Apple found guilty in e-book price fixing case

E-book prices went up after Apple jumped into the market following the iPad’s release in 2010, and those price hikes were the result of collusion between Apple and major book publishers. That’s the gist of today’s ruling by New York District Judge Denise Cote in a high-profile price-fixing suit against Apple.

According to Reuters’ coverage of the story, Amazon once had a 90% share of the e-book business and sold e-books for $9.99 a piece—allegedly “below cost.” Around late 2009, Apple is said to have entered “agency agreements” with publishers like Hachette, HarperCollins, Penguin, Simon & Schuster, and Macmillan. Those agreements allowed publishers to raise prices and pay commission to Apple. Amazon was allegedly “pushed into a similar business model,” and as a result, some e-book prices rose from $9.99 to $12.99 or even $14.99.

According to the Judge’s opinion, “Apple is liable here for facilitating and encouraging the Publisher Defendants’ collective, illegal restraint of trade. Through their conspiracy they forced Amazon (and other resellers) to relinquish retail pricing authority and then they raised retail e-book prices. Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant.”

Judge Cote’s opinion includes some damning quotes from e-mails sent by Steve Jobs to publishers. One of them says in part, “The current business model of companies like Amazon distributing ebooks below cost or without making a reasonable profit isn’t sustainable for long.” It adds, “All the major publishers tell us that Amazon’s $9.99 price for new releases is eroding the value perception of their products in customer’s minds, and they do not want this practice to continue for new releases.” Jobs also urged publishers to “move Amazon to the agent model too for new releases for the first year,” adding, “If they don’t, I’m not sure we can be competitive.”

The Associated Press says Apple denies colluding with publishers and plans to appeal Judge Cote’s ruling.

Comments closed
    • Diplomacy42
    • 7 years ago

    Hypothetically: I want to open a bar. I spend 10 million dollars making my bar awesome. However, when it comes time for me to open the doors of my bar, I start to realize that it won’t be profitable. I spent too much, I don’t have a customer base, other bars have more volume, less overhead, cheaper drinks and are somehow still profitable. So, I contact my buddies at all 5 licensed wholesale distributors of alcohol in the state and together we decide to raise the price of alcohol and mandate the cost that a bar sells a drink at. Beer will be one price, mixed drinks another, hard liquor another and so on. Any bar who sells their booze below the price that I have set will no longer be able to buy alcohol in the state, so they will go out of business. My bar will be profitable, because without price competition, people are drawn to the bar with the expensive sound system and live entertainment.

    Its a win-win for everyone, except the other bars who used to get by offering their drinks cheap(and of course their customers.)

    • danny e.
    • 7 years ago

    [quote<]Around late 2009, [/quote<] Not to be the one to defend Apple here but this was around the time the government was pouring billions into the economy and the Fed started printing trillions of fake currency. The moral of the story here is it's all just inflation and Obama is to blame. --- I wonder if the defense made any kind of inflation defense: [quote<] "In the 1950's you could buy a soda for a nickel" Is Coca Cola price fixing just because I have to pay a lot more now?[/quote<]

      • Fighterpilot
      • 7 years ago

      LOL…another Rush fan bitchin…”We was robbed”….still?

      • Diplomacy42
      • 7 years ago

      Some things have absolutely nothing to do with Obama. Corporate douchery in the general vicinity is a good example of something that has nothing to do with Obama.

      Six degrees of Kevin Bacon is was never intended to become a religion.

    • tanker27
    • 7 years ago

    As someone brought up before, Why aren’t “they” going after the college text books scam and the Teachers/ Professors that get kickbacks from the publishers when their textbook is used?

    I admit that some of the pricing on ebooks was outrageous but the books I read in digital format were the free classics from Project Gutenburg. I may have actually bought 2-3 books, never from Apple though always Amazon.

