US court finds Apple guilty of conspiring to raise e-book prices

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  • Reply 121 of 163
    koopkoop Posts: 337member


    When information about this surfaced, I was 98% sure the conviction was in the bag. It's almost a case study in price collusion. Embarrassingly so. The US GOVT would have to come out as clowns on a unicycle yelling 'JK!' for any other verdict to come out of this. 


     


    As much as I enjoy Apple products, I enjoy freedom and price competition in the media I consume. This is a win for me as a consumer, regardless if it negatively effects a company who's products I enjoy. 

  • Reply 122 of 163
    hill60hill60 Posts: 6,992member
    buzdots wrote: »
    Got a list of those?  I have my bags packed... seriously, I need a list so I can do some homework.

    No, I'm serious!!

    Of course it would help if English was at least a secondary language taught in their schools...

    Australia
  • Reply 123 of 163
    techboytechboy Posts: 183member

    Quote:

    Originally Posted by themouse View Post



    I'm the biggest Apple fanboy there is. I had an Apple II in the 80's and the first Macintosh II. I own stock and every single iThing. When e-books started appearing on Amazon, I bought them to read on the Kindle app on the iPad. Since it was no physical item, the prices were amazing compared to the real book. Then Apple added books to it's online store. Then the Amazon prices went up! I'm just saying.


     


    This is one of the many damn misconceptions with this case. Apple coming into the picture to compete and offer alternative pricing to Amazon...prices for ebooks went up because publishers now sets the prices via agency model. So what is the problem? Are you insisting publishers can't set their own price but it's okay for Amazon to sell at a lose or little gain? I sense this judge don't have a clue of where the technology is heading regarding e-commerce.


     


    Let's pretend ebooks are groceries for a second, anyone have a problem with one store selling same goods at higher price than another? What about another store 2 miles out matching the same price? or a higher in the middle of nowhere selling at prices much higher than within a crowded town? Ever go on a vacation or tourist trap towns and paid a few dollars more for same bottle of water that you would otherwise get for much less??? Should we start suing everyone and say there is collusion?


     


    IMHO, this judge failed in an epic way to put everything into context. All she did is blame Apple for providing an e-commerce environment for publishers to "collude". So why don't we find gun manufacturers guilty for gun and war crimes? or alcohol manufacturer for DUI? or soft drinks and snack manufacturers for obesity and health issues?

  • Reply 124 of 163
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by Gazoobee View Post


    Scalia and Alito have no respect for the law or the government, or anything but their own radical opinions and have brought more shame to the body in the last five years than any other judge has for a century.  



     


    BS.  Talk to someone trained in ConLaw and ask them about about of the major recent cases and which opinions are the most radical in terms of creating new legal principles out of thin air to support their side.  I'll give you a hint: Scalia will be a dissenter in most of those cases.  It's the newer liberal judges who should be ashamed of their legislating from the bench philosophy.

  • Reply 125 of 163
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by Smallwheels View Post


    Even though Apple let the publishers set their own prices, the agreements they had to sign forbade publishers from selling the same product elsewhere or allowing their other outlets, such as Amazon, to sell their products for less money. That is price fixing. If Apple even hinted at prices they hoped the sellers would select, that would mean they were colluding with the others to set a price at a certain level.



     


    Wrong.  Please go read up on the most-favored-nation clause.


     


    "If I'm going to do business with you, you have to agree to give me the same deals you give someone else" is not the same as "You are not allowed to give deals to anyone else."  That's the simple version.

  • Reply 126 of 163
    buzdotsbuzdots Posts: 451member

    Quote:

    Originally Posted by hill60 View Post





    Australia


    I completely forgot about them...  aren't they taxed out the wazoo though?

  • Reply 127 of 163
    wigginwiggin Posts: 2,265member
    Quote:
    Originally Posted by Techboy View Post

     

    This is one of the many damn misconceptions with this case. Apple coming into the picture to compete and offer alternative pricing to Amazon...prices for ebooks went up because publishers now sets the prices via agency model. So what is the problem? Are you insisting publishers can't set their own price but it's okay for Amazon to sell at a lose or little gain? I sense this judge don't have a clue of where the technology is heading regarding e-commerce.

