US Justice Department details Apple's e-book 'conspiracy' in opening arguments

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Comments

  • Reply 21 of 71
    solipsismxsolipsismx Posts: 19,566member
    mstone wrote: »
    I don't understand why Amazon wouldn't want to actually make some profit on those books anyway. Perhaps they didn't want to be brought into a potential collusion with Apple.

    They did it with the intent of strengthening their other products by selling at a significantly loss. If they didn't do that. Even if they were selling the books at break even prices then Apple wouldn't have been able to reasonably request the MFN clause. It was Amazon's predatory practices that have hurt the eBook market for publishers, consumers, and other potential entries into the market that set all of this in motion.
  • Reply 22 of 71
    gatorguygatorguy Posts: 20,585member
    solipsismx wrote: »
    They did it with the intent of strengthening their other products by selling at a significantly loss. If they didn't do that. Even if they were selling the books at break even prices then Apple wouldn't have been able to reasonably request the MFN clause. It was Amazon's predatory practices that have hurt the eBook market for publishers, consumers, and other potential entries into the market that set all of this in motion.

    You keep referring to Amazon's predatory practices. What has you convinced that Amazon is practicing that illegal price strategy?
  • Reply 23 of 71
    dasanman69dasanman69 Posts: 12,980member
    Civil cases are judged on the 'balance of probabilities'. In many cases there is no hard evidence but lots of circumstantial evidence. It's not "did Apple collude with the publishers" but "how highly probable was it that Apple colluded?" 3 phone calls in row may very well mean nothing but what could have happened is the picture the DoJ trying to paint.
  • Reply 24 of 71
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post




    It was Amazon's predatory practices that have hurt the eBook market for publishers, consumers, and other potential entries into the market that set all of this in motion.



    I'm not sure how the break even pricing harmed consumers. Isn't that the issue at hand? The DoJ is claiming that Apple, by forcing the prices up by some 30% across the board, was bad for consumers.

  • Reply 25 of 71
    dasanman69dasanman69 Posts: 12,980member
    gatorguy wrote: »
    You keep referring to Amazon's predatory practices. What has you convinced that Amazon is practicing that illegal price strategy?

    And why wasn't there a issue of Amazon's practices before Apple entered the fray?
  • Reply 26 of 71
    anantksundaramanantksundaram Posts: 19,152member

    Quote:

    Originally Posted by Gatorguy View Post



    With you being somewhat of a legal expert you no doubt recognize that the opening statements for both sides only serve as an outline of how they intend to present their arguments and not include everything they think they have to prove their case. The actual evidence is yet to be presented. Within a few weeks it will be clearer as to the facts and whether any of it rises to the level of illegality.


    Uh.... you (along with a couple of your 'legal eagle' pals, kdarling and loptomist) were confidently predicting that this was a slam dunk case for the DoJ. Want to wait a few weeks, now, eh?

  • Reply 27 of 71
    maestro64maestro64 Posts: 4,563member

    Quote:

    Originally Posted by jragosta View Post





    So?



    There's nothing prima facie illegal about telling a company what another company had agreed to. You'd need much more than that to prove collusion.



    Heck, if that was sufficient to prove collusion, then every single purchasing agent in the country would be charged. "But company Y agreed to give me xxxxx" is a very common (and completely legal) negotiating tactic.


    Actually it may not be legal to share anyone company's pricing with its competitors.  Usually the selling company usually have agreements in place which bar a buying company from sharing the purchase price with anyone outside the company.Thus tell company A that Company B was willing to sell you their product at $X.xx could get you into civil as well as price fixing trouble. But you are right I see very poor negotiators tell competitors what the other guys price is to somehow to get the same or better. For all they knew Company A would have sold it for less and you just told them you were willing to accept Company's B pricing.


     


    however, In the wholesale market, everyone buying wholesale pays the same price, however, it is illegal for the selling company to tell the wholesaler what price they can sell the products to their customers. This is part of the reason Apple does not sell most of its products in the wholesale markets. This is why companies have a love hate relationship with Walmart, they are acting like a wholesaler, they buy at a price and sell it at whatever price they think will get consumers in the door even if the price as a lost leader. For company this is the worse thing you can have happen since now consumer thing your product is only worth so much since walmart gave it away. BTW this happen all the time, selling below cost or lost leader and it too is illegal, companies such as Walmart and Amazon do it all the time and it seem to be fine. This is called predatory pricing 

  • Reply 28 of 71
    gatorguygatorguy Posts: 20,585member
    Uh.... you (along with a couple of your 'legal eagle' pals, kdarling and loptomist) were confidently predicting that this was a slam dunk case for the DoJ. ?

