States want Apple to pay at least $280M in e-books antitrust case, push for $840M

Posted:
in General Discussion edited February 2014
The state attorneys general suing Apple for price fixing are seeking $280 million in damages and will ask that the court order the award tripled to $840 million in advance of an upcoming damages trial, a new report says.

Summation
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court


The demands were made in a memorandum filed Friday with Judge Denise Cote, the federal judge presiding over the case, according to Bloomberg. The plaintiffs argue that Apple should be subjected to treble damages thanks to the company's "conclusively proven" role as the scheme's leader.

"The three cases pending before this court allege the same conspiracy, by the same conspirators, with the same goals, methods, and effects," the memo reportedly read. The document was sealed upon submission.

Apple was found guilty last July of joining with five major publishers in a conspiracy to fix the price of e-books. As a result of the verdict --?which is still under appeal --?the company was forced to alter its agreements with publishers and was assigned an external antitrust compliance monitor, a penalty which Apple is also fighting.

A new trial to determine damages in the case is set for May of this year.
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Comments

  • Reply 1 of 132
    Ridiculous. If anyone should be on trial it's Amazon not Apple.

    Apple coming along was one of the best things that could have happened for the eBook market, considering it allowed for some, you know, actual competition - yet apparently Apple are the bad guys and Amazon's monopoly is completely lawful.

    It's stupidity like this that makes me extremely glad I don't live in the US and have to deal with the idiocy of the legal system there.
  • Reply 2 of 132
    Three states licking their Mr Burns lips to cover state budget deficits on Apple's dime.
  • Reply 3 of 132
    they had a great quarter lets get some $ out of them..
  • Reply 4 of 132
    pazuzupazuzu Posts: 1,728member
    thebmt wrote: »
    Ridiculous. If anyone should be on trial it's Amazon not Apple.

    Apple coming along was one of the best things that could have happened for the eBook market, considering it allowed for some, you know, actual competition - yet apparently Apple are the bad guys and Amazon's monopoly is completely lawful.

    It's stupidity like this that makes me extremely glad I don't live in the US and have to deal with the idiocy of the legal system there.

    Freedom isn't free.
    And how was making me pay more for a eBook actually better? When Amazon start selling music against Apple's monopoly they actually charged less not more. And this was when Apple's iTunes were not the great quality they are today.
    Thinking you can have it both ways is actually pretty stupid.
  • Reply 5 of 132
    Quote:

    Originally Posted by pazuzu View Post





    Freedom isn't free.

    And how was making me pay more for a eBook actually better? When Amazon start selling music against Apple's monopoly they actually charged less not more. And this was when Apple's iTunes were not the great quality they are today.

    Thinking you can have it both ways is actually pretty stupid.

    The average e-book price went down if you follow the facts.  Amazon was/is trying to commoditize books which causes brilliant authors to look to other fields to make decent money.  If you want to read garbage then Amazon's method is the way to get there since soon that's all that would be available....

  • Reply 6 of 132
    Testing
  • Reply 7 of 132
    gwydiongwydion Posts: 1,067member
    Quote:

    Originally Posted by GregInPrague View Post

     

    The average e-book price went down if you follow the facts.  Amazon was/is trying to commoditize books which causes brilliant authors to look to other fields to make decent money.  If you want to read garbage then Amazon's method is the way to get there since soon that's all that would be available....


     

    if you follow the facts, average accused publishers e-book prices went up

  • Reply 8 of 132
    pazuzupazuzu Posts: 1,728member
    The average e-book price went down if you follow the facts.  Amazon was/is trying to commoditize books which causes brilliant authors to look to other fields to make decent money.  If you want to read garbage then Amazon's method is the way to get there since soon that's all that would be available....

    Going from $9.99 to $14.99 is an increase Basic accounting, math and logic.
    If the price decreased there never would have been a case- if fact it's the whole basis of the case.
    Can you follow?
  • Reply 9 of 132
    gatorguygatorguy Posts: 19,817member
    IMHO it's ridiculous for those States to be seeking triple damages.
  • Reply 10 of 132
    thomprthompr Posts: 1,510member
    Quote:

    Originally Posted by pazuzu View Post





    Freedom isn't free.