      • Diplomacy42
      • 7 years ago

      they aren’t going after college professors because what they do isn’t illegal( just unethical.) forcing a captive audience to use the same textbook, even a more expensive textbook, and then taking a cut from the sale isn’t illegal.

      whereas getting 5 publishers in a room, telling them that the new *~RETAIL~* price will be 9.99 for this type of book, 15.99 for this other type of book etc and that these prices must apply to all other retailers the publishers deal with, well that is illegal.

        • tanker27
        • 7 years ago

        Have you seen the cost of texts books lately?

        I guarantee the same thing is happening with the publishers with Textbooks. They are colluding to jack up the prices on physical textbooks.

          • Diplomacy42
          • 7 years ago

          its not collusion, its economic theory. supply = artificially limited by publishers, demand = artificially inflated by mandatory book purchases(and private and federal subsidies), thus the market will bear an artificially high price,

          but individual retailers are allowed to set their own prices.

          thus not price fixing.

    • Silus
    • 7 years ago

    The evidence was pretty clear and only with a massive bribe would Apple not be found guilty of this. They can still bribe someone to win the appeal of course…something that I wouldn’t be too surprised.

    • Captain Ned
    • 7 years ago

    Before you all go bashing each other’s brains out over interpretations of the RDF and all that, read this analysis of the 160 page opinion posted by an experienced trial lawyer. His takeaway is that Apple got taken to the woodshed and severely beaten and that the only remaining issue is the size of the restitution check.

    [url<]http://beldar.blogs.com/beldarblog/2013/07/reactions-upon-reading-todays-court-ruling-against-apple-in-the-ebook-price-fixing-conspiracy-case.html[/url<] The money graf is when Kelso actually tells a reporter that they've made a deal to inflate e-book prices.

      • Diplomacy42
      • 7 years ago

      +1

    • marvelous
    • 7 years ago

    GUILTY

    • HisDivineOrder
    • 7 years ago

    The RDF is growing incredibly weak without its anchor in the physical world.

    Many of its adherents are looking at Google devices and beginning to feel doubt grow in their hearts. They look at Samsung devices and whisper softly to one another in the dark when they think the Macbook can’t hear that those Samsung devices look much better than the Apple ones. They look at Google Glass and wish it had an Apple logo on it. Americans hate them for what they’re doing to Chinese workers while the Chinese hate them for just being not as cool as advertised. Europeans see them as another rich money well to be tapped. In court, the biggest win they had with Samsung-Apple’s lawsuit begins to turn against them in every possible way imaginable despite the fact that they won the case.

    Investors don’t think Apple is a money tree, courts don’t listen to the specious arguments their fulltime paid lawyer teams spout, and Jony Ive is aping Microsoft’s latest designs for aesthetic advice and Android/WebOS for design advice because he’s all out of ideas and not the guy who was supposed to be designing UI aesthetics, but Tim Cook sure can’t do it. Siri remains a joke of imprecise control and limited usefulness. Apple can’t replace the Samsung parts wholesale because no one can maintain the rate of production like Samsung and Apple can’t replace the Google apps they relied on wholesale because Google’s apps are better than Apple’s in some cases. Maps is the best example.

    The RDF’s structural integrity is weakening to critical levels. It could give at any moment…

    The Evacuation Order’s been given. The alarms are blaring. Siri is telling everyone to proceed in a calm, orderly manner, but everyone’s shoving and throwing each other out of the way. Crowds are surging toward the exit. Someone’s knocked over the iTunes card stand and it’s blocking the only exit out of the walled garden. The entire RDF begins to buckle. The world outside is not as white, stark, brushed aluminum, or thin.

    As the last of the survivors escapes, they blink and rub their eyes. “Mommy,” one child cries, “There’s so much color! Everything is so thick!”

    “I know, baby. It’s okay. This is just the way the world looks…”

    “I don’t like it, Mommy. Make it thin! Make it black or white! Make it cost more! Cheap is bad!”

    “Shhhh, honey, we’re just lucky to get out…” Turning, they watch the bubble collapse inward. People caught on the other side of the itunes gift station are struggling to shove each other off the stand and push it out of the way, but it’s too late. The field jerks inward.

