A matter for appellate courts. Both sides make their record. Matter of law as little dispute as to facts. Also Apple will have a large cushion if case Ultimately lost . Credits from prior settlements. Ml
When they implement clauses that will cause their vendors to raise prices on other sites to match theirs, that would be price fixing. (It has nothing to do with 'monopolistic' practices so those arguments being made are somewhat moot)
There was no such clause. In no way has it been shown that Apple set or fixed a single price or required vendors to raise prices. The publishers could have given Apple the lower price that Amazon was selling it at. The only thing they wanted is not to have their prices higher than others (which doesn't sound unreasonable when you're up against a monopoly that is arguably using predatory pricing to keep others out of the market). What this did was kill Amazon's predatory price dumping, which the publishers could have matched with iBookstore if they had wanted to. They choose finally tell Amazon to fuçk off after years of predatory pricing at the expense of their product's value.
Q: Would Apple have even need to use a favored nation clause if Amazon was selling their books at the levels the publishers were being paid? Id set, at cost? I don't think so.
Only the books that were really in demand which so other store could not compete because there was no profit in the industry. Since they took it over at the very beginning, and now had 90 % of the market no one dared enter because they could easily go back to their tactics of selling many more below cost. There is a reason there were few smaller ebook stores. Even the authors couldn't compete against them with their own product.
You could be correct. But that wouldn't have anything to do with the DoJ claims against Apple.
I really don't mind if Apple wants to sell the same books for $12.99 to Apple users as anyone else can buy for $9.99 elsewhere.
When they implement clauses that will cause their vendors to raise prices on other sites to match theirs, that would be price fixing. (It has nothing to do with 'monopolistic' practices so those arguments being made are somewhat moot)
Price fixing isn't illegal, in and of itself.
The issue is whether the major publishers CONSPIRED TOGETHER to fix their prices (which they likely did, given they settled), and, if so, whether Apple was the instigator of said conspiracy.
For example:
Scenario #1: Apple approaches Publisher A, who has 20% market share, about the agency model. Publisher A agrees, and fixes the selling price at $12.99, and agrees not to allow it to be sold cheaper anywhere else under a Most Favored Nation Clause.
Not illegal.
Scenario #2: Apple approaches Publishers A, B, C, D, and E, who COMBINED have over 70% market share. They all agree to adopt the agency model, and decide TOGETHER to fix the selling price at $12.99, yadda yadda yadda.
Illegal for everyone.
Notice the difference? The key is if the publishers conspired together, thus abusing their combined market positioning; price fixing is thus illegal. Apple, by "running point" on this is also guilty.
Scenario #3: Apple approaches Publishers A-E, but does so separately. Without Apples knowledge, the Publishers all talk amongst themselves, and agree to ALL follow the agency model and agree to Apple's terms, yadda yadda yadda.
Illegal for the publishers, not for Apple.
Apple is being accused of being intimately involved in the alleged conspiracy; Apple is arguing that it in good faith just negotiated this agreement with the various publishers, and was not party to any conspiracy; from Apple's point of view, is this any different than when they negotiated the $0.99 and $1.29 iTunes songs?
There was no such clause. In no way has it been shown that Apple set or fixed a single price or required vendors to raise prices. The publishers could have given Apple the lower price that Amazon was selling it at. The only thing they wanted is not to have their prices higher than others (which doesn't sound unreasonable when you're up against a monopoly that is arguably using predatory pricing to keep others out of the market). What this did was kill Amazon's predatory price dumping, which the publishers could have matched with iBookstore if they had wanted to. They choose finally tell Amazon to fuçk off after years of predatory pricing at the expense of their product's value.
Q: Would Apple have even need to use a favored nation clause if Amazon was selling their books at the levels the publishers were being paid? Id set, at cost? I don't think so.
I agree with a lot of your points. I don't think Apple will be found guilty, but I obviously haven't seen all the evidence. There is a lot of 'wink, wink, nudge, nudge' to this and Apple has amazing lawyers. Was there a deliberate effort and push on Apples and the publishers part? I think you'd have to have your head buried in the sand or be so love struck with Apple that you're willing to overlook it.
I do think the publishers are largely at fault. They allowed Amazon to squeeze them further than they should have and that's a tough spot to get out of. If one of them decides its not worth it and raises their prices- they are not going to sell as many books unless their competitors also raise their prices. That's kind of the rub. They were in a tough spot, felt they had to do something, and all got together and agreed to all raise their prices. Apple may have pushed just a little too far with the 30% requirement.
Either way, some kind of determination has to be made on 'side loaded' profits and at what point they become anti-competitive. There's probably a better term for it, but I mean companies like Amazon and Google's profit structures. They make a lot of money through corollary profits, so they don't actually need to make a profit on certain items. That makes people trying to profit on those items very tough. They are not really being predatory as they are not taking a loss in order to drive others out of business, they are taking a loss on certain items because it makes their overall profits higher. Google breaks even on Android because giving it away makes them a ton of money in search- so Android is indeed very profitable for Google- just not directly. Amazon sells Kindles at close to zero margin (maybe even negative)- but they make a ton of money by selling Kindles because then people then shop Amazon (and even if they don't shop amazon I think if the average user buys 5 apps on the Amazon app store the margin on the Kindle is already approaching 20%).
The issue is whether the major publishers CONSPIRED TOGETHER to fix their prices (which they likely did, given they settled), and, if so, whether Apple was the instigator of said conspiracy.
For example: ...
I like the comparison that you laid out ... does anyone know which is closest to what is alleged to have happened? I would think that Apple knows the legal pitfalls of grand negotiations like this, so I would be surprised if they got them all together in one room with their lawyers to hammer it out.
At the same time, it's still rather strange to me that a publisher wouldn't be free to set the price of their authors books using the agency model and to have that price vary according to whatever criteria they deem appropriate. If you want to sell John Grisham releases at 13.99, then why not. If the public thinks that is too high and another publisher is selling Tom Clancy for 11.99, maybe you'll sell fewer titles to price sensitive readers. Maybe they'll adjust their agency pricing on that title, or maybe the readers will shell out the extra two bucks if they really want that book. If another publisher leaves it up to Amazon for their authors, will someone who wants to read John Grisham jump to a different book just to save a few bucks? ... I have trouble imagining that, unless you'll buying it as a gift and don't really know the persons taste.
In any event, I subscribe to the Amazon lobbyist scenario stoking the controversy and prodding the case. Bezos was breathing fire the morning that he got the wire.
Seeing only the DoJ's summary evidence so far it certainly looks like Apple facilitated the matching agreements between the publishers. No idea if that's illegal or not.
Here's my opinion. Prior to Apple entering the market, Amazon had a virtual monopoly on e-books. Amazon sold e-book below cost, effectively preventing competitors from entering the market. Apple entered the market and created actual competition. Once Amazon lost their monopoly position, publishers were free to raise their prices.
The Fed's position seems to be that Apple broke the law because it knew, and acknowledged that prices would likely go up, once Amazon stopped dumping product into the marketplace.
I am surprised that the Feds haven't also started an antitrust action against Amazon. Prior to Apple entering the market, Amazon was selling below cost. Generally a large company is prohibited from selling below cost to prevent competitors from entering the market.
I am not an attorney, and the above is simply my personal opinion.
... from Apple's point of view, is this any different than when they negotiated the $0.99 and $1.29 iTunes songs?
I think that's generally what Eddy Cue is saying. Apple needed a way to break into the eBook market in a big way and he handled this negotiation the same way they handled iTunes and the music publishers.
Apparently the trial will hinge on Mr. Cue's activities since he acted as the go-between, communicating back and forth between the publishers and Mr. Jobs (who looks to have been smart enough to stay out of most direct contact with the pubs himself).
EDIT: The threads on Apple and the DoJ may get fairly quiet for a day or two. I think the evidence the DoJ says they're prepared to offer is a bit more than some AI members expected to see. I know there's more there than I expected.
"... even though Amazon was actually paying more money to the publishers than it was charging customers for the books."
I love these stories. So Amazon was selling below its marginal cost to maintain its position in the market, which is itself a violation of antitrust law.
Loss leaders are not illegal. It wasn't every ebook that they were taking a loss on but only a select few.
Loss leaders aren't illegal, but using a monopoly position with predatory pricing that creates barriers of entry into a market is anti-competivive and illegal under most competition laws.
Comments
Both sides make their record.
Matter of law as little dispute as to facts.
Also Apple will have a large cushion if case
Ultimately lost .
Credits from prior settlements.
Ml
There was no such clause. In no way has it been shown that Apple set or fixed a single price or required vendors to raise prices. The publishers could have given Apple the lower price that Amazon was selling it at. The only thing they wanted is not to have their prices higher than others (which doesn't sound unreasonable when you're up against a monopoly that is arguably using predatory pricing to keep others out of the market). What this did was kill Amazon's predatory price dumping, which the publishers could have matched with iBookstore if they had wanted to. They choose finally tell Amazon to fuçk off after years of predatory pricing at the expense of their product's value.
Q: Would Apple have even need to use a favored nation clause if Amazon was selling their books at the levels the publishers were being paid? Id set, at cost? I don't think so.
You could be correct. But that wouldn't have anything to do with the DoJ claims against Apple.
Originally Posted by Caseevaluator
A matter for appellate courts.
Both sides make their record.
Matter of law as little dispute as to facts.
Also Apple will have a large cushion if case
Ultimately lost .
Credits from prior settlements.
Ml
Burma-Shave.
Quote:
Originally Posted by Frood
Glad the DoJ stepped in.
I really don't mind if Apple wants to sell the same books for $12.99 to Apple users as anyone else can buy for $9.99 elsewhere.
When they implement clauses that will cause their vendors to raise prices on other sites to match theirs, that would be price fixing. (It has nothing to do with 'monopolistic' practices so those arguments being made are somewhat moot)
Price fixing isn't illegal, in and of itself.
The issue is whether the major publishers CONSPIRED TOGETHER to fix their prices (which they likely did, given they settled), and, if so, whether Apple was the instigator of said conspiracy.
For example:
Scenario #1: Apple approaches Publisher A, who has 20% market share, about the agency model. Publisher A agrees, and fixes the selling price at $12.99, and agrees not to allow it to be sold cheaper anywhere else under a Most Favored Nation Clause.
Not illegal.
Scenario #2: Apple approaches Publishers A, B, C, D, and E, who COMBINED have over 70% market share. They all agree to adopt the agency model, and decide TOGETHER to fix the selling price at $12.99, yadda yadda yadda.
Illegal for everyone.
Notice the difference? The key is if the publishers conspired together, thus abusing their combined market positioning; price fixing is thus illegal. Apple, by "running point" on this is also guilty.
Scenario #3: Apple approaches Publishers A-E, but does so separately. Without Apples knowledge, the Publishers all talk amongst themselves, and agree to ALL follow the agency model and agree to Apple's terms, yadda yadda yadda.
Illegal for the publishers, not for Apple.
Apple is being accused of being intimately involved in the alleged conspiracy; Apple is arguing that it in good faith just negotiated this agreement with the various publishers, and was not party to any conspiracy; from Apple's point of view, is this any different than when they negotiated the $0.99 and $1.29 iTunes songs?
Quote:
Originally Posted by SolipsismX
There was no such clause. In no way has it been shown that Apple set or fixed a single price or required vendors to raise prices. The publishers could have given Apple the lower price that Amazon was selling it at. The only thing they wanted is not to have their prices higher than others (which doesn't sound unreasonable when you're up against a monopoly that is arguably using predatory pricing to keep others out of the market). What this did was kill Amazon's predatory price dumping, which the publishers could have matched with iBookstore if they had wanted to. They choose finally tell Amazon to fuçk off after years of predatory pricing at the expense of their product's value.
Q: Would Apple have even need to use a favored nation clause if Amazon was selling their books at the levels the publishers were being paid? Id set, at cost? I don't think so.
I agree with a lot of your points. I don't think Apple will be found guilty, but I obviously haven't seen all the evidence. There is a lot of 'wink, wink, nudge, nudge' to this and Apple has amazing lawyers. Was there a deliberate effort and push on Apples and the publishers part? I think you'd have to have your head buried in the sand or be so love struck with Apple that you're willing to overlook it.
I do think the publishers are largely at fault. They allowed Amazon to squeeze them further than they should have and that's a tough spot to get out of. If one of them decides its not worth it and raises their prices- they are not going to sell as many books unless their competitors also raise their prices. That's kind of the rub. They were in a tough spot, felt they had to do something, and all got together and agreed to all raise their prices. Apple may have pushed just a little too far with the 30% requirement.
Either way, some kind of determination has to be made on 'side loaded' profits and at what point they become anti-competitive. There's probably a better term for it, but I mean companies like Amazon and Google's profit structures. They make a lot of money through corollary profits, so they don't actually need to make a profit on certain items. That makes people trying to profit on those items very tough. They are not really being predatory as they are not taking a loss in order to drive others out of business, they are taking a loss on certain items because it makes their overall profits higher. Google breaks even on Android because giving it away makes them a ton of money in search- so Android is indeed very profitable for Google- just not directly. Amazon sells Kindles at close to zero margin (maybe even negative)- but they make a ton of money by selling Kindles because then people then shop Amazon (and even if they don't shop amazon I think if the average user buys 5 apps on the Amazon app store the margin on the Kindle is already approaching 20%).
Quote:
Originally Posted by Pendergast
Price fixing isn't illegal, in and of itself.
The issue is whether the major publishers CONSPIRED TOGETHER to fix their prices (which they likely did, given they settled), and, if so, whether Apple was the instigator of said conspiracy.
For example: ...
I like the comparison that you laid out ... does anyone know which is closest to what is alleged to have happened? I would think that Apple knows the legal pitfalls of grand negotiations like this, so I would be surprised if they got them all together in one room with their lawyers to hammer it out.
At the same time, it's still rather strange to me that a publisher wouldn't be free to set the price of their authors books using the agency model and to have that price vary according to whatever criteria they deem appropriate. If you want to sell John Grisham releases at 13.99, then why not. If the public thinks that is too high and another publisher is selling Tom Clancy for 11.99, maybe you'll sell fewer titles to price sensitive readers. Maybe they'll adjust their agency pricing on that title, or maybe the readers will shell out the extra two bucks if they really want that book. If another publisher leaves it up to Amazon for their authors, will someone who wants to read John Grisham jump to a different book just to save a few bucks? ... I have trouble imagining that, unless you'll buying it as a gift and don't really know the persons taste.
In any event, I subscribe to the Amazon lobbyist scenario stoking the controversy and prodding the case. Bezos was breathing fire the morning that he got the wire.
The 2nd one as it's the only one that makes Apple cuplable.
http://www.scribd.com/doc/145486131/U-S-v-Apple-Et-Al-Opening-Slides
The Fed's position seems to be that Apple broke the law because it knew, and acknowledged that prices would likely go up, once Amazon stopped dumping product into the marketplace.
I am surprised that the Feds haven't also started an antitrust action against Amazon. Prior to Apple entering the market, Amazon was selling below cost. Generally a large company is prohibited from selling below cost to prevent competitors from entering the market.
I am not an attorney, and the above is simply my personal opinion.
I think that's generally what Eddy Cue is saying. Apple needed a way to break into the eBook market in a big way and he handled this negotiation the same way they handled iTunes and the music publishers.
Apparently the trial will hinge on Mr. Cue's activities since he acted as the go-between, communicating back and forth between the publishers and Mr. Jobs (who looks to have been smart enough to stay out of most direct contact with the pubs himself).
EDIT: The threads on Apple and the DoJ may get fairly quiet for a day or two. I think the evidence the DoJ says they're prepared to offer is a bit more than some AI members expected to see. I know there's more there than I expected.
I only use the Kindle App on my iPad. More choice where to read the books.
Loss leaders are not illegal. It wasn't every ebook that they were taking a loss on but only a select few.
And what barriers were there?
Quote:
Originally Posted by dasanman69
And what barriers were there?
Getting access to products to sell.
Oh I see, just like when no other carrier could get the iPhone to sell. Thanks for clarifying that for me.
Yep, getting providers to take a risk on a new venture.
A normal business procedure.
So what's the problem?
Ask the DoJ