardly call it open and shut. Looking at recent history, MS wasn't just takent to court just because they were successful in making IE the dominant web browser, they were investigated because they used their monopoly in another market (operating systems) to do it. Amazon may have sold some books at a loss, but did their entire ebook business operate at a loss? Did they use profit from their other markets to prop up their ebook business? Maybe, I don't know; but I've not seen anyone provide any actual evidence that they did anything illegal...selling some books at a loss certainly is not illegal.
post #43 of 85
Quote:
Originally Posted by drblank View Post


Plus I think Google should be investigated in light of the latest security issues. They are finding that their Android OS since 1.6 release has a security flaw. And they are just finding out about this now? I'm wondering how long Google has known about this and what they are planning on doing about it. Some phones can't be updated with the latest OS so what's Google planning on doing? Haven't heard a peep about it. Does Google think that if they don't mention anything that it will just go away?

There's been several articles that report Google patched the flaw back in February. The OEM's were also given the fix at around the same time to roll out in an update. Obviously those OEM's have been less than prompt about it.
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post #44 of 85
Quote:
Originally Posted by rob53 View Post

Amazon was selling books below their total operational cost just to drive out other business and to force people to buy their garbage e-book readers.

 

Amazon was one of the first major sellers of e-books. Exactly what competition did they have to have to drive to drive out of business? They were trying to build a market that didn't exist. It's clear from comments on these forums that people expect digital versions to be cheaper than their analog equivalents, which is exactly what Amazon was trying to provide. Some items sold below cost, some items sold above cost, just like in regular retail markets. That 99 cent hamburger at McDonald's might not make them any profit, but when you buy the $1 soda that costs them 5 cents in product/materials, they easily make up for it.

 

And I must have been out of the town the day the Amazon leg-breaker came to my house to force me to purchase a Kindle. I've been purchasing items from Amazon for years and still haven't gotten that forced Kindle on my doorstep. I've bought several e-books from Amazon and still haven't been required to purchase a Kindle.

 

You can read Amazon's e-books on PC, Mac, the Web, iOS, Android, Blackberry, and probably some other platforms.

 

Meanwhile Apple's iBooks are accessible via iOS. Period. Eventually they'll be readable via OS X and iOS. Period. Hmm...forced?

post #45 of 85
Apple is GUILTY. To bring amazon into this does nothing.

If Apple and the publishers had issues with amazon and its low prices the right thing that could've been done is to contact the DOJ, not turn into a low class cartel.

Apple wanted to get into the book market and take share from amazon, they didnt care if their consumers had to pay more or what the right price was, so they got together and planned to raise price of ebooks. Apple can't compete with amazon in the current ebook market without sacrificing their golden model of everything must make a profit, so the best way to compete is to remove the advantage of amazon price.

Say Amazon really wanted to get more share of the mp3 business. So they call Sony, Warner ect... and they say hey we will sell your songs for $1.99 a song, but all other stores have to sell your songs for $1.99.

That is ILLEGAL. Apple was wrong and got caught.
post #46 of 85
"Part of the evidence was this video shot by Kara Swisher of Steve Jobs speaking with Walt Mossberg in the hands-on press area after the introduction of the original iPad in 2010. Mossberg asks Jobs why someone would buy a book for $14.99 from the iBookstore when they could buy the same book from Amazon for $9.99.

Jobs: Well, that won’t be the case.

Mossberg: Meaning you won’t be $14.99, or they won’t be $9.99?

Jobs (smiling): The prices will be the same."

http://daringfireball.net/

Apple was wrong accept it and move on.
post #47 of 85
Quote:
Originally Posted by rednival View Post

I like this article.  The judge explains why she made her decision.  You may not agree with her decision, but one thing is clear to me: most of the discussion on this forum is focusing on the wrong things.  The issue did not come down to the agency model or price matching.  The judge even says she is OK if Apple uses those sames strategies in the future.  That's not where this went wrong in her view.

 

The issue for the judge was Apple serving as a middle man as the publishers worked out a new pricing model.  It is because Apple was at the center of those discussions that they are now in trouble.  Had Apple simply discussed a deal with each publisher individually and kept the details of each agreement private, this case would have gone differently.