    Screams echo through the bubble and come out the other side the sounds of giddy enthusiasm. Then it’s gone. Just a massive hole in the ground where there was once paradise on earth. Ruined walls, melted computers, unused cards with itunes credit, withered impoverished husks with no life, and rotten fruit are all that is left.

      • windwalker
      • 7 years ago

      You can qoute them, glorify or villify them, but the one thing you can’t do is ignore them.

    • lilbuddhaman
    • 7 years ago

    I think this is an extremely interesting image to go along with this story:
    [url<]http://www.digitopoly.org/2013/06/06/a-puzzling-graph-on-ebook-prices-and-the-doj-case/[/url<]

    • BobbinThreadbare
    • 7 years ago

    Below cost :rollseyes:. I must have missed it when the price of bandwidth increased 100 fold.

      • peartart
      • 7 years ago

      “Below cost” means relative to what they were paying the publishers. The real problem is that the publishers didn’t individually have the courage of their convictions to just raise the price they charged Amazon (and everyone else) for eBooks.

      • windwalker
      • 7 years ago

      Writing inane comments is comparable to the cost of bandwidth.
      Writing and editing books is several orders of magnitude more expensive.

        • Diplomacy42
        • 7 years ago

        well, then i guess its a good thing that Amazon PAID FULL PRICE regardless of what price they sold the books for on their stores and devices, isn’t it?

    • kamikaziechameleon
    • 7 years ago

    Good to see the federal government doing something productive. Hopefully this will discourage price fixing in many other tech arenas.

      • Diplomacy42
      • 7 years ago

      i have my doubts the penalty will fit the crime

    • FireGryphon
    • 7 years ago

    More info needed! It doesn’t make sense that a company is guilty for selling something at a price that is higher than below market value. If anything, conspiring to sell ebooks below market value should have gotten Amazon in trouble. The only way Apple should get any blame is if they raised it to a price that is not market value.

      • chasscF1
      • 7 years ago

      Amazon is merely a middleman. They paid the publisher and then descide what they want to resell the product for. From what it sound like, they were not losing money selling e-books, they were losing money on newer, high priced ones and making up the difference by profitting on the rest of the e-books. And really they were trying to build a market, no force out competitors. Its not like there are large mom and pop ebook sellers. Before Apple, their main competition was Sony. The publishers don’t like this model because they don’t want to sell you an ebook for less than a physical book, even though it cost money to produce, ship, and store. By colluding with Apple, they were able to set prices. Amazon’s practices are not illegal, they make sense. Most people would agree that it would make sense to pay less for a digital copy of a book and Amazon provided that to build up the marketplace.

        • windwalker
        • 7 years ago

        Wrong.
        The publishers did not make any more money, they made less.
        It was all about forcing Amazon to make a profit, stop their predatory pricing and prevent them from becoming a monopoly.

          • chasscF1
          • 7 years ago

          And why would they take less? To protect printed books as stated above. I didn’t say they wanted to make more money. And I don’t know why everyone like yourself is assuming Amazon was not making a profit selling books. They were selling some for less than they paid. That doesn’t mean they sold every book for less than they paid. It doesn’t state that Amazon wasn’t profitable. Merely that their profits weren’t to Apple tax standards.

          Your logic doesn’t make sense. If they were making more with Amazon as a monopoly, why change?

            • mnemonick
            • 7 years ago

            This is really the crux of the argument. Publishers were unhappy with Amazon because Amazon wouldn’t play ball and keep its ebook prices closer to hardcover pricing. That’s why they were willing to sacrifice their wholesale ebook pricing for a higher retail price on all ebooks.

            The amusing thing is that Amazon came out fine all the way ’round – they actually get more money per book sold under the agency system than they did before.

            • Captain Ned
            • 7 years ago

            Because at the start of the e-book market the publishing houses failed to see the new revenue stream and worried about e-books eating into the dead treee business.