     

    Let's pretend ebooks are groceries for a second, anyone have a problem with one store selling same goods at higher price than another? What about another store 2 miles out matching the same price? or a higher in the middle of nowhere selling at prices much higher than within a crowded town? Ever go on a vacation or tourist trap towns and paid a few dollars more for same bottle of water that you would otherwise get for much less??? Should we start suing everyone and say there is collusion?

     

    IMHO, this judge failed in an epic way to put everything into context. All she did is blame Apple for providing an e-commerce environment for publishers to "collude". So why don't we find gun manufacturers guilty for gun and war crimes? or alcohol manufacturer for DUI? or soft drinks and snack manufacturers for obesity and health issues?

     

    Here, let's make your analogy relevant to this case, because what you wrote is complete irrelevant.... Now let's say that tourist trap selling water at higher prices than elsewhere worked with all of the bottled water suppliers and convinced them to change their relationship with the other stores and force them to sell water at the same higher price as the tourist trap shop.



    I'm not saying that's what Apple did. I'm saying that's what Apple is accused of doing. I don't know enough of the gory details of the case to have a strong opinion. But your example suggesting that it was a simple matter of market competition is not an accurate representation of the case.
  • Reply 128 of 163
    wigginwiggin Posts: 2,265member
    Quote:
    Originally Posted by malax View Post

     

    Wrong.  Please go read up on the most-favored-nation clause.

     

    "If I'm going to do business with you, you have to agree to give me the same deals you give someone else" is not the same as "You are not allowed to give deals to anyone else."  That's the simple version.

     

    Everybody likes to point to MFN clauses as some holy grail that justifies, even enables, cerrtain business practicies. But MFN is a bit like monopolies in that they can be totally benign or they can be tools for anticompetitive practices. Monopolies are not automatically illegal. It's what you do with them that gets you into trouble.



    Also, it appears from my limited reading that historically MFN clauses are used to dictate the prices the supplier (publishers) charges the retailer (Apple, Amazon) and NOT the prices the retailer is allowed to charge the consumer. If Apple required MFN clauses to state that the price the publisher charges Apple for their product can't be more than the publisher charges Amazon, no problem. Both Apple and Amazon are then free to run their businesses, and set their retail prices, as they see fit. But then Apple wouldn't be able to compete with Amazon on price and still get their 30% cut of the retail price because Amazon was willing to take a smaller cut of the price charged to consumers (whether Amazon was doing anything illegal with their pricing is completely irrelevant to the case against Apple).



    So if Apple wanted 30% on top of what they pay the publishers and still be able to compete with Amazon on retail price, the options were to either pay the publishes less or get Amazon to increase their prices. So the question is did they do anything considered to be illegal/anticompetitive in order to achieve their goal. Pointing to MFNs or to Amazon's "monopology" as a justificiation for what Apple is accused of doing (I don't have a firm opinion if they should have been found guilty or not) does not prove your case. Guns (in the US) are legal...but you can use them to do illegal things.



    Edit: One referenc I found stated that if all the major players in an industry adopt similar MFNs that it may be evidience of anticompetitive practices:



    "The antitrust enforcement agencies and courts are more likely to
    allege collusion if a large percentage of the relevant competitors,
    either buyers or sellers, adopt similar MFNs. For example, in Starr
    v. Sony BMG, the court found the adoption of similar MFNs by
    record labels representing more than 80% of the sales of music
    on the internet as evidence useful to support a Section 1 claim
    (592 F.3d 314, 323 (2d Cir. 2010))."
  • Reply 129 of 163
    tribalogicaltribalogical Posts: 1,182member
    This is the entire case in a nutshell:

    "Apple led the charge in convincing publishers to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform.

    In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so."


    For me, the question that matters here (and that was apparently overlooked by the court) is the one that comes from that last part regarding Amazon's 'powers': Did Apple's actions PREVENT Amazon from setting their own RETAIL prices at or below cost if they chose to do so? Apple didn't remove the "wholesale model" from Amazon, did they? They simply said to publishers, "if you sell to Amazon (or others) for a lower price, you have to give us that price too. And to the publishers they said, on OUR store YOU set the prices, not us.

    Where is there "price fixing" or "conspiring" to raise prices? I just don't see it%u2026
  • Reply 130 of 163

    Quote:

    Originally Posted by Soloman View Post





    Even in a global market it would hurt someone like Barnes & Noble who may not have the global presence of a Apple or Amazon. Of course I don't like what Amazon was doing but forcing the same price across all vendors isn't good either. I would put a little leeway in the MFN clause, if a competitor's price is over one dollar less then I must be allowed to price match.


    But you are missing the point here. The price you pay for an eBook has at least 2 components: the cost that is paid to the author/publisher, and the cost that is 'siphoned off' by the distributor. The price matching you are talking about is all about price competition among distributors who are competing for your business, not price competition driven by authors or even the publishers. The distributors add no value to the product itself other than providing authors with access to buyers. And in the case of electronic products, like eBooks and software, Apple's stores offer by far the most efficient way of distributing electronic products to a global market. B&N and Amazon just can't compete with the distribution model created by Apple. Their outdated business model, involving price competition on distribution only, should not be protected by the DoJ.

  • Reply 131 of 163
    russellrussell Posts: 296member

    Quote:

    Originally Posted by tribalogical View Post



    This is the entire case in a nutshell:



    "Apple led the charge in convincing publishers to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform.



    In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so."





    For me, the question that matters here (and that was apparently overlooked by the court) is the one that comes from that last part regarding Amazon's 'powers': Did Apple's actions PREVENT Amazon from setting their own RETAIL prices at or below cost if they chose to do so? Apple didn't remove the "wholesale model" from Amazon, did they? They simply said to publishers, "if you sell to Amazon (or others) for a lower price, you have to give us that price too. And to the publishers they said, on OUR store YOU set the prices, not us.



    Where is there "price fixing" or "conspiring" to raise prices? I just don't see it%u2026


     


     


    That is NOT the entire case in a nut shell.


     


    With the help of Apple, publishers collectively(conspired) forced Amazon to adopt the Agency model and simultaneously raising prices(price fixing) for consumers.


     


    Antitrust laws were created to protect consumers, not businesses.

  • Reply 132 of 163
    jungmarkjungmark Posts: 6,882member
    russell wrote: »

    That is NOT the entire case in a nut shell.

    With the help of Apple, publishers collectively(conspired) forced Amazon to adopt the Agency model and simultaneously raising prices(price fixing) for consumers.

    Antitrust laws were created to protect consumers, not businesses.

    It is hard to believe Amazon didn't have more influence than Apple.

    In addition then why did the government go after Microsoft for IE? IE was free. Free is good for consumers. Fact is competition is required. Amazon had a near monopoly and was undercutting others so they could not make a buck.
  • Reply 133 of 163
    wigginwiggin Posts: 2,265member
    Quote:
    Originally Posted by jungmark View Post



    It is hard to believe Amazon didn't have more influence than Apple.



    In addition then why did the government go after Microsoft for IE? IE was free. Free is good for consumers. Fact is competition is required. Amazon had a near monopoly and was undercutting others so they could not make a buck.

     

    As I stated in a previous post, the issue with MS and IE was that MS used their monopoly position in one industry (operating systems) to force their way into another (web browsers). This prevented others from being able to compete with IE, not because IE was good, and not even because it was free. They couldn't compete because MS used their OS position to force PC vendors to include IE (and later IE was integrated into the OS) and to forbid them from including other web browsers on the PCs they sold.
  • Reply 134 of 163
    wijgwijg Posts: 99member
    Something good of all this mess may at least be that more people are aware of the vast artibtrary power of the government to interfere in all manner of private life. Reasonable people seem to understand that going after Apple in this way (not to mention the publishers and, by extension, authors) is unjust. Perhaps this will help erode the perversion of antitrust laws and lead the so called Department of Justice to review its practices.

    Here's a nice parallel video from 1979 or 1980:

    Who Protects the Consumer?

    From the Milton Friedman series Free to Choose
    Running time is approximately 58 minutes
    Includes a moderated discussion between Friedman and statist representatives at the end.