 

Another person interviewed in the articles points out this sets a precedence as to whether dominant companies can coordinate discussions between the parties in a particular industry.  My guess is Apple has used similar strategies with both the movie and music industry, so I know why Apple is sticking to its guns and saying it did nothing wrong.  

 

Personally, I can see a difference.  When Apple worked out deals with movie and music industries, they were breaking new ground.  With iBooks, they entered an existing market and had far greater market share going into the discussion.  That said, I am not sure if I agree with the judge's decision, but I recognize there were different circumstances surrounding the iTunes and iBooks negotiations.

 

That's the problem with antitrust law.  It is very circumstantial.  You can do the exact same thing you have done time and time again and finally get in trouble for it simply because your situation has improved.  

 

Very well said.  I might argue that Apple DID "[discuss] a deal with each publisher individually and kept the details of each agreement private" but the court ruled otherwise.

post #48 of 85
Quote:
Originally Posted by caliminius View Post

Amazon was one of the first major sellers of e-books. Exactly what competition did they have to have to drive to drive out of business? They were trying to build a market that didn't exist. It's clear from comments on these forums that people expect digital versions to be cheaper than their analog equivalents, which is exactly what Amazon was trying to provide. Some items sold below cost, some items sold above cost, just like in regular retail markets. That 99 cent hamburger at McDonald's might not make them any profit, but when you buy the $1 soda that costs them 5 cents in product/materials, they easily make up for it.

And I must have been out of the town the day the Amazon leg-breaker came to my house to force me to purchase a Kindle. I've been purchasing items from Amazon for years and still haven't gotten that forced Kindle on my doorstep. I've bought several e-books from Amazon and still haven't been required to purchase a Kindle.

You can read Amazon's e-books on PC, Mac, the Web, iOS, Android, Blackberry, and probably some other platforms.

Meanwhile Apple's iBooks are accessible via iOS. Period. Eventually they'll be readable via OS X and iOS. Period. Hmm...forced?

Being first doesn't mean you can't undercut future competitors. That was a barrier to entry.

It's also amazing that Apple had that much influence when Amazon had a near monopoly.
post #49 of 85
Quote:
The big winner in the U.S. government's antitrust victory over Apple is Amazon, experts say, as the online retailer will now be able to price e-books however it wants.

 

No, the "big winner" here are consumers, who will now pay fair market value prices on ebooks, not artificially inflated prices set by Apple and it's colluding publishers. While they should make a healthy profit, pricing since Apple began running things has been ridiculous, with new ebooks sometimes selling for as much as their hardback versions. This makes no sense whatsoever, seeing how the production costs aren't even close to the same, nor is the value since it's not like I can loan my drm locked ebook to a friend the same way I can a physical book. That ability adds value, and as such physical books should rightly be priced higher than ebooks. 

 

Love be how you try to leave the consumer completely out of the equation, and paint this as solely an Apple versus Amazon situation. 

post #50 of 85
Quote:
Originally Posted by Gatorguy View Post

Apple can do the same can't they? I don't thin k the government was trying to restrict Apple's price options. They certainly have a huge advantage from a revenue standpoint and can easily afford to price match Amazon.

Yeah. Another way to think about Amazon's predatory $9.99 wholesale pricing model is that only eBook companies with deep pockets AND are willing to take a loss can compete on price. While, as you pointed out Apple can do this (but it didn't want to sell books at a loss), there aren't many that can, which squeezes out many smaller players from entering the eBooks market at competitive prices. That had to be Amazon's plan: be the big fish and set market prices so that conditions were unfavorable for (smaller) competitors. Or large competitors who weren't interested in selling books as a loss leader. Ironically, Apple and the publishers put a stop to this by "forcing"Amazon" to adopt the agency pricing model so the playing field was level.

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post #51 of 85
I personally only purchase EPub based ebooks. That means zero Mobi based files so Amazon gets no sales.
post #52 of 85
Quote:
This case stinks of lobbyists. Amazon is spending money hand over fist on lobbying the government and apparently buying judges. No one following the case thought that the DOJ met their burden of proof and even the judge had to moderate her comments. Guess Amazon came thru with another payment just in time for the formal decision because it was another 180 change in course.