            • windwalker
            • 7 years ago

            If they wanted to protect printed books they could just sell no e-books at all.

            Amazon was making a profit from the long tail. They used predatory pricing for all popular e-books to ensure no competitor could enter.

            The world is not static. If the publishers had allowed Amazon to own e-books distribution, Amazon could easily dictate both wholesale and retail prices.

            • chasscF1
            • 7 years ago

            They wanted to protect the price of books compared to ebooks not the books themselves. I don’t know why you call it predatory pricing? Who were they hurting other than their bottom line? The two other giant corporate entities (who could not enter the market according to you even though they were and are still in the market) they were fairly competing with in the reader hardware and ebook business before Apple got in the game(B&N and Sony)? Amazon did not abuse their market share to dictate price even though they probably could have, so your statement holds no water. Again from the evidence it appears that Amazon was using pricing to build a customer base. Do you want the DOJ to sue Amazon because they sell hardware like the kindle fire at cost and Apple does not? Its the same damn thing. Apple has shown they can sell at a higher price through iTunes than other people. Ever comparison shopped music between iTunes and Amazon? Amazon probably wins or is even 99% of the time, yet I don’t see iTunes shuttered. Apple and the publishers colluded to affect the market for two distinct goals that hurt the customer and their competition. Apple didn’t have to compete on price and the publishers decreased the delta between eBook and printed book price. What is your evidence that Amazon monopolized the market or created a cartel with competitors to increase price?

        • Diplomacy42
        • 7 years ago
      • Diplomacy42
      • 7 years ago

      [url<]http://beldar.blogs.com/beldarblog/2013/07/reactions-upon-reading-todays-court-ruling-against-apple-in-the-ebook-price-fixing-conspiracy-case.html[/url<] more info needed? fine, read this synopsis of the judge's ruling. as you can see, apple was not convicted of charging too much, but of conspiring with publishers to force amazon to match apple's inflated prices. if apple had just launched iBookstore and charged more, amazon might have raised their prices or they might not have. either way, its not apple's place to renegotiate their competitor's contracts and business practices for them.

    • sschaem
    • 7 years ago

    “damning quotes”???

    “The current business model of companies like Amazon distributing ebooks below cost or without making a reasonable profit isn’t sustainable for long.”

    Selling below cost is now considered good business practices that Apple must have followed?
    Actually, this is the exact tactic large corporations use to destroy smaller one.
    Only large corporation like Amazon can sell below cost for extended time to kill off / acquire competitors in distress.

    What ‘we’ should have looked at closer, instead doing this Apple witch hunt, is how textbook for kids get priced at $200+
    School have no choice but the buy those mandatory textbook at a fixed prices.

    Reality : Its the US government that is truly guilty of price fixing… and is promoting the destruction of small business by allowing below cost tactics from large corporations.

      • Waco
      • 7 years ago

      Define “reasonable profit”.

        • Diplomacy42
        • 7 years ago

        apparently, that is 30% commission

      • kamikaziechameleon
      • 7 years ago

      I agree the choice quotes are not as damning as we were lead to believe. But based on what the synopsis said amazon was wronged. The distributor wants to loose money, let them loose money. Apple basically says, “Well that isn’t profitable, we will collude with content providers to manipulate amazon’s business model.” Then they do that, raising prices and essentially flattening the market. That is not a free market maneuver and violates anti-trust laws among many others.

        • sjl
        • 7 years ago

        The problem isn’t in the short term. The problem is in the long term. If a company sells under cost to attract business for other, more profitable items, hey – good luck to them. If, on the other hand, that company is selling under cost to drive its competitors out of business, thereby giving it a monopoly … that’s a problem.

        So the question then becomes: was Amazon selling below cost to increase its business, or to try to gain an edge in market share it could subsequently use to dictate prices? If the former, then Apple was being Eeeeeeevil, and deserves to be punished. If the latter, then Apple’s intervention helped to restore some degree of competitive sanity to the marketplace, and should be lauded.