    And how was making me pay more for a eBook actually better? When Amazon start selling music against Apple's monopoly they actually charged less not more. And this was when Apple's iTunes were not the great quality they are today.

    Thinking you can have it both ways is actually pretty stupid.

    If the scope of things you consider in this matter is limited to just price differential immediately before and just after Apple brought iBooks to market, then I could see why you might reach the conclusion that Apple is guilty.

     

    But if you start your consideration with Amazon's strategy and the state of the market before iBooks came to market, you would likely conclude that Amazon was engaging in predatory pricing to prevent others from being able to compete, and they were successful at it too.  In other words, you may very well conclude that the price differential you fixated on was not due to anticompetitive pricing after iBooks but rather anticompetitive pricing before iBooks.  So Apple's combined use of: (1) an agency pricing model (not illegal) and (2) most-favored nation clauses (also not illegal) resulted in a solution to a marketplace problem as opposed to the creation of one.  Prices going up is not always indicative of a bad thing in a marketplace.  Sure the customers aren't happy about it at first, but if it results in healthy competition going forward (it undoubtedly did, as more entities entered the market... not just Apple) then you can expect the pricing would take care of itself and gravitate towards what the consumers would support.

     

    Food for thought.

     

    Thompson

  • Reply 11 of 132
    Quote:

    Originally Posted by pazuzu View Post





    Going from $9.99 to $14.99 is an increase Basic accounting, math and logic.

    If the price decreased there never would have been a case- if fact it's the whole basis of the case.

    Can you follow?



    The price of the best sellers increased while the average price fell I believe

  • Reply 12 of 132
    pazuzupazuzu Posts: 1,728member
    thompr wrote: »
    If the scope of things you consider in this matter is limited to just price differential immediately before and just after Apple brought iBooks to market, then I could see why you might reach the conclusion that Apple is guilty.

    But if you start your consideration with Amazon's strategy and the state of the market before iBooks came to market, you would likely conclude that Amazon was engaging in predatory pricing to prevent others from being able to compete, and they were successful at it too.  In other words, you may very well conclude that the price differential you fixated on was not due to anticompetitive pricing after iBooks but rather anticompetitive pricing before iBooks.  So Apple's combined use of: (1) an agency pricing model (not illegal) and (2) most-favored nation clauses (also not illegal) resulted in a solution to a marketplace problem as opposed to the creation of one.  Prices going up is not always indicative of a bad thing in a marketplace.  Sure the customers aren't happy about it at first, but if it results in healthy competition going forward (it undoubtedly did, as more entities entered the market... not just Apple) then you can expect the pricing would take care of itself and gravitate towards what the consumers would support.

    Food for thought.

    Thompson

    Is 99cents a song "predatory pricing"?
    More food for thought.
  • Reply 13 of 132
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by pazuzu View Post





    Going from $9.99 to $14.99 is an increase Basic accounting, math and logic.

    If the price decreased there never would have been a case- if fact it's the whole basis of the case.

    Can you follow?

     

    You are over simplifying the matter. Amazon forced publishers to release ebooks at the same time as hardcover releases by threatening to not carry publishers hardcover books. Amazon then significantly undercut the price of the hardcover books, which essentially killed hardcover sales and put stores like Borders out of business. This hurt consumers would don't just want Barnes and Nobles as an option. So it used its online monopoly in traditional online book sales to gain a monopoly on ebooks. Publishers wanted a tiered distribution system similar to movies for books, but Amazon used its monopoly power to kill that. What Amazon did was not sustainable for publishers in the long term, and therefore not beneficial to consumers in the long term either. 