 

Agreed, which is how come I'm confident an Appellate Federal Court will overturn this ruling.

post #53 of 85
Quote:
Originally Posted by Suddenly Newton View Post


Yeah. Another way to think about Amazon's predatory $9.99 wholesale pricing model is that only eBook companies with deep pockets AND are willing to take a loss can compete on price. While, as you pointed out Apple can do this (but it didn't want to sell books at a loss), there aren't many that can, which squeezes out many smaller players from entering the eBooks market at competitive prices. That had to be Amazon's plan: be the big fish and set market prices so that conditions were unfavorable for (smaller) competitors. Or large competitors who weren't interested in selling books as a loss leader. Ironically, Apple and the publishers put a stop to this by "forcing"Amazon" to adopt the agency pricing model so the playing field was level.

 

That squeezing out of competition gives grounds for an Appeal to show cause that Amazon's model is damaging to ensure a healthy market of sellers.

post #54 of 85

FTC Guide to the Antitrust Laws

Dealings with Competitors:

"For the most blatant agreements not to compete, such as price fixing, big rigging, and market division, the rules are clear. The courts decided many years ago that these practices are so inherently harmful to consumers that they are always illegal,..."

 

http://www.ftc.gov/bc/antitrust/dealings_with_competitors.shtm

 

 

 

and amazon haters....

 

Single Firm Conduct:

"Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not illegal for a company to have a monopoly, to charge "high prices," or to try to achieve a monopoly position by what might be viewed by some as particularly aggressive methods. The law is violated only if the company tries to maintain or acquire a monopoly through unreasonable methods. For the courts, a key factor in determining what is unreasonable is whether the practice has a legitimate business justification."

 

http://www.ftc.gov/bc/antitrust/single_firm_conduct.shtm

 

 

 

 

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

 

http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm

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post #55 of 85
Quote:
Originally Posted by Suddenly Newton View Post


Yeah. Another way to think about Amazon's predatory $9.99 wholesale pricing model is that only eBook companies with deep pockets AND are willing to take a loss can compete on price. While, as you pointed out Apple can do this (but it didn't want to sell books at a loss), there aren't many that can, which squeezes out many smaller players from entering the eBooks market at competitive prices. That had to be Amazon's plan: be the big fish and set market prices so that conditions were unfavorable for (smaller) competitors. Or large competitors who weren't interested in selling books as a loss leader. Ironically, Apple and the publishers put a stop to this by "forcing"Amazon" to adopt the agency pricing model so the playing field was level.

 

Assuming that you somehow have deep insight into Amazon's long-term business plan for ebooks (but I'm betting you don't), is this really all that different than when Apple created the first succesful music download business? Apple "forced" the music labels to, in almost all cases, sell individual songs rather than full albums. The labels screamed that this devalued their product (sound familiar?), but they agreed to the terms. And it made it very difficult for anyone selling only albums to compete. In the beginning the iTunes Music Store was more-or-less a break-even venture for Apple, and I'm sure at first, as they were building out the infrastructure, it had a net loss. (I have yet to see any actual evidence that Amazon's ebook business was operating at a loss, only that some titles were sold at a loss.) Is break even any way to operate a publicly owned company? Or is that simply the cost of creating a new market? Were you accusing Apple then of the same evil intentions that you are now accusing Amazon? I'm betting not.

Perhaps Amazon's long-term business plan parallel's Apple's with iTunes. iTunes was pretty much a monopoly, in the same way Amazon's ebook business was when all this happend, for the first several years of it's existence; and even today it is a near monopoly. Perhaps Amazon has similar plans. Once they've created a mature sustiainable market, they can start to make a larger profit WITHOUT raising prices. Just as iTunes started making more and more money for Apple even while the prices were still 99 cents/song.
post #56 of 85
Quote:
Originally Posted by mdriftmeyer View Post

 

That squeezing out of competition gives grounds for an Appeal to show cause that Amazon's model is damaging to ensure a healthy market of sellers.

 

How?

It might be great evidence in a trial where Amazon was the defendent; but how, exactly, does it have any bearing on the trial against Apple?
post #57 of 85
Quote:
Originally Posted by Cash907 View Post

No, the "big winner" here are consumers, who will now pay fair market value prices on ebooks, not artificially inflated prices set by Apple and it's colluding publishers.
So why does Amazon get to define "fair market value" prices and not the content owners?
post #58 of 85
Quote:
Originally Posted by Frood View Post

Apple could have entered the market by either offering better books or a better price.  Their choice was to offer the same books at a much higher price.

