DoJ dismisses pro-Apple arguments in defense of e-book settlement terms
In a response to 868 public comments regarding its Apple e-book price fixing case, the U.S. Department of Justice on Monday released a statement saying it will not modify the terms of a proposed settlement and alleges that Amazon's dominant market position has been overstated.
The DoJ's statement dismisses the 789 comments made by various companies and industry players opposing the body's proposed final judgment, writing them off as "self-serving" and instead lauds certain examples individually picked from 70 supportive letters, reports Fortune.
According to Fortune's Philip Elmer-Dewitt, the DoJ "sidesteps the central criticism" that claims the government would be siding with monopoly, in this case represented by Amazon, while not fostering competition in bringing an antitrust suit against Apple and five publishing houses. Three of those publishers, Simon & Schuster, Hachette and HarperCollins, immediately settled out of court.
The Justice Department first filed suit against Apple in April over an investigation alleging the iPad maker's so-called "agency model" agreement with book publishers bordered on price-fixing. Under the agency model a publisher can set the pricing for content under a "most favored natiions" agreement that forbids them from peddling the same property to another reseller at a lower price. The DoJ claims the way in which Apple and its publishing partners entered into the scheme can be considered an act of collusion, one that ultimately hurt consumers by falsely inflating e-book prices.
Chart illustrating purported halt of e-book price drop as result of Apple's "agency model." | Source: DoJ
The first paragraph of Monday's response neatly sums up the DoJ's argument (via PaidContent):
The Justice Department denies Apple's claims and alleges: "despite its conspiritorial efforts, Apple's entry into the e-book market was not immediately successful. It was, in fact, Barnes & Noble's entry - prior to Apple - that took significant share away from Amazon." According to the body, Apple's "touted innovations" in the market were in development before the iPad maker decided to enter the business, though the response falls short of citing a source for the claims.
As Elmer-Dewitt notes, the DoJ's response presents somewhat of a double standard as it uses "highly charged language" to insist Apple's arguments be "stripped of [their] rhetoric."
Google and Microsoft's recently-announced tablets were cited in the response as evidence of a healthy e-book market post-lawsuit, though the claim is questionable at best considering the two companies are not presenting the devices as clear e-book competitors. The Intel-based version of Microsoft's Surface, for example, is set to be a full-featured tablet expected to run a complete version of Windows 8 when it launches later this year. Google has also launched the Nexus 7, a small form-factor tablet meant for multimedia and internet content consumption. While both devices have e-reader capabilities it is unlikely that either will be marketed as such.
Most recently the DoJ's lawsuit saw political opposition from Senator Charles Schumer (D-NY), who warned the case could "wipe out the publishing industry as we know it" by allowing Amazon to regain its dominant market position.
The DoJ's statement dismisses the 789 comments made by various companies and industry players opposing the body's proposed final judgment, writing them off as "self-serving" and instead lauds certain examples individually picked from 70 supportive letters, reports Fortune.
According to Fortune's Philip Elmer-Dewitt, the DoJ "sidesteps the central criticism" that claims the government would be siding with monopoly, in this case represented by Amazon, while not fostering competition in bringing an antitrust suit against Apple and five publishing houses. Three of those publishers, Simon & Schuster, Hachette and HarperCollins, immediately settled out of court.
The Justice Department first filed suit against Apple in April over an investigation alleging the iPad maker's so-called "agency model" agreement with book publishers bordered on price-fixing. Under the agency model a publisher can set the pricing for content under a "most favored natiions" agreement that forbids them from peddling the same property to another reseller at a lower price. The DoJ claims the way in which Apple and its publishing partners entered into the scheme can be considered an act of collusion, one that ultimately hurt consumers by falsely inflating e-book prices.