     

    The fixed prices you refer to only related to new releases that publishers offered to both Apple and Amazon. Amazon was free to negotiate with publishers and authors directly for exclusive distribution rights thereby still being able to charge whatever it wanted. Further, this is exactly what Amazon did. It has many exclusives such as Ian Flemmings works, as well as things such as Harry Potter. Moreover, for anything not a new releases  (the great majority of books), the prices on ebooks based on competition brought the prices of ebooks down

     

    Moreover, the key point is Apple unlike Amazon did not have any power over the publishers to demand anything, and by striking a deal with the publishers, it was not colluding with its competition. It is generally fine for a player like Apple with no market power in an established market to collude against competitors. 

  • Reply 14 of 132
    65c81665c816 Posts: 133member
    Quote:

    Originally Posted by pazuzu View Post





    Going from $9.99 to $14.99 is an increase Basic accounting, math and logic.

    If the price decreased there never would have been a case- if fact it's the whole basis of the case.

    Can you follow?

    You do understand that Amazon would buy new ebook releases at $x and sell it at below $x, right?  This is to help create the market, as well as to corner the market.

     

    What Apple asked was that when Apple pays $y for the books, $y will never be more than $x.

     

    Consumers still could go get whatever discounts Amazon wanted to offer, from Amazon.

  • Reply 15 of 132
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by pazuzu View Post





    Is 99cents a song "predatory pricing"?

    More food for thought.

    No. Apple had no power to force music publishers to agree to 99 cents per song. The price was fairly negotiated without Apple holding monopoly power over the publishers. Amazon on the other hand forced ebook concessions by threatening not to carry publishers other books, which would have killed the publishers. 

  • Reply 16 of 132
    froodfrood Posts: 771member
    Quote:

    Originally Posted by Gatorguy View Post



    IMHO it's ridiculous for those States to be seeking triple damages.

     

    It technically meets the criteria.  I don't know if it was you that had posted the link to all the evidence in the case, but I actually read most of it and thought it was pretty crippling.

     

    Steve definitely knew he was doing something deliberately and willfully that would harm consumers to the benefit of Apple's and the publisher's profits.

     

    That said I think it is unlikely they will actually get triple damages- its more just 'lawyers 101'   Sue for 800+ mil so it feels like the verdict is already lowered when they "only" award you 250mil.

  • Reply 17 of 132
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by 65C816 View Post

     

    You do understand that Amazon would buy new ebook releases at $x and sell it at below $x, right?  This is to help create the market, as well as to corner the market.

     

    What Apple asked was that when Apple pays $y for the books, $y will never be more than $x.

     

    Consumers still could go get whatever discounts Amazon wanted to offer, from Amazon.


    That is not quite right. For new releases, Apple asked for when it sold a new release book for $y the price nowhere else would be lower than that. That is agency pricing, which is not illegal. So, if a publisher sold a book for $14.99 on Apple, it would also have to sell the book for no less than $14.99 on Amazon. Amazon, however, could avoid the same pricing for new releases by acquiring the exclusive rights to the books. 

  • Reply 18 of 132
    And how would this fine benefit a single citizen? Answer: It won't. It will all go into the pockets of the greedy government for their self serving interests and pensions.
  • Reply 19 of 132
    ceek74ceek74 Posts: 323member

    Hey Apple, wouldn't it be cheaper just to bank roll a few more lobbyists in D.C.?  Problem solved.

  • Reply 20 of 132
    thomprthompr Posts: 1,510member
    Quote:

    Originally Posted by pazuzu View Post





    Is 99cents a song "predatory pricing"?

    I don't know, is it?  I am unaware that Apple is operating at a loss in order to maintain their dominance in music, which is what predatory pricing is and what Amazon was doing regarding digital Books.  But that is a separate issue that would need to be looked into if it has any merit.  Perhaps someone should look into it.  Food for thought on a different topic.

     

    Meanwhile, in the digital books case before us, would it be fair for me to assume that you concur that predatory pricing is a bad thing?  Further, since you don't refute my assertion that Amazon engaged in the practice, then may I assume you agree?  Following on from there, might it be true that breaking Amazon's strategy would be healthy for the marketplace?  I look forward to receiving your thoughtful consideration.

     

    Thompson

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