        That said, I’m a little bit peeved at certain publishers, such as Hachette – they gouge Australians to the Nth degree for ebooks. I wouldn’t object so much if it weren’t blatantly obvious when you compare the price for US customers compared with the price for Australian …

          • Diplomacy42
          • 7 years ago

          The problem with your theory is that if amazon ever raised their prices, the market would readjust, new businesses would come in to compete. If amazon ever tried to raise & fix prices, then they would have been guilty of the anti-trust stuff apple did (and probably would have gotten more than an apology from the prosecutors who went after them in the first place).

          must be nice being Apple

            • sjl
            • 7 years ago

            There’s one issue with what you’re saying, and that’s the platform lock-in inherent when publishers insist on DRM. (Yes, Amazon’s DRM has been broken, and will remain so – that isn’t the point, since most people don’t have the technical nous to figure out what software to grab and how to do it.) If Joe Q Public has bought an extensive library of books from Amazon, he’s likely to balk at the expense of buying into a new platform: first there’s a new reader, then there’s the cost of all those books that he can’t read on the new reader. Or he could just buy another Amazonian reader, in which case, why bother buying into another platform?

            The US government, at least, seems to be rather unwilling to enforce anti-trust laws on the big players in the market, and that makes me wonder just how likely it is that things would play out in the way you paint them. In Apple’s case, it seems to be more a case of “we’re going after them because they won’t help fund our political campaigns at election time” than “we’re going after them because what they did was wrong” – the latter is the way they’re spinning it, but I do have to wonder.

            I could be wrong. I freely admit that. And there’s also the point that some, at least, of the more mainstream book publishers are getting a clue when it comes to DRM – have a look at the Baen ebook store, and also Tor’s policies on DRM. It’s just going to take a while for the others, who – surprise, surprise – are owned by major media conglomerates, to join that particular party (at which point, we can all start celebrating.. if it happens.)

            • Diplomacy42
            • 7 years ago

            Correct me if I’m wrong, but is there not a kindle app for Android, Linux, Windows, nook HD, OSX and iOS, oh and a cloud version, just for good measure?

            While I admit that when some OTHER players have gained a foothold in a specific market, they have used anti-competitive practices to such ends, the danger of that happening for kindle was fairly low.

            so, since that was the “one thing wrong with my theory,” and since it has been successfully debunked, you will be apologizing and reversing your position, correct?

      • shank15217
      • 7 years ago

      You can now buy those books from international suppliers at much lower prices due to a recent supreme case win for the consumer, Kirtsaeng v. John Wiley & Sons.

        • cynan
        • 7 years ago

        How does this work exactly? Which international suppliers are offering cheaper versions of textbooks?

      • OneArmedScissor
      • 7 years ago

      You are half right and half wrong. The federal government is certainly a price fixer, and there are consequences.

      However, there is nothing wrong with selling at or even below cost, as it’s not price fixing and doesn’t stifle competition. Amazon is one of many companies who have proved why that is, not why it is bad.

      Are AMD and Elpida price fixers, driving their competitors out of business by operating at a loss? Obviously not. We as customers still win, even if they lose.

      Start with basic supply and demand. Thanks to the internet, the supply of information is infinite. Even if demand is infinite, the cost can be driven down to literally zero.

      Prices are for allocating scarce goods. As time goes on, more forms of information are shifted to the internet, and eventually, they cease to be scarce. We already watch videos, play games, read articles, write posts, share pictures, listen to music, and have access to a limited, but growing, number of books for effectively free.