Chart illustrating purported halt of e-book price drop as result of Apple's "agency model." | Source: DoJ
The first paragraph of Monday's response neatly sums up the DoJ's argument (via PaidContent):
Apple argues that its entry into the e-book market disrupted a claimed monopoly by Amazon, which allegedly engaged in "predatory practices" and sold content based on a "wholesale model." Under the internet sales giant's pricing scheme, resellers are able to sell digital content purchased from publishers at below-cost prices to drum up sales.When Apple launched its iBookstore in April of 2010, virtually overnight the retail prices of many bestselling and newly released e-books published in this country jumped 30 to50 percent—affecting millions of consumers. The United States conducted a lengthyinvestigation into this steep price increase and uncovered significant evidence that theseismic shift in e-book prices was not the result of market forces, but rather came aboutthrough the collusive efforts of Apple and five of the six largest publishers in the country.That conduct, which is detailed in the United States? Complaint against those entities, is per se illegal under the federal antitrust laws.
The Justice Department denies Apple's claims and alleges: "despite its conspiritorial efforts, Apple's entry into the e-book market was not immediately successful. It was, in fact, Barnes & Noble's entry - prior to Apple - that took significant share away from Amazon." According to the body, Apple's "touted innovations" in the market were in development before the iPad maker decided to enter the business, though the response falls short of citing a source for the claims.
As Elmer-Dewitt notes, the DoJ's response presents somewhat of a double standard as it uses "highly charged language" to insist Apple's arguments be "stripped of [their] rhetoric."
Google and Microsoft's recently-announced tablets were cited in the response as evidence of a healthy e-book market post-lawsuit, though the claim is questionable at best considering the two companies are not presenting the devices as clear e-book competitors. The Intel-based version of Microsoft's Surface, for example, is set to be a full-featured tablet expected to run a complete version of Windows 8 when it launches later this year. Google has also launched the Nexus 7, a small form-factor tablet meant for multimedia and internet content consumption. While both devices have e-reader capabilities it is unlikely that either will be marketed as such.
Most recently the DoJ's lawsuit saw political opposition from Senator Charles Schumer (D-NY), who warned the case could "wipe out the publishing industry as we know it" by allowing Amazon to regain its dominant market position.
Comments
Any way to blame Google? Lobby money?
Yeah, and whom did Amazon pay off? Campaign contributions? Back-room negotiations? Seems awful odd that the DoJ would be so adamant about this considering the implications. Then again, I would expect nothing less from this current Administration. When is Eric Holder going to be disbarred?
Apparently Apple's chances against the DoJ are pretty decent.
I have to wonder if it doesn't come down to who is a Windoze person (now called Android person) Apple hater on the deciding panels these days and who isn't.
The DoJ is ignoring that while Barnes and Noble, Borders and Sony all had ebooks they were forced into selling at Amazon's pricing which was potentially predatory and damaging to all parties but Amazon, which had everything else in their stable to make up losses. They set the prices, not market forces. They had and still have favored nation clauses in place to make sure no one under sells them even for one hour. Those promos like the Starbucks give away are included in this and Amazon had made sure they have the right to 'sell' the same titles for free.
Amazon also tried bullying stunts like removing all books in all formats for publishers that were going to go with iBooks.
And lets keep in mind that Amazon could have said no to the publishers about changing terms. Yes they would have lost some ebook titles but they had the right to make that decision.
And then there's the DoJ's proof that Apple was part of the collusion. The key point seems to be this bit about how Apple mandated that a majority of the major publishers had to agree to the terms. But what is unclear is what the result would have been if they had not. Would Apple have ditched the whole idea or just come up with new terms as the lack of agreement would signify that the publishers didn't want to go with the agency system. Also where is the proof that Apple said that the publishers had to demand agency terms from all services.
The DoJ is also making comments about the 'right' price of books and implying they have the right to set that price. There's a bit of a fallacy in that tact as they don't have such rights. This isn't like food or flu shots or such that are vital to folks staying alive. Books are nice but they aren't a life necessity, particularly in electronic format. If folks don't want to pay they aren't going to die over not buying the books. THey can buy paper or even check out either format from the library.