    Hardly, but it's not the first time I've been accused of saying something I did not. I'm used to it by now so carry on if you'd like, tho it would be more effective if you offered some imaginary quote of mine to "prove" your claim.
  • Reply 29 of 71
    solipsismxsolipsismx Posts: 19,566member
    gatorguy wrote: »
    You keep referring to Amazon's predatory practices. What has you convinced that Amazon is practicing that illegal price strategy?

    Because they priced their eBooks so low that they lose money on them. This goes well beyond the razor-handle/razor-blade model but seems to be designed specifically to prevents others from entering the market, not merely as a means to sell their physical books and Kindle products. This isn't unlike what MS did with IE.
  • Reply 30 of 71
    gatorguygatorguy Posts: 20,585member
    solipsismx wrote: »
    Because they priced their eBooks so low that they lose money on them. This goes well beyond the razor-handle/razor-blade model but seems to be designed specifically to prevents others from entering the market, not merely as a means to sell their physical books and Kindle products. This isn't unlike what MS did with IE.

    Here's a Justice Dept white-paper that might help clarify what predatory pricing is, how it's determined and why there hasn't been a successful adjudication of a predatory pricing case since 1993. If Amazon is so clearly guilty of it maybe they could be the first and serve as a poster-child.
    http://www.justice.gov/atr/public/hearings/single_firm/docs/218778.htm
  • Reply 31 of 71
    dasanman69dasanman69 Posts: 12,980member
    solipsismx wrote: »
    Because they priced their eBooks so low that they lose money on them. This goes well beyond the razor-handle/razor-blade model but seems to be designed specifically to prevents others from entering the market, not merely as a means to sell their physical books and Kindle products. This isn't unlike what MS did with IE.

    It doesn't prevent anyone from entering the market but it does make it difficult for them to compete.
  • Reply 32 of 71
    solipsismxsolipsismx Posts: 19,566member
    mstone wrote: »
    I'm not sure how the break even pricing harmed consumers. Isn't that the issue at hand? The DoJ is claiming that Apple, by forcing the prices up by some 30% across the board, was bad for consumers.

    1) Amazon's prices weren't break-even. Not even close.

    2) No where has it been shown that Apple forced prices up or by 30%. Their contracts were to get 30% from sales, but the publishers still had complete control over what they price their products at. If you want to claim that forced prices up by 30% by wanting 30% from each sale then you have to also claim that App Store apps are 30% more expensive because Apple wants 30% from each sale. Yet there are hundreds of thousands of free apps not the market and nothing preventing publishers from choosing to give away books on iBookstore.
  • Reply 33 of 71
    solipsismxsolipsismx Posts: 19,566member
    dasanman69 wrote: »
    It doesn't prevent anyone from entering the market but it does make it difficult for them to compete.

    By that measure then MS giving away IE didn't have any affect on the browser market since anyone could make a competing browser.. so long as it was free of charge. Funny I haven't heard you say how MS was the victim and consumers benefited from IE's ill-gained dominance.
  • Reply 34 of 71
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post




    This isn't unlike what MS did with IE.



    That was a bit different since Netscape was a really tiny company and MS took advantage of that by giving away IE for free.


     


    In this case both Apple and Amazon are large well funded companies. Apple could have entered the ebook market easily and matched Amazons pricing. After becoming well established it would be more like the oil companies with petrol stations on opposite corners. The prices move up and down, mostly up, and the other company matches the price. That is not collusion it is just competition. If one station raises the price a nickel the other company can do likewise or keep their price lower to try to attract the other company's customers, however, many customers would pay the slightly higher price due to loyalty.


     


    Apple just tried to jump into the game and change the rules in one fell swoop.

  • Reply 35 of 71
    gatorguygatorguy Posts: 20,585member
    kozchris wrote: »
    If Apple wins does that mean that the publishers can choose not to honor their settlements if they want?