      Let me repeat that last part:

      [b<]Some books are already free, and more become free every day.[/b<] Is that price fixing, anti-competitive, or actually bad in any way, shape, or form? No, because then the other things would be bad, too. And then the entire internet would be bad, but obviously, that's not the case. The internet raises our standard of living by reducing costs. So while the transition with books is still taking place, I have a hard time believing a $10 ebook is actually below cost, even if it still has [i<]some[/i<] cost, for the time being. And it's certainly not price fixing. If you look back to the early cases of "trust busting," there actually were no cases of large businesses selling at a loss to kill off competitors. It was just a weird theory that never panned out. Instead, they broke up alleged, though not necessarily proved, cartels for having high prices. But of course, then the federal government immediately stepped in and created its own - the central banking system, USDA, etc. Bizarrely enough, some of the "monopolies" of the time didn't even have the market share that a company like Intel has historically had all along. It was just a dumb concept, all around, which the internet is finally helping to disprove.

        • peartart
        • 7 years ago

        Prices are for making money. You can model them as allocating scarce resources, but if your resources aren’t scarce you need to find a different model, not say that the resource is going to be free.

        • Diplomacy42
        • 7 years ago

        [quote<]So while the transition with books is still taking place, I have a hard time believing a $10 ebook is actually below cost, even if it still has some cost, for the time being. And it's certainly not price fixing.[/quote<] amazon was selling lots of books for 1.99, 2.99, 4.99 on up. Before apple's little stunt, 9.99(14.99 at the most) was the price they charged for A-list titles like the da vinci code or 50 shades of repression. I agree with you on the rest of your conclusions, but i thought I'd mention it.

      • Voldenuit
      • 7 years ago

      [quote<]"The current business model of companies like Amazon distributing ebooks below cost or without making a reasonable profit isn't sustainable for long." Selling below cost is now considered good business practices that Apple must have followed? Actually, this is the exact tactic large corporations use to destroy smaller one.[/quote<] Steve was suffering from his own RDF. The DOJ investigated Amazon and found no evidence of predatory pricing (pricing products below cost to force out competitors). Yes there were loss-leader items to try and drive sales, but that is a common (and legal) practice among retailers (just go to any grocery chain in the US). Ironically, it was Apple and the publishers which steered the DOJ in Amazon's direction, which after having completed its investigation of Amazon, turned its roving eye onto said publishers and Apple. The publishers were smart enough to settle over their price-fixing deals, but Apple, in its hubris, was not. They truly reaped what they sowed in this case.

        • windwalker
        • 7 years ago

        That’s BS.
        The DoJ did not investigate Amazon.

        The head of Kindle testified during the trial that Amazon sent a complaint after the publishers told them Amazon would get e-books several months after retailers that agreed to allow the publishers to set retail prices.

          • Voldenuit
          • 7 years ago

          [quote<]That's BS. The DoJ did not investigate Amazon.[/quote<] ORLY? From the DOJ's response to public comments on the US vs APPLE, INC., HACHETTE BOOK GROUP, INC., HARPERCOLLINS PUBLISHERS, L.L.C., VERLAGSGRUPPE GEORG VON HOLTZBRINCK GMBH, HOLTZBRINCK PUBLISHERS, LLC , MACMILLAN, THE PENGUIN GROUP, A DIVISION OF PEARSON PLC, PENGUIN GROUP (USA), INC., and SIMON & SCHUSTER, INC., [quote<] In the course of its investigation, the United States examined complaints about Amazon’s alleged predatory practices and found persuasive evidence lacking. As is alleged in the Complaint, the United States concluded, based on its investigation and review of data from Amazon and others, that “[f]rom the time of its launch, Amazon’s e-book distribution business has been consistently profitable, even when substantially discounting some newly released and bestselling titles.”[/quote<] [url=http://www.scribd.com/doc/100824144/DOJ-Response-to-Comments<]Link[/url<]. Clearly, the DOJ fabricated the results of a fictional investigation at the behest of its Illuminati overlords /sarcasm

            • windwalker
            • 7 years ago

            Outside of clearance sales, selling anything below cost is predatory pricing.
            Amazon used it for all popular e-books to prevent any competitors entering.
            They made money to cover for the predatory pricing from all the sales of their massive catalogue of old and obscure books.
            A very clever racket indeed.
            And they got pissy when Apple came in and blew it all up.