The DoJ is yelling about letting the market decide, competition etc and yet they are strong arming certain companies into giving up their rights because a noisy part of the public doesn't like the new rules and is demanding heads roll. And they are doing it before any wrong doing is actually confirmed in regards to one group of companies and continuing to ignore possible wrong doing by others (or rather another). That they cherry picked a small cut of the comments to pay attention to just shows that they are totally biased in this matter. Perhaps what we need is for the publishers to collude to sue the DoJ over the matter of what suits they have filed, and more important what suit they never did and apparently won't. Might be good to kick it off with a motion to require everyone involved to disclose if they own stock in Amazon etc and dismiss everyone that does to avoid the possibility that their ownership will make them biased
Sadly the corruption in Washington has reached new heights, this should highlight to many why people no longer trust our federal government. I can't imagine anything other than somebody in the DoJ being influenced by outside $$$$ as their argument is simply not rational. Maybe it is about time people start stain public protests in Washington to highlight this disaster. It is pretty obvious that the leftist media is ignoring what is going on in Washington, so maybe they need to get in touch with reality too.
It is called corruption, something that is rampant in this administration. Many people like to park their heads in the sand and try to hold onto their 'liberal values" but it is getting very hard to ignore even for the most bleeding of liberals.
I like to think i'm middle of the road in most respects, so I'm not against Apple be held accountable for wrong doing. In this case though they very much did the right thing in addressing the Amazon issue. For the DoJ to be so biased as to ignore this reality is not understandable and as such lead to the obvious conclusion that the Justice department is corrupt.
Quote:
Originally Posted by charlituna
The DoJ is ignoring that while Barnes and Noble, Borders and Sony all had ebooks they were forced into selling at Amazon's pricing which was potentially predatory and damaging to all parties but Amazon, which had everything else in their stable to make up losses. They set the prices, not market forces. They had and still have favored nation clauses in place to make sure no one under sells them even for one hour. Those promos like the Starbucks give away are included in this and Amazon had made sure they have the right to 'sell' the same titles for free.
Amazon also tried bullying stunts like removing all books in all formats for publishers that were going to go with iBooks.
And lets keep in mind that Amazon could have said no to the publishers about changing terms. Yes they would have lost some ebook titles but they had the right to make that decision.
And then there's the DoJ's proof that Apple was part of the collusion. The key point seems to be this bit about how Apple mandated that a majority of the major publishers had to agree to the terms. But what is unclear is what the result would have been if they had not. Would Apple have ditched the whole idea or just come up with new terms as the lack of agreement would signify that the publishers didn't want to go with the agency system. Also where is the proof that Apple said that the publishers had to demand agency terms from all services.
The DoJ is also making comments about the 'right' price of books and implying they have the right to set that price. There's a bit of a fallacy in that tact as they don't have such rights. This isn't like food or flu shots or such that are vital to folks staying alive. Books are nice but they aren't a life necessity, particularly in electronic format. If folks don't want to pay they aren't going to die over not buying the books. THey can buy paper or even check out either format from the library.
The DoJ is yelling about letting the market decide, competition etc and yet they are strong arming certain companies into giving up their rights because a noisy part of the public doesn't like the new rules and is demanding heads roll. And they are doing it before any wrong doing is actually confirmed in regards to one group of companies and continuing to ignore possible wrong doing by others (or rather another). That they cherry picked a small cut of the comments to pay attention to just shows that they are totally biased in this matter. Perhaps what we need is for the publishers to collude to sue the DoJ over the matter of what suits they have filed, and more important what suit they never did and apparently won't. Might be good to kick it off with a motion to require everyone involved to disclose if they own stock in Amazon etc and dismiss everyone that does to avoid the possibility that their ownership will make them biased
Utterly off topic, but when the hell is AppleInsider going to catch on that, in the past couple of days, Proview's own legal team is now suing Proview? For non-payment of fees, no less.
And you guys thought that the DoJ were 'naughty'... (>_<)
Quote:
Originally Posted by Quadra 610
Apparently Apple's chances against the DoJ are pretty decent.