 

So prior to Apple entering the market, which Amazon eBooks contained coloured illustrations?

 

If that isn't better why aren't we still watching black and white TV?

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post #59 of 85
Quote:
Originally Posted by Techstalker View Post

"Part of the evidence was this video shot by Kara Swisher of Steve Jobs speaking with Walt Mossberg in the hands-on press area after the introduction of the original iPad in 2010. Mossberg asks Jobs why someone would buy a book for $14.99 from the iBookstore when they could buy the same book from Amazon for $9.99.

Jobs: Well, that won’t be the case.

Mossberg: Meaning you won’t be $14.99, or they won’t be $9.99?

Jobs (smiling): The prices will be the same."

http://daringfireball.net/

Apple was wrong accept it and move on.

 

So price matching is illegal, is it?

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post #60 of 85
Quote:
Originally Posted by Cash907 View Post

...artificially inflated prices set by Apple...

 

Apple doesn't set prices.

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post #61 of 85

What this is telling business is you never want to be in a wholesale business model. As the current laws are written, once you sell your product to a wholesaler you can not legally tell them what price they can sell a product. This rule has screwed the publishing industry, they will never make money again since the court say the Amazon is fee to sell books at a lose if they want so why would consumers ever pay full price unless they are just stupid and much have the book when it first shows up.

 

Unlike Apple who controls their price and no matter where you buy an Apple product the price is virtually the same. Good for Apple profits, bad for publishers since the court just said they not allow to set their price and undo the wholesale model.

 

I have not been able to find the reference but I do believe it illegal to set pricing below costs, it consider predator pricing companies which have a Monopoly have this ability to do this and keep competitors. 

 

I personally think this case has far reaching implication which we have yet to see. I think the judge tried avoiding by saying her statement is not to interpreted broadly.


Edited by Maestro64 - 7/11/13 at 2:18pm
post #62 of 85
So now it is OK to sell the exact same thing to one company at one price and to another company at another price? If companies were people I would call that discrimination. Got to love the legal system.
post #63 of 85
The agency model vs the wholesale model also means the result (profit control) is very different. It's comparing apples and oranges%u2026

The opening statement is rather inaccurate, "Amazon%u2026 experts say, as the online retailer will now be able to price e-books however it wants."

Except that it never really lost that ability. It was never 'disabled'. Publishers don't "sell" wholesale books to Apple. The publishers sell directly via the iBooks store. They set the prices and pay a flat fee of 30% to Apple, regardless of the sale price.

Amazon "buys" books at whatever wholesale price they negotiate, and mark up (or down) as they like.

I don't understand how this ruling helps anyone but to line the government's pockets with some kind of fee money...
post #64 of 85
Quote:
Originally Posted by jungmark View Post


So why does Amazon get to define "fair market value" prices and not the content owners?

 

 

Amazon doesn't decide FMV by themselves. It requires consumers willing to buy it at that price before it's considered FMV.

 

Fair Market Value: The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.

 

Quote:
Originally Posted by Maestro64 View Post

What this is telling business is you never want to be in a wholesale business model. As the current laws are written, once you sell your product to a wholesaler you can not legally tell them what price they can sell a product. This rule has screwed the publishing industry, they will never make money again since the court say the Amazon is fee to sell books at a lose if they want so why would consumers ever pay full price unless they are just stupid and much have the book when it first shows up.

 

Unlike Apple who controls their price and no matter where you buy an Apple product the price is virtually the same. Good for Apple profits, bad for publishers since the court just said they not allow to set their price and undo the wholesale model.

 

I have not been able to find the reference but I do believe it illegal to set pricing below costs, it consider predator pricing companies which have a Monopoly have this ability to do this and keep competitors. 

 

I personally think this case has far reaching implication which we have yet to see. I think the judge tried avoiding by saying her statement is not to interpreted broadly.

 

 

Wholesale business model works fine. It's the publishing industry's fault for not adapting to, or embracing this new disruptive technology.

 

But good for consumers which is what the lawsuit was about.

 

It is NOT illegal to set prices below cost.

 

Catastrophizing.

 

 

Quote:
Originally Posted by esummers View Post

So now it is OK to sell the exact same thing to one company at one price and to another company at another price? If companies were people I would call that discrimination. Got to love the legal system.