    Quite interesting. It reminds me of the the government strong-arming used to force Chrysler's recall of safe vehicles:
    http://www.startribune.com/business/212017211.html

    What a wonderful world.
  • Reply 135 of 163
    mikeb85mikeb85 Posts: 506member

    Quote:

    Originally Posted by winchester View Post



    I'm not siding with Apple for the sake of siding with Apple. But if what they did was in violation of an antitrust law, I just think it's a stupid law! It's only logical for a retailer to bargain with suppliers for the lowest possible price.



    To my knowledge, the only stipulations made by apple were that publishers offer them the lowest available price for their ebooks and that apple collect a 30% retailers fee. How is this illegal? Regardless of emails Steve Jobs may or may not have sent- these terms were not dictated in the deals that were signed by the publishing companies. They were just thoughts being communicated. How long does the arm of the government extend? Has it become illegal for corporate leaders to casually share ideas with each other leading up to a business partnership? This, to me sounds ridiculous! If this is the law, it needs to be changed.


     


    The issue wasn't that Apple would buy the product for the lowest possible price, but that Apple would guarantee through collusion that their selling price would be the lowest.  It wasn't Apple's adoption of an agency model that was illegal, but rather that they convinced the publishers to strong-arm Amazon into an agency model that ensured Apple's prices would be lower than Amazons, preventing Amazon from selling books in a retail model (ie. Amazon buys at the price the publisher sets, then re-sells book at whatever price they want).  


     


    This is pretty much the prototypical anti-trust scenario...  

  • Reply 136 of 163
    solomansoloman Posts: 228member
    mikeb85 wrote: »
    The issue wasn't that Apple would buy the product for the lowest possible price, but that Apple would guarantee through collusion that their selling price would be the lowest.  It wasn't Apple's adoption of an agency model that was illegal, but rather that they convinced the publishers to strong-arm Amazon into an agency model that ensured Apple's prices would be lower than Amazons, preventing Amazon from selling books in a retail model (ie. Amazon buys at the price the publisher sets, then re-sells book at whatever price they want).  

    This is pretty much the prototypical anti-trust scenario...  

    Here's a good article.

    http://tidbits.com/article/13912
  • Reply 137 of 163
    dasanman69dasanman69 Posts: 13,001member
    But you are missing the point here. The price you pay for an eBook has at least 2 components: the cost that is paid to the author/publisher, and the cost that is 'siphoned off' by the distributor. The price matching you are talking about is all about price competition among distributors who are competing for your business, not price competition driven by authors or even the publishers. The distributors add no value to the product itself other than providing authors with access to buyers. And in the case of electronic products, like eBooks and software, Apple's stores offer by far the most efficient way of distributing electronic products to a global market. B&N and Amazon just can't compete with the distribution model created by Apple. Their outdated business model, involving price competition on distribution only, should not be protected by the DoJ.

    Why would publishers need to compete on price? One publisher doesn't offer the same exact books as another only distributors do that so they're the ones that need to compete on price. Amazon's way did indeed present roadblocks for competitors but Apple's way does too. All we're going to eventually have is a duopoly with high prices instead of a near monopoly with low prices.
  • Reply 138 of 163
    pendergastpendergast Posts: 1,358member
    wijg wrote: »
    It reminds me of the the government strong-arming used to force Chrysler's recall of safe vehicles:
    http://www.startribune.com/business/212017211.html

    What a wonderful world.

    Because we should just take a big corporation's word for it that their products are safe.

    We should also let the financial sector regulate itself.

    While we're at it, I have some shoreline property to sell you in Florida.
  • Reply 139 of 163
    I love Apple products but the iBookstore really, really boggles my mind.

    I'm not saying Apple did/did not do wrong here; I am saying that Apple's hands clearly got dirty by shaking the wrong hands.

    Apple's iBookstore pricing is something to behold--on average, nearly all the books I look for are either the same price or higher than Kindle. However, Kindle has more books, and more access to them (i.e. Macs, iOS, PC, Web, Android, etc.)--I am not saying Amazon is some grandiose savior of the book-buying public but charges less money for the same item, and with better access for its customers to view their content.
  • Reply 140 of 163
    tallest skiltallest skil Posts: 43,399member
    juanguapo wrote: »
    I love Apple products but...
    1000
    I'm not saying Apple did/did not do wrong here; I am saying that Apple's hands clearly got dirty by shaking the wrong hands.

    I'm not saying you've read absolutely nothing about what's going on here, but...
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