Are they? I genuinely hope so. I want this nonsense resolved correctly.
That's funny - their own data doesn't support their allegation. AT WORST (even assuming that their numbers are correct), the price jumped by 10-15%. Why would anyone believe the DOJ who can't even accurately report their own data?
But since other reports say that the price dropped after Apple got involved, even that conclusion is questionable.
Quote:
Originally Posted by GTR
Utterly off topic, but when the hell is AppleInsider going to catch on that, in the past couple of days, Proview's own legal team is now suing Proview? For non-payment of fees, no less.
And you guys thought that the DoJ were 'naughty'... (>_<)
Story link. It just keeps getting more and more unbelievable: http://news.cnet.com/8301-13579_3-57477555-37/apple-foe-proview-finds-itself-sued-by-own-legal-counsel/
Ive come to the conclusion that the DOJ is run by bozo the clown and his clown car freinds. This has to be the stupidest weakest case I have ever seen and every time the doj opens there mouth they look dumber and dumber.
What they will succeed in doing for consumers with this lawsuit is recreating the amazon monolpoly and run the e book industry to bankruptcy and all of the indie publishers will go broke.
For the prices to drop under a agency model means that some ebooks were actually overpriced to compensate for the lower priced ones. That's the only conclusion I can draw to those reports.
I totally agree with the notion of punishing wrong doing, after it is proven. But strong arming companies into settling and breaking contracts before the case is even on the trial docket is way overstepping to me. And if the issue is pricing, make them price things lower not ditch the system all together especially before they prove there is anything illegal about the style of the terms
Have any one of you ever seen one of the pie charts that shows how much the Author gets from the sale of a book? It's always under a $1. The big publishers were looking for a way to save themselves from being forgotten about, because sites like Amazon make it to easy for an author to sell a book without a publisher, and Amazon only keeps something like 10%, giving a much greater sale.
And even if you choose not to agree with the above argument, common sense should tell you that a digital version of a book should always be MUCH cheaper than a paperback, not the same price or even more like it has been recently. Just think of all the costs that goes into printing a book, guessing how many copies you need, and distributing the books across the country. Meanwhile you can post a book on Amazon in under 5 minutes with a couple clicks.
And 3 of the 5 publishers have settled out of court.
This is a slam dunk for DoJ, and I am extremely proud that they are putting a stop to this price fixing.
Quote:
Originally Posted by ApolloFortyNine
This is a slam dunk for DoJ, and I am extremely proud that they are putting a stop to this price fixing.
Except that isn't what happened. At all.
Quote:
Originally Posted by ApolloFortyNine
Have any one of you ever seen one of the pie charts that shows how much the Author gets from the sale of a book? It's always under a $1. The big publishers were looking for a way to save themselves from being forgotten about, because sites like Amazon make it to easy for an author to sell a book without a publisher, and Amazon only keeps something like 10%, giving a much greater sale.
Actually, prior to iBooks, Amazon was getting +70% from independent authors, as well as the publishers.
I suspect that if the DOJ forces Apple and the publishers to switch back to a wholesale model, Apple will still charge the same markup over the wholesale price as they are now (i.e., 30% of the sticker price goes to apple). The only difference is that Amazon will be liberated to sell books at a lower profit margin, or even at a loss.
If this had happened back in 2010 it might have seriously hurt iBooks. But now I'm not so sure. There's no "most favored nation" clause (that I know of) in Apple's agreements with recording labels. Indeed, you can often buy mp3s from Amazon for less money that AACs from iTunes. Yet iTunes is doing very well, in large part because it's the default option on iDevices. Being the default option is tremendously valuable, especially on a monster platform like the iPad (or the iPod before it).
Even if this does hurt iBooks, I doubt that it will hurt iPad sales since most of the value of the iPad comes from apps, not ebooks.
Finally, if the DOJ wins this, then the DOJ is on the hook to make sure that Amazon doesn't become a monopolist. If Amazon becomes a monopolist, it's the DOJ's fault, and it will be up to the DOJ to rectify the situation.