 

 

No, it's ALWAYS been ok to sell it that way.  You never heard of volume discount?

Doesn't apple pay less for memory chips than their competitors?

Do you really think the corner liquor store pays the same price for a 6-pack of soda as Wal-Mart?

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post #65 of 85
Quote:
Originally Posted by tribalogical View Post


I don't understand how this ruling helps anyone but to line the government's pockets with some kind of fee money...
 

 

 

The ruling helps consumers. That's what antitrust laws were designed for.

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post #66 of 85
Quote:
Originally Posted by mjtomlin View Post

 

Furthermore, the publishers could've told Apple to take a hike, but they didn't. They saw an opportunity to screw Amazon and used Apple to do it. When the DOJ knocked on the door, they all scrambled and went running, leaving Apple standing alone to defend itself.

 

Publishers -> Guilty.

Apple -> Not Guilty.

 

It's freaken obvious what happened. The thing is, since the publishers settled, any evidence of wrong doing on their part cannot be used in this trial. Apple is left to completely justify the actions of everyone involved.

 

When publishers settled with DOJ, it certainly didn't help Apple. This idiot judge took those settlements as facts of wrongdoing...and hence the best conclusion she can draw is to find Apple guilty as well for providing the platform to start those conversations. Just plain awful and silly reasoning for a judge.

post #67 of 85

"Wholesale business model works fine. It's the publishing industry's fault for not adapting to, or embracing this new disruptive technology.

 

But good for consumers which is what the lawsuit was about.

 

It is NOT illegal to set prices below cost."

 

 

Another LOL'ed! Which part of this verdict is going to help the consumers??? eBooks is a much much smaller market compare to what Apples earns from apps and music. This lawsuit is never about consumers protection, get real!

post #68 of 85
Quote:
Originally Posted by Techboy View Post

"Wholesale business model works fine. It's the publishing industry's fault for not adapting to, or embracing this new disruptive technology.

 

But good for consumers which is what the lawsuit was about.

 

It is NOT illegal to set prices below cost."

 

 

Another LOL'ed! Which part of this verdict is going to help the consumers??? eBooks is a much much smaller market compare to what Apples earns from apps and music. This lawsuit is never about consumers protection, get real!

 

You know nothing about the lawsuit.
Apple's ebooks to apps to music earnings ratio is irrelevant to the case.

Ebook prices will go down. Lower prices benefit consumers. Duh!

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post #69 of 85
Hill60 suggests:Time for Apple to introduce $2.99 eBooks and see how long Amazon can match that price.

Costly. Then of course, the DOJ would go after Apple for predatory pricing, because selling below cost to gain market share, or to maintain it, is illegal. Except for the current monopolistic leader Amazon. They must have someone in their pocket.
post #70 of 85
Quote:
Originally Posted by Russell View Post

You know nothing about the lawsuit.

Apple's ebooks to apps to music earnings ratio is irrelevant to the case.


Ebook prices will go down. Lower prices benefit consumers. Duh!

Still LOL'ed....you brush aside how little ebook profit is to Apple? The context is important here, for them, ebooks is adding content to their new product that will show off the device and its multiple uses. This was never going to be their trump card for making the iPad great. The only aspect of ebook they care for was not the general consumer ebooks with big five publishers but their pursuit for the education sector...there, iPad can really shake things up.

You know nothing about publishing kid, lower prices doesn't make publishers and authors more money. The margins are shrinking for everyone. This is better for consumers? You are kidding yourself if you want to see quality ebooks for lower price...you can expect less efforts from publishers for quality. You should go look up how many outsource their ebooks for conversion oversea. You get what you pay for. Got ahead, get cheaper.
post #71 of 85
Quote:
Originally Posted by Maury Markowitz View Post

"For that reason, they aligned with Apple to switch to the "agency" pricing model, which let them set their own prices %u2014 a move that brought on antitrust scrutiny from the U.S. government."

NO NO NO NO NO!

That is NOT what "brought on antitrust scrutiny".

What "brought on antitrust scrutiny" was that Apple ALSO got the companies to agree to *raise* prices on Amazon. Price fixing is illegal, and when multiple parties agree to do something illegal that's a conspiracy. THAT is what this court case is about.

