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Apple says DOJ's e-book settlement brief is improper, would give Amazon competitive advantage

post #1 of 65
Thread Starter 
An endorsed memo from Apple lawyer Orin Snyder entered into court records on Monday says the U.S. Department of Justice's latest filing regarding the recent e-book trial is "plainly improper," alleging it is less of a letter to the court than a "12-page broadside masquerading as a brief."

DOJ


In his letter to U.S. District Court Judge Denise Cote, who in July ruled Apple was guilty of e-book price fixing, Snyder notes that both parties were to submit letters to the court if they could not reach an agreement on settlement terms.

According to Snyder, the DOJ instead "filed a 12-page broadside masquerading as a brief repeating their prior arguments and largely ignoring this Court's core guidance." Accompanying the brief was 72 pages of documents "simply pulled off the internet," not from trial records, looking to discredit Apple.

Apple's counsel characterizes the brief as an effort on the part of the Justice Department to win an injunction that is out of proportion to the evidence asserted during the trial. The issues raised by the DOJ are counterproductive, Snyder says, because they are separate from those already adjudicated.

In addition to chipping away at Apple's credibility, much of the brief focuses on how the company deals with purchases made through the Amazon Kindle app. Here Snyder points out the issue was not even raised during the trial, saying that any changes to the current arrangement could give Amazon a significant competitive advantage.

Another bone of contention is a proposed external antitrust monitor, which the DOJ wants installed at Apple for a minimum of five years.

Wrapping up, Snyder takes a final swipe at the Justice Department's brief, saying, "The parties have been litigating long enough to understand what it means to file letters setting forth their positions.There is simply no excuse for plaintiffs' disregard of the Court's order, and their inclusion of non-record material on issues not adjudicated by this Court in this case."

Judge Cote ultimately denied Apple's request to have the DOJ resubmit a more focused letter. The two parties are set to meet again on Tuesday for further discussions.

Snyder's Memo:


DOJ's Brief:
post #2 of 65
I still say Orin Snyder is the man. I love that Apple is standing up to the DOJ.

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post #3 of 65
I won't be surprised if Amazon hires the DOJ lawyers for its new Law bookstore in 2014.
post #4 of 65
"Apple says DOJ's e-book settlement brief is improper, would give Amazon competitive advantage"

Hasn't that been its purpose from Day One? Isn't that Chicago politics in a nutshell--using governmental power to help a politically favored business by crushing its competitors? Eric Holder, head of the DOJ is from Chicago. Obama was active in the city's politics for 20 years without making the slightest squeak about the city's corruption.

Having Al Gore on Apple's board doesn't help. Gore is from Tennessee.
post #5 of 65
Or does it simply reset the scales to how they were in the beginning, in which Amazon beat the pants off Apple by selling ebooks at market value, instead of price-fixed artificially inflated value?

Yeah, I can see how that would be a bad thing.

Wait, no I can't.
post #6 of 65
Quote:
Originally Posted by Cash907 View Post

Or does it simply reset the scales to how they were in the beginning, in which Amazon beat the pants off Apple by selling ebooks at market value, instead of price-fixed artificially inflated value?

Yeah, I can see how that would be a bad thing.

Wait, no I can't.

Who decided what market value was when Amazon was the only game in town. You do realize it was selling them at a loss.
post #7 of 65
Quote:
Originally Posted by Inkling View Post

"Apple says DOJ's e-book settlement brief is improper, would give Amazon competitive advantage"

Hasn't that been its purpose from Day One? Isn't that Chicago politics in a nutshell--using governmental power to help a politically favored business by crushing its competitors? Eric Holder, head of the DOJ is from Chicago. Obama was active in the city's politics for 20 years without making the slightest squeak about the city's corruption.

Having Al Gore on Apple's board doesn't help. Gore is from Tennessee.

Gore is a waste of oxygen. And that nitwit from Intuit who can't update his program for Apple, thought his company clearly does favor the Windows version. These guys are bums.

post #8 of 65
Looks like Cote is giving them everything they need to have a really good shot of getting it overturned on Appeal. All of this because she thinks the witnesses have no credibility? She is the one left with zero credibility.
post #9 of 65
I really do not understand this case.... the other ebook retailers offer their sales through their own websites... you can purchase books from those websites and have them delivered to your iOS device. If you CHOOSE to purchase books through the iBooks store, then you pay a bit more for that convenience. It's not like you're stuck purchasing books ONLY through iBooks. I really don't understand the DOJs foundation for this case unless they are challenging the entire iBooks/AppStore/iTunes model.. which is one of the biggest draws of the iOS ecosystem. Apple has invested a considerable amount of resources to implement a unified payment system for ALL vendors who chose to sell on their platform. Are they not justified in charging for that service? The app developers certainly seem to be making a tidy profit alongside Apple, should publishing houses not get the same benefit?
post #10 of 65

Amazon was selling books BELOW PUBLISHER COST... intentionally undercutting publishing house's retail pricing so that NO OTHER BOOK RETAILER COULD MATCH THEIR PRICES. Fortunately for Amazon, they sell enough other products they can subsidize those losses.

Apple on the other-hand was telling the publishing houses to set the prices they thought were appropriate (not attempting to fix prices at any particular number or range), and Apple would add on its 30% convenience fee. Yes, it increases the cost of books for people who choose to purchase them from the iBooks store, but it did NOT limit where you could purchase the books. The only concession Apple asked for was the ability to sell those books at the lowest price offered to other major retailers. You can still buy most of them on Amazon. You can still buy them at Barnes and Noble, you can still go to your local bookstore (if you're luck enough to have one that Amazon didn't already put out of business.) Not exactly a monopoly or anti-consumer now is it?

 

I've read through a lot of the "evidence" produced by the DOJ on this case, and find it lacking.  Yes, Apple negotiated with a large number of publishers at the same time. Yes, Apple offered all of those publishers the same terms.  Yes, Apple wants a 30% cut of any digital media sold through iOS and use their standard payment API.  How does that constitute and antitrust case?  Especially when you consider that the company the DOJ keeps referencing as the target of Apple's strategy held a > 90% market share?  If anyone should be the target of an antitrust case, it should be Amazon for artificially lowering the price to a point where anyone who hoped to match their pricing would lose money.

 

Sorry, I decided to post again after a glass of scotch and a bit of additional in-depth reading on the subject.  It just seems absurd, and I wonder how a competent judge could come to this decision if they had any relevant knowledge on the subject.

post #11 of 65

Amazon contributed huge sums to Obama's election campaigns.  Apple didn't.  Payback time.

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post #12 of 65
Looks like USA politics are as fucked up as anywhere else ^^
I hope Apple wins still.

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post #13 of 65
Quote:
Originally Posted by jungmark View Post

Who decided what market value was when Amazon was the only game in town. You do realize it was selling them at a loss.

I don't know that anyone has shown Amazon to be selling all "best-sellers" below cost, much less the rest of their book and magazine line. Be that as it may, Walmart had decided to undercut Amazon "best-seller" pricing by another 10%, dropping prices on some e-books to just $9 compared to Amazon's $10. Perhaps they thought that simple aggressive pricing would negate any Amazon advantage. Afterall, "discount pricing" works for many of their other product lines.

Eventually they determined that it wasn't just about price in the first place. Amazon was still maintaining it's market leader status, in large part due to the incredibly popular and well-designed Kindle. Worse, the newer Kindle Fire brought attention to Amazon's entire online store, not just books. That's what Amazon really wanted to accomplish. it was never about just books. So how did Walmart decide was one of the better ways to answer competition from Amazon? Stop selling the Kindle Fire.

Now when it came to toys Walmart didn't have to deal with Amazon in the same way. Aggressively low pricing was enough to force KBToys into bankruptcy and leave ToysRUS teetering on the edge. Another example of predatory pricing?
Edited by Gatorguy - 8/27/13 at 4:44am
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post #14 of 65
Quote:
Originally Posted by jungmark View Post

Who decided what market value was when Amazon was the only game in town. You do realize it was selling them at a loss.

That's a misconception Sony's ebook store predates Amazon's and B&N's store is almost as old as Amazon's.
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post #15 of 65
Quote:
Originally Posted by tsunami78 View Post

Amazon was selling books BELOW PUBLISHER COST... intentionally undercutting publishing house's retail pricing so that NO OTHER BOOK RETAILER COULD MATCH THEIR PRICES. Fortunately for Amazon, they sell enough other products they can subsidize those losses.


Apple on the other-hand was telling the publishing houses to set the prices they thought were appropriate (not attempting to fix prices at any particular number or range), and Apple would add on its 30% convenience fee. Yes, it increases the cost of books for people who choose to purchase them from the iBooks store, but it did NOT limit where you could purchase the books. The only concession Apple asked for was the ability to sell those books at the lowest price offered to other major retailers. You can still buy most of them on Amazon. You can still buy them at Barnes and Noble, you can still go to your local bookstore (if you're luck enough to have one that Amazon didn't already put out of business.) Not exactly a monopoly or anti-consumer now is it?

I've read through a lot of the "evidence" produced by the DOJ on this case, and find it lacking.  Yes, Apple negotiated with a large number of publishers at the same time. Yes, Apple offered all of those publishers the same terms.  Yes, Apple wants a 30% cut of any digital media sold through iOS and use their standard payment API.  How does that constitute and antitrust case?  Especially when you consider that the company the DOJ keeps referencing as the target of Apple's strategy held a > 90% market share?  If anyone should be the target of an antitrust case, it should be Amazon for artificially lowering the price to a point where anyone who hoped to match their pricing would lose money.

Sorry, I decided to post again after a glass of scotch and a bit of additional in-depth reading on the subject.  It just seems absurd, and I wonder how a competent judge could come to this decision if they had any relevant knowledge on the subject.

Is price the only way a company can compete? Offer a better product or experience and customers will pay more. Apple does that quite well so why not this time?

Btw you're wrong, Apple does not use the agency model on all media, they use the wholesale model for TV shows, movies, and music.
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post #16 of 65
Quote:
Originally Posted by dasanman69 View Post


Is price the only way a company can compete? Offer a better product or experience and customers will pay more. Apple does that quite well so why not this time?

Good point.  iBooks are much higher quality than Kindle books.  iBooks seem to be copy-edited while Kindle books seem to be OCRed without any checking for OCR errors.

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post #17 of 65
Quote:
Originally Posted by jungmark View Post


Who decided what market value was when Amazon was the only game in town. You do realize it was selling them at a loss.

Well we can tell you obviously have no idea what you're talking about.  Before Apple joined the party, Amazon, Barnes & Noble, AND Sony, had ebook readers AND stores, along with a few smaller groups.  Sony was there well before Amazon started with the Kindle in 2007, charged way too much for ebooks, usually around $30 for a book that cost $6 for the paperback.  Amazon joined in and priced retail at similar prices, Sony was also retail set prices, even though Sony's prices were so high.  The Kindle was so successful both because of the prices AND the ease of use, in that you didn't need a stupid program on your computer to buy books, you only needed to head to the website, order, and download your file, you didn't even need to have your device hooked up to the computer you purchased from.  They introduced wireless connectivity, when Sony was still ignoring it.  

 

Because of the success of the Kindle, B&N released the Nook, with the SAME game plan as the Kindle, retail pricing, no computer needed, order from the web, wireless downloads.  The publishers got scared because the ebooks started to cannibalize sales of PAPER BOOKS, that is the only reason they went with the iBookstore deal, they make LESS with agency than they were with retail pricing.  It is ONLY because they did not want ebooks to be priced lower than hardcover books or the same as the paperback versions that they freaked out.

 

AGAIN, Sony, B&N, AND Amazon were in the game before Apple.  But continue to tell yourself that ignorant story that Amazon was the only one and fixing prices.  AFAIC if you support Apple & the publishers in raising prices YOU OWE ME MONEY for the increase in price!

post #18 of 65
Quote:
Originally Posted by mcarling View Post

Amazon contributed huge sums to Obama's election campaigns.  Apple didn't.  Payback time.

Prove it.  AFAIK Apple DID donate to Obamas campaign, but blame the black guy again.  Typical CONservative.  Oh and before you argue with me, if you DO support the troops, shut your mouth, by arguing with me you ARE arguing with a soldier, therefore you would NOT be supporting the troops doing so.

post #19 of 65
Quote:
Originally Posted by dasanman69 View Post


Is price the only way a company can compete? Offer a better product or experience and customers will pay more. Apple does that quite well so why not this time?

Btw you're wrong, Apple does not use the agency model on all media, they use the wholesale model for TV shows, movies, and music.

This discussion is about BOOKS, where Apple gave the publishers exactly what they wanted, a way to stop Amazon.  The idea may be Apples, but they knew it was what the publishers wanted by talking with the publishers BEFORE development.  That is the KEY to collusion.  If you support agency and higher prices YOU OWE ME MONEY!

post #20 of 65
Quote:
Originally Posted by AppleInsider View Post

Judge Cote ultimately denied Apple's request to have the DOJ resubmit a more focused letter. The two parties are set to meet again on Tuesday for further discussions.

Of course. Her mind was made up from the start, so why drag things out.
Quote:
Originally Posted by Phone-UI-Guy View Post

Looks like Cote is giving them everything they need to have a really good shot of getting it overturned on Appeal. All of this because she thinks the witnesses have no credibility? She is the one left with zero credibility.

Yep. I would expect the Appeals court to stay Cole's decisions and remand the entire matter back to her - although it is at least slightly possible that they'll simply overturn her decision without remanding it to her.
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post #21 of 65
inkling - You obviously are not from Chicago. Citizens put up with Chicago-style politics because most of it is done in the common interests of both the people and businesses of Chicago. In this case with obvious pandering to Amazon with nothing going to the common good would not be tolerated in Chicago. Corruption at the state level in IL is a different story, but it is much better then it used to be.
post #22 of 65
mcarling - Apple (via Steve Jobs, not the company that stays politically neutral) was a big supporter of Obama. Either way, that has little to do with the DOJ.
post #23 of 65
Quote:
Originally Posted by dasanman69 View Post


Is price the only way a company can compete? Offer a better product or experience and customers will pay more. Apple does that quite well so why not this time?

Btw you're wrong, Apple does not use the agency model on all media, they use the wholesale model for TV shows, movies, and music.

 

If Apple uses a different model then what business does the DOJ have telling Apple how that side of their business runs?

 

As to the DOJ and Cote it's getting more bizarre.

 

Imagine you went to court and were convicted of burglary for sneaking into a jewelry store and stealing diamonds. When sentencing came around the prosecutor mentions the fact that two other jewelry stores were also hit in the last year and one had a bunch of watches stolen while another had gold stolen. The prosecutor then tells this to the judge and asks her to take these other crimes into account even though you were never convicted of them. This is essentially what the DOJ appears to be doing by bringing in facts and evidence that weren't presented at trial. If this is true (as Apples lawyer argues) then I am at a complete loss for words to describe how utterly ridiculous this whole situation is.

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post #24 of 65
Quote:
Originally Posted by EricTheHalfBee View Post

If Apple uses a different model then what business does the DOJ have telling Apple how that side of their business runs?

As to the DOJ and Cote it's getting more bizarre.

I totally agree with you but the publishers shouldn't be able to tell Amazon how to run their business either. These publishers should have never let Amazon get the upper hand on them. They were in the position of power initially but still they allowed themselves to be pushed around. Renegotiating terms is not a new tactic but flags went up when they all wanted new terms at the same time.
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post #25 of 65
Quote:
Originally Posted by dasanman69 View Post

Is price the only way a company can compete? Offer a better product or experience and customers will pay more. Apple does that quite well so why not this time?

Btw you're wrong, Apple does not use the agency model on all media, they use the wholesale model for TV shows, movies, and music.

Really? Since when?

I'm not sure about movies and shows, but for music, they sell the music via iTunes, keep 30% and send the rest to the publisher. That's the agency model, not wholesale.
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post #26 of 65
Quote:
Originally Posted by jragosta View Post

Really? Since when?

I'm not sure about movies and shows, but for music, they sell the music via iTunes, keep 30% and send the rest to the publisher. That's the agency model, not wholesale.

To be honest they've never publicly disclosed what model they use for music.
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post #27 of 65
Quote:
Originally Posted by dasanman69 View Post

To be honest they've never publicly disclosed what model they use for music.

It appears Apple doesn't use a strict agency model since by definition it would be the music publisher's setting the minimum selling price. That's unless Amazon was given better terms than Apple gets which would be darn surprising. Amazon sells some of the same music choices for less than iTunes.
http://www.csmonitor.com/Business/Saving-Money/2013/0731/iTunes-vs-Amazon-Where-to-get-the-cheapest-music
Edited by Gatorguy - 8/27/13 at 7:47am
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post #28 of 65
Quote:
Originally Posted by Eric Mazzone View Post

AGAIN, Sony, B&N, AND Amazon were in the game before Apple.  But continue to tell yourself that ignorant story that Amazon was the only one and fixing prices.  AFAIC if you support Apple & the publishers in raising prices YOU OWE ME MONEY for the increase in price!

 

So how many iBooks did you buy?

 

Ten, twenty?

 

It must be pretty tough that twenty or thirty bucks represents such a large amount.

 

Maybe you should head for a public library where you can read books for free.

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post #29 of 65
Quote:
Originally Posted by Eric Mazzone View Post

Well we can tell you obviously have no idea what you're talking about.  Before Apple joined the party, Amazon, Barnes & Noble, AND Sony, had ebook readers AND stores, along with a few smaller groups.  Sony was there well before Amazon started with the Kindle in 2007, charged way too much for ebooks, usually around $30 for a book that cost $6 for the paperback.  Amazon joined in and priced retail at similar prices, Sony was also retail set prices, even though Sony's prices were so high.  The Kindle was so successful both because of the prices AND the ease of use, in that you didn't need a stupid program on your computer to buy books, you only needed to head to the website, order, and download your file, you didn't even need to have your device hooked up to the computer you purchased from.  They introduced wireless connectivity, when Sony was still ignoring it.  

Because of the success of the Kindle, B&N released the Nook, with the SAME game plan as the Kindle, retail pricing, no computer needed, order from the web, wireless downloads.  The publishers got scared because the ebooks started to cannibalize sales of PAPER BOOKS, that is the only reason they went with the iBookstore deal, they make LESS with agency than they were with retail pricing.  It is ONLY because they did not want ebooks to be priced lower than hardcover books or the same as the paperback versions that they freaked out.

AGAIN, Sony, B&N, AND Amazon were in the game before Apple.  But continue to tell yourself that ignorant story that Amazon was the only one and fixing prices.  AFAIC if you support Apple & the publishers in raising prices YOU OWE ME MONEY for the increase in price!

Amazon had 90% market share because they were undercutting everyone prior to Apple entering. So you tell me how Amazon can dictate fair market value of an ebook when they had a near monopoly.

The publishers panicked when Amazon went below cost and devalued the hard covers by $15-20. They weren't worried about ebooks being less than hard covers otherwise they would have sold the ebooks to Amazon at hard cover prices. Again they worried that Amz sold them for extremely less than hard covers.
post #30 of 65
Quote:
Originally Posted by Gatorguy View Post

It appears Apple doesn't use a strict agency model since by definition it would be the music publisher's setting the minimum selling price. That's unless Amazon was given better terms than Apple gets which would be darn surprising. Amazon sells some of the same music choices for less than iTunes.
http://www.csmonitor.com/Business/Saving-Money/2013/0731/iTunes-vs-Amazon-Where-to-get-the-cheapest-music

You have a strange definition of 'agency model'.

In the agency model, the publisher sets the price. There is no requirement that they can't sell it for less somewhere else (that's a most favored nation clause). Basically, publisher says 'price is $xxxx' and distributor gets a fixed percentage of the price while publisher keeps the rest. That's exactly the iTunes model.

The only twist is that Apple gives a range of acceptable prices. You can sell a song for $0.69 or $0.99 or $1.29, but not $1.17. That does not change it from being an agency model, though.
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post #31 of 65
Quote:
Originally Posted by dasanman69 View Post

To be honest they've never publicly disclosed what model they use for music.

So you were wrong when you said that they don't use the agency model. 1smoking.gif


Furthermore, they do disclose the model. Their terms are quite clear. Publisher gets 70% and Apple gets 30%. That's agency model.
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post #32 of 65
Quote:
Originally Posted by jragosta View Post

You have a strange definition of 'agency model'.

In the agency model, the publisher sets the price. There is no requirement that they can't sell it for less somewhere else (that's a most favored nation clause). Basically, publisher says 'price is $xxxx' and distributor gets a fixed percentage of the price while publisher keeps the rest. That's exactly the iTunes model.

The only twist is that Apple gives a range of acceptable prices. You can sell a song for $0.69 or $0.99 or $1.29, but not $1.17. That does not change it from being an agency model, though.

You and I have exactly the same definition for an agency model which is specified in my second sentence. So you'd be of the opinion that Amazon gets better terms than Apple? Just curious.
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post #33 of 65

Anyone who thinks Amazon is looking out for the consumer is only looking at the short term. They will raise the prices to whatever insane amount they want once they've killed all competition, just as Walmart has done around the country.

post #34 of 65
Quote:
Originally Posted by jungmark View Post

Amazon had 90% market share because they were undercutting everyone prior to Apple entering. So you tell me how Amazon can dictate fair market value of an ebook when they had a near monopoly?

Do you have proof that it was because they were undercutting everyone? Did Apple get 90% of the tablet market by undercutting the competition or by redefining the market? eInk readers were very popular before the iPad and the eBook reader of choice was the Kindle and many people that bought a iPad and also owned a Kindle would most likely keep buying from Amazon because they could read their ebooks on both.
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post #35 of 65
Quote:
Originally Posted by travisgamedev View Post

Anyone who thinks Amazon is looking out for the consumer is only looking at the short term. They will raise the prices to whatever insane amount they want once they've killed all competition, just as Walmart has done around the country.

They most certainly can raise prices but it doesn't mean that they will, and even if they did are they not allowed to have a healthy profit margin or is Apple the only one that can?
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post #36 of 65
Quote:
Originally Posted by dasanman69 View Post

Do you have proof that it was because they were undercutting everyone? Did Apple get 90% of the tablet market by undercutting the competition or by redefining the market? eInk readers were very popular before the iPad and the eBook reader of choice was the Kindle and many people that bought a iPad and also owned a Kindle would most likely keep buying from Amazon because they could read their ebooks on both.

Fact: Amazon was selling ebooks for less than cost. Other companies actually needed to make money

Apple sold iPads with 40% margins. It wasn't selling them at cost. It was the best tablet available.
post #37 of 65
Quote:
Originally Posted by jragosta View Post

So you were wrong when you said that they don't use the agency model. 1smoking.gif


Furthermore, they do disclose the model. Their terms are quite clear. Publisher gets 70% and Apple gets 30%. That's agency model.

Not necessarily. The music industry doesn't get to set the price. Apple didn't give them that option.
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post #38 of 65
Quote:
Originally Posted by jungmark View Post

Fact: Amazon was selling ebooks for less than cost. Other companies actually needed to make money

Apple sold iPads with 40% margins. It wasn't selling them at cost. It was the best tablet available.

Another misconception. It was only a small selection of books that were being undersold. The vast majority of ebooks were the same price across all other ebook stores.
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post #39 of 65
Quote:
Originally Posted by esummers View Post

mcarling - Apple (via Steve Jobs, not the company that stays politically neutral) was a big supporter of Obama. Either way, that has little to do with the DOJ.

Yes, one of the biggest mistakes Steve ever made.

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post #40 of 65
Quote:
Originally Posted by travisgamedev View Post

Anyone who thinks Amazon is looking out for the consumer is only looking at the short term. They will raise the prices to whatever insane amount they want once they've killed all competition, just as Walmart has done around the country.

Walmart keeps their prices low, even after they manage to undercut and destroy their competition. They are the best company in the world at squeezing their suppliers.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

Reply
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