    Nope. None of them admitted any guilt, but chose to make an agreement with the DoJ to avoid a possible finding for it. Those cases are done.
  • Reply 36 of 71
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post



    1) Amazon's prices weren't break-even. Not even close.



    2) No where has it been shown that Apple forced prices up or by 30%. Their contracts were to get 30% from sales, but the publishers still had complete control over what they price their products at. If you want to claim that forced prices up by 30% by wanting 30% from each sale then you have to also claim that App Store apps are 30% more expensive because Apple wants 30% from each sale. Yet there are hundreds of thousands of free apps not the market and nothing preventing publishers from choosing to give away books on iBookstore.


    I think everyone knew that vastly different pricing on the same book would not work out for a more expensive Apple bookstore. If there was going to be any profit, the prices needed to go up. Apple would not agree to a higher price than Amazon because it would mean instant fail for them. The only choices were publishers take a hit or Amazon raise their prices. Of course there was the one other alternative, Apple play the same game Amazon was playing. Give away some books as a loss leader. Of course we know that was never going to happen.

  • Reply 37 of 71
    anantksundaramanantksundaram Posts: 19,152member

    Quote:

    Originally Posted by Gatorguy View Post




    Quote:

    Originally Posted by anantksundaram View Post



    Uh.... you (along with a couple of your 'legal eagle' pals, kdarling and loptomist) were confidently predicting that this was a slam dunk case for the DoJ. ?




    Hardly, but it's not the first time I've been accused of saying something I did not. I'm used to it by now so carry on if you'd like, tho it would be more effective if you offered some imaginary quote of mine to "prove" your claim.


    Ah... my apologies.... I went back and checked: that was the ITC case you all were opining on.....

  • Reply 38 of 71
    gatorguygatorguy Posts: 20,585member
    Ah... my apologies.... I went back and checked: that was the ITC case you all were opining on.....

    Thanks for the correction. No prob. You can save the original post tho, since it's entirely possible I could be wrong about Apple and the ITC.

    If that happens I've no issue owning what I said in advance of the ruling.

    EDIT: By the way I wanted to give you props too. You're one of the few regulars here who will own up to a mistake. Cut and run is the norm. Tho we often disagree I still have respect for you as an AI member and need to remember to tone it down a bit when I find I've been misunderstood by you. Thanks and my apologies for the tenor of my initial reply. It wasn't warranted.
  • Reply 39 of 71
    wigginwiggin Posts: 2,265member
    Quote:
    Originally Posted by mstone View Post

    Well you could put it that way or one could characterize it as Apple being late to the ebook market and wanted a foot in the door. And, they still wanted to make their 30% too. Had they just said to the publishers that you set the price at whatever you want and we'll take 30% and left it at that, then there would be no trial. But Apple knew they would not sell very many ebooks if the price was higher than Amazon. With a higher price than Amazon, Apple's bookstore would be perceived as a failure so they worked out a plan to try to make Amazon raise their prices, which I don't understand why Amazon wouldn't want to actually make some profit on those books anyway. Perhaps they didn't want to be brought into a potential collusion with Apple.

     

    Yep, that's where Apple might find itself in trouble. If rather than figure out how to make themselves more competitive (ie, lower prices) they schemed to make everyone else less competitive (ie, force them to raise their prices), then that negatively effects consumers...thus the lawsuit by the DOJ. And while Amazon stands to make more profit when they are forced to raise prices, they are also limited in their ability to compete because they are no longer able to undercut Apple on price. So *if* it can be shown that Apple orchestrated an industry-wide effort to both increase prices to consumers and limit the ability of other retailers to compete, then I'd say they are guilty. There has been no "smoking gun" shown yet, but there are definitely a few things that don't look too good, either.
  • Reply 40 of 71
    froodfrood Posts: 771member

    Quote:

    Originally Posted by mstone View Post


    I'm not sure how the break even pricing harmed consumers. Isn't that the issue at hand? The DoJ is claiming that Apple, by forcing the prices up by some 30% across the board, was bad for consumers.



     


     


    "yes, the customer pays a little more, but that's what you want anyway" - Steven Jobs, on eBook pricing...


     


     

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