You are so wrong. with agency pricing with the favorite vendor clause Apple wouldn't care what price Amazon sold ebooks at because Apple could match Amazon's price and still make 30%. Apple didn't set the price under the agency model, the publishers did.

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post #72 of 85
Quote:
Originally Posted by Maestro64 View Post

What this is telling business is you never want to be in a wholesale business model. As the current laws are written, once you sell your product to a wholesaler you can not legally tell them what price they can sell a product. This rule has screwed the publishing industry, they will never make money again since the court say the Amazon is fee to sell books at a lose if they want so why would consumers ever pay full price unless they are just stupid and much have the book when it first shows up.

 

Only an idiot EVER paid full price for a book. Barnes & Noble, Borders and all the major brick and mortar stores have coupons all the time. The publishing industry will never make money again? How about they just sell the books to Amazon at a profitable rate, just like the majority of other industries? If Amazon pays $10 for the book, why should Random House care if Amazon sells it for $2? Random House already got their $10.

 

Quote:
Unlike Apple who controls their price and no matter where you buy an Apple product the price is virtually the same. Good for Apple profits, bad for publishers since the court just said they not allow to set their price and undo the wholesale model.

 

What Apple essentially tried to do was set the price for the entire e-book industry. No one was allowed to have a lower price than what Apple had, thus there was absolutely no point price shopping. And price is one of the major things stores compete on.

 

Quote:
I have not been able to find the reference but I do believe it illegal to set pricing below costs, it consider predator pricing companies which have a Monopoly have this ability to do this and keep competitors. 

 

Come back when you actually understand what you're talking about. Stores have been using items (like CDs) as loss leaders for decades. You'd go to Best Buy to pick up the latest CD (being sold under cost), and hopefully maybe you'd pick up something more expensive that generates profit like headphones or new speakers. With Amazon, it was maybe you'd come buy an e-Book that was sold under cost and then come back and buy other books that produced profit, or maybe you'd buy a new toaster or whatever.

 

You all focus on how Amazon can screw the e-book market with it's current position, but Apple can screw the e-book market just as well. Worse really since unlike Amazon, Apple has no real need to make a profit from it. Apple's profit is primarily in hardware and iBooks, the App Store and all that are just value-adds and lock-ins. How can a company compete against someone who has no need to make a profit selling the same product?

post #73 of 85
Quote:
Originally Posted by Techboy View Post

When publishers settled with DOJ, it certainly didn't help Apple. This idiot judge took those settlements as facts of wrongdoing...and hence the best conclusion she can draw is to find Apple guilty as well for providing the platform to start those conversations. Just plain awful and silly reasoning for a judge.

No need to guess about the judge's reasoning for her ruling. She's spelled out the details, and available to read at ArsTechnica.

"(Judge)Cote described how Apple struck agreements with each of the five publisher defendants—who settled the case before trial—in order to push e-book rates higher than Amazon's. The negotiations happened in the seven weeks leading up to the January 27, 2010 announcement of the iPad."

With a wholesale model, Apple would purchase e-books and resell them at a price of its choosing, whereas with an agency model "a publisher sets the retail price and the retailer sells the e-book as its agent." Apple would become the agent selling the books, taking a 30 percent commission on each sale, just as it does with its App Store.

But Apple did not want to open an e-book store at all unless it was profitable, Cote wrote, and in order to make it work, the company had to deal with Amazon. Apple had even considered proposing a partnership with Amazon, "with iTunes acting as 'an e-book reseller exclusive to Amazon and Amazon becom[ing] an audio/video iTunes reseller exclusive to Apple,'" Cote wrote.

"Apple realized, however, that in handing over pricing decisions to the Publishers, it needed to restrain their desire to raise e-book prices sky high," Cote wrote. "It decided to require retail prices to be restrained by pricing tiers with caps. While Apple was willing to raise e-book prices by as much as 50 percent over Amazon’s $9.99, it did not want to be embarrassed by what it considered unrealistically high prices."

The agency model (along with publisher-set but capped prices of $12.99 to $14.99) made it profitable enough for Apple to open its own e-book store—so long as Amazon's prices went up, too. Apple thus devised a Most Favored Nation (MFN) clause in its contracts with publishers which "guaranteed that the e-books in Apple’s e-bookstore would be sold for the lowest retail price available in the marketplace," Cote wrote."


