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.
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.
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?
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.
"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?
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.
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.
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.
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.
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.
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.
"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,..."
"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."
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.
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?
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?
"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?
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.
Comments
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.
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.
Quote:
Originally Posted by rob53
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?
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.
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.
Quote:
Originally Posted by rednival
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.
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.
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.
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.
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.
Quote:
Originally Posted by Suddenly Newton
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.
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
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.
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?
Quote:
Originally Posted by Frood
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?
Quote:
Originally Posted by Techstalker
"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?
Quote:
Originally Posted by Cash907
...artificially inflated prices set by Apple...
Apple doesn't set prices.
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.