        • Diplomacy42
        • 7 years ago

        they will get a slap on the wrist and they will continue to tie it up in court for another 5 years.

        reaped what they sowed indeed

      • mesyn191
      • 7 years ago

      You’re assuming what he said was correct which is a bad assumption to make.

      Also seeing as how mass market paperbacks usually sell for around $8, and the profit margin on them is quite a bit lower than a e-book at the same price much less $9.99, I don’t see how you can even slightly believe that Amazon is selling books for at or below cost.

      • mnemonick
      • 7 years ago

      You’d have a point, except that the publishers named in the case agreed that the $9.99 price [i<]wasn't[/i<] below cost. From the excellent [b<]Ars Technica[/b<] breakdown of the judge's ruling ( [url<]http://arstechnica.com/tech-policy/2013/07/how-apple-led-an-e-book-price-conspiracy-in-the-judges-words/[/url<] ): [quote<]"Publishers told Apple they were unhappy with Amazon's standard price of $9.99. [i<]Although they received the full wholesale value of each book sold by Amazon[/i<], publishers didn't want $9.99 to catch on as the new default price for e-books, especially since this was so much lower than hardcovers."[/quote<] (italics mine) Amazon was the only company taking a loss on ebook sales, which they were doing to promote the Kindle (and their online ebook business in general). See this chart for the breakdown: [url<]http://cdn.arstechnica.net/wp-content/uploads/2013/07/e-book-price-chart.png[/url<] The real reason that publishing houses don't want lower ebook prices is that it cannibalizes their higher profit hardcover market. Also note that the publishers agreed to take [i<]less money[/i<] under the higher retail pricing of the agency model, then ask yourself why they would do that.

      • Diplomacy42
      • 7 years ago

      The problem with your theory is that if amazon ever raised their prices, the market would readjust, new businesses would come in to compete. If amazon ever tried to raise & fix prices, then they would have been guilty of the anti-trust stuff apple did.

      • cphite
      • 7 years ago

      [quote<]"damning quotes"???[/quote<] In the context of what they're being accused of doing, yes. The quotes show that the person in charge at the time was in active communications with publishers about fixing prices. Legally, that's pretty damning.

        • Diplomacy42
        • 7 years ago

        On January 27, Jobs launched the iPad. As part of a beautifully orchestrated presentation, he also introduced the iPad’s e-reader capability and the iBookstore. He proudly displayed the names and logos of each Publisher Defendant whose books would populate the iBookstore. To show the ease with which an iTunes customer could buy a book, standing in front of a giant screen displaying his own iPad’s screen, Jobs browsed through his iBooks “bookshelf,” clicked on the “store” button in the upper corner of his e-book shelf display, watched the shelf seamlessly flip to the iBookstore, and purchased one of Hachette’s NYT Bestsellers, Edward M. Kennedy’s memoir, True Compass, for $14.99. With one tap, the e-book was downloaded, and its cover appeared on Jobs’s bookshelf, ready to be opened and read.

        When asked by a reporter later that day why people would pay $14.99 in the iBookstore to purchase an e-book that was selling at Amazon for $9.99, Jobs told a reporter, “Well, that won’t be the case.” When the reporter sought to clarify, “You mean you won’t be 14.99 or they won’t be 9.99?” Jobs paused, and with a knowing nod responded, “The price will be the same,” and explained that “Publishers are actually withholding their books from Amazon because they are not happy.” With that statement, Jobs acknowledged his understanding that the Publisher Defendants would now wrest control of pricing from Amazon and raise e-book prices, and that Apple would not have to face any competition from Amazon on price.

        from page 85 of the judges opinion

    • albundy
    • 7 years ago

    it’s not like it’s a crime. nobody will do hard time, even though i’d wish they would. just a slap on the wrist and dont do it again scolding. fines are useless to a company with mega cash.