"The MFN approach "eliminated any risk that Apple would ever have to compete on price when selling e-books, while as a practical matter forcing the Publishers to adopt the agency model across the board," the judge wrote.

"A chief stumbling block to raising e-book prices was the Publishers’ fear that Amazon would retaliate against any Publisher who pressured it to raise prices. Each of them could also expect to lose substantial sales if they unilaterally raised the prices of their own e-books and none of their competitors followed suit. This is where Apple’s participation in the conspiracy proved essential. It assured each Publisher Defendant that it would only move forward if a critical mass of the major publishing houses agreed to its agency terms. It promised each Publisher Defendant that it was getting identical terms in its Agreement in every material way. It kept each Publisher Defendant apprised of how many others had agreed to execute Apple’s Agreements. As Cue acknowledged at trial, “I just wanted to assure them that they weren’t going to be alone, so that I would take the fear awa[y] of the Amazon retribution that they were all afraid of.” As a result, the Publisher Defendants understood that each of them shared the same set of risks and rewards."

The rest of the article is linked here:
http://arstechnica.com/tech-policy/2013/07/how-apple-led-an-e-book-price-conspiracy-in-the-judges-words/
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post #74 of 85
Quote:
Originally Posted by Gatorguy View Post


No need to guess about the judge's reasoning for her ruling. She's spelled out the details, and available to read at ArsTechnica.

 

 

Don't bother.

 

I've already published one link with comments directly from the judge.  I received one positive comment and everyone else ignored it and kept arguing.  Honestly, I doubt anyone here cares about the real issues of this case.  They'd rather just argue endlessly about the aspects that had little to no impact on the judges decision.  Which is unfortunate, really, because there is a great conversation to be had about the REAL issues of this case and the impact of the decision.  

 

The problem is that in discussing the REAL issue here, it is not as black and white.  At least, not for me.  So everyone just wants to argue about the issues the judge herself says don't matter.  So go ahead and debate away at MFN clauses.  Go ahead and argue agency vs. wholesale.  But people are arguing about the details instead of the crux.  The judge has said Apple is free to keep using both the agency model and MFN clauses, but needs to think long and hard about how they conduct business.  The terms were not the issue.  It was the way Apple and the publishers arrived at the terms.

 

And it is much more difficult to discuss that without seeing where things there were a little more grey than people would like.


Edited by rednival - 7/12/13 at 8:17am
post #75 of 85
Quote:
Originally Posted by rednival View Post

 

Don't bother.

 

I've already published one link with comments directly from the judge.  I received one positive comment and everyone else ignored it and kept arguing.  Honestly, I doubt anyone here cares about the real issues of this case.  They'd rather just argue endlessly about the aspects that had little to no impact on the judges decision.  Which is unfortunate, really, because there is a great conversation to be had about the REAL issues of this case and the impact of the decision.  

 

The problem is that in discussing the REAL issue here, it is not as black and white.  At least, not for me.  So everyone just wants to argue about the issues the judge herself says don't matter.  So go ahead and debate away at MFN clauses.  Go ahead and argue agency vs. wholesale.  But people are arguing about the details instead of the crux.  The judge has said Apple is free to keep using both the agency model and MFN clauses, but needs to think long and hard about how they conduct business.  The terms were not the issue.  It was the way Apple and the publishers arrived at the terms.

 

And it is much more difficult to discuss that without seeing where thing there were a little more grey than people would like.

 

In addition, it seems like a lot of folks here are genuinely confused about who was on trial here, Apple or Amazon. Maybe Amazon was doing something illegal prior to Apple entering the market. I doubt it, but even if they were, that has no relevance to the case against Apple. Agency models and MFN clauses are just tools. How you use them it what matters, and like you said that's what the judge stated as well. Apple is a great company, but they can make mistakes. But a lot of people seem to think Apple is infallible and that Amazon is pure evil. Neither position is true.

One final comment I'll make on MFN clauses...a lot of people seem to think the judge was out of bounds and somehow doesn't understand anything about MFN. Like she was making it up as she went. But there is previous cases which illustrate and support her interpretation and verdict. I posted this in one of the previous discussions and can't find the URL right now, but from a paper I recently read:

"The antitrust enforcement agencies and courts are more likely to allege collusion if a large percentage of the relevant competitors, either buyers or sellers, adopt similar MFNs. For example, in Starr v. Sony BMG, the court found the adoption of similar MFNs by record labels representing more than 80% of the sales of music on the internet as evidence useful to support a Section 1 claim (592 F.3d 314, 323 (2d Cir. 2010))."

This is pretty much the exact same situation. Having all of the publishers under pretty much the exaxt same MFN clauses, while not a smoking gun, is "evidence useful to support" a claim of anticompetitive activities. Along with what appears to be Apple's own statements that they assured each publisher that the other publishers were on board with similar contracts does seem to support the judges verdict.
post #76 of 85
Quote:
Originally Posted by Wiggin View Post

But a lot of people seem to think Apple is infallible and that Amazon is pure evil.

 

Which is why I avoid a large number of discussions here.  

 

Apple can do wrong.  

Amazon can do good.

 

God forbid, you can even own an iPad and a Kindle E-Reader and not be destined to eternal damnation in Hell.

 

[Edit- Removed a large portion of comment. Did not come across the way I intended]


Edited by rednival - 7/12/13 at 9:43am
post #77 of 85

Such strong passion. Such confident implications that the judge and the government are not only wrong but may be complicit.

 

Just one question - which one of you read the judge's opinion before deciding yours? I urge you to read it. It will take time. But such a complex issue should take time to understand, shouldn't it? And if you really care, shouldn't you read it? If you don't care, why are you so passionate about this?

post #78 of 85
Quote:
Originally Posted by Techboy View Post


Still LOL'ed....you brush aside how little ebook profit is to Apple? The context is important here, for them, ebooks is adding content to their new product that will show off the device and its multiple uses. This was never going to be their trump card for making the iPad great. The only aspect of ebook they care for was not the general consumer ebooks with big five publishers but their pursuit for the education sector...there, iPad can really shake things up.

You know nothing about publishing kid, lower prices doesn't make publishers and authors more money. The margins are shrinking for everyone. This is better for consumers? You are kidding yourself if you want to see quality ebooks for lower price...you can expect less efforts from publishers for quality. You should go look up how many outsource their ebooks for conversion oversea. You get what you pay for. Got ahead, get cheaper.

It's not enough that you are commenting without understanding the case. You have to belittle others when it's clear you're not sufficiently informed? This is how you get your jollies?

post #79 of 85
Quote:
Originally Posted by Gatorguy View Post


Blah, blah, blah including bullshit from a moronic judge.

I guess we'll just have to wait for the appeals process then.

Btw, the judge is such a moron she thinks Apple "led" behind Barnes and Noble who were moving toward the agency model BEFORE these events even happened.
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post #80 of 85
Quote:
Originally Posted by Wiggin View Post

Open and shut only if you consider best sellers as markets onto themselves. Otherwise a bit murkier I think. Or are you suggesting that it's also illegal for my local grocery store to sell a few items at below cost to get people to shop there? Because guess what, that happens, too..

Selling below cost is not illegal. Predatory pricing is. The difference is abuse of monopoly power - which is what Amazon is doing.
Quote:
Originally Posted by Techstalker View Post

"Part of the evidence was this video shot by Kara Swisher of Steve Jobs speaking with Walt Mossberg in the hands-on press area after the introduction of the original iPad in 2010. Mossberg asks Jobs why someone would buy a book for $14.99 from the iBookstore when they could buy the same book from Amazon for $9.99.

Jobs: Well, that won’t be the case.

Mossberg: Meaning you won’t be $14.99, or they won’t be $9.99?

Jobs (smiling): The prices will be the same."

http://daringfireball.net/

Apple was wrong accept it and move on.

The only problem with your logic is that most favored nation clauses are fully legal. Jobs was simply telling Mossberg that they were going to have a MFN clause.

Quote:
Originally Posted by Russell View Post


The ruling helps consumers. That's what antitrust laws were designed for.

No, the ruling tells Amazon that it's OK to abuse their monopoly power - and prices have already started going up since the ruling.
Quote:
Originally Posted by rednival View Post

Don't bother.

I've already published one link with comments directly from the judge.  I received one positive comment and everyone else ignored it and kept arguing.  

Well, no. The judge's comments were ignored because she is a biased idiot. She made her decision before the trial - and simply repeated the same assumptions she made earlier.
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