    • OneArmedScissor
    • 7 years ago

    Let’s say they conspire to raise the price to a billion dollars. What happens? People buy paper books, or yet [i<]another[/i<] alternative distribution model appears. The price is going to be what people are willing to pay, regardless. Apple has always had high prices and sometimes even "monopolized" markets simply by being the only one there - at first. And then what happens, every single time, with no intervention required? $50 smartphones. $200 tablets. $400 ultrabooks. And dropping. Everyone else sees the profit potential and dogpiles in, consistently driving profit margins down to 1-2%, and sometimes even zero. But at least they didn't go after Amazon for selling too low. If there's any glimmer of hope that somebody is learning something, it appears that half of the "trust busting" scam is dead and buried. I thought the internet and global trade had disproved this 19th century idea that when copycat businesses are not directly competitive, they are to be viewed in isolation, pretending this is a science experiment performed in a vaccuum, and no other competitor / alternative / variable of any sort will appear. This is actually worse, as they are intentionally ignoring competitors that already existed for hundreds of years. Why? Well, someone in the federal government definitely has it out for Apple. Just recently, Apple had been called to congressional hearings, but not for a crime, and not to debate a bill. The exclusve reason was to badger Apple over the exact percentage their tax liability comes out to, [i<]legally[/i<]. Even if you don't like Apple, imagine if you were singled out like that. I bet you'd scream bloody murder about discrimination. The fox is guarding the hen house. The only price fixing which stifles competition today is actually legislated by the federal government. Look at farm bills. They set prices for countless food items, both minimum and maximum. Look at the Federal Reserve. They set the interest rate every bank account pays - or [i<]doesn't[/i<] pay, as has been the case for an unprecedented number of years now. Is that really who should be accusing and prosecuting conspirators?

      • indeego
      • 7 years ago

      Good post. I think antitrust should have some modifications made. e-Books aren’t a critical market. When I saw the high price of the first e-books I just totally ignored the entire market. They actually can lose customers by pricing high.

      Apple and the publishers had the potential for this to massively backfire.

        • BobbinThreadbare
        • 7 years ago

        How are markets defined in the context of anti-trust?

        Sounds like an easy argument that Amazon was competing against paper books, so they couldn’t have a commanding market share with just the digital copies (as of this lawsuit).

      • windwalker
      • 7 years ago

      Apple is paying for the luxury of not having a PAC.

        • MadManOriginal
        • 7 years ago

        The truth, condensed to a mere 11 words.

          • BobbinThreadbare
          • 7 years ago

          There is no way that Apple’s big time share holders aren’t contributing lots of money to the political system. So I’m not sure how true it is.

      • ratborg
      • 7 years ago

      They didn’t just go after Apple they also went after the publishers who all settled. You can’t have a cartel and collude to set prices. It’s the fact that they orchestrated the prices across multiple companies that made it a crime.

      • Geistbar
      • 7 years ago

      [quote<]I thought the internet and global trade had disproved this 19th century idea that when copycat businesses are not directly competitive, they are to be viewed in isolation, pretending this is a science experiment performed in a vaccuum, and no other competitor / alternative / variable of any sort will appear. This is actually worse, as they are intentionally ignoring competitors that already existed for hundreds of years.[/quote<] I don't think you can really call a product a competitor when it's still sold by the same party (the publishers). If the publishers successfully get price fixing for ebooks, then they'll want to get rid of the physical market, since they can get vastly more profits in the ebook realm. Invoking "competition" here makes absolutely no sense. [quote<]Just recently, Apple had been called to congressional hearings, but not for a crime, and not to debate a bill. The exclusve reason was to badger Apple over the exact percentage their tax liability comes out to, legally.[/quote<] Congressional hearings aren't there to persecute parties guilty of breaking the law -- that's what the DoJ is there for. Instead, [url=http://en.wikipedia.org/wiki/United_States_congressional_hearing<]hearings are there to collect information to help determine what policy to set[/url<]. If the idea behind the hearing is "our legal tax framework is allowing companies to pay very little taxes on large profits" then calling in a company that is doing an extraordinary job at doing so is exactly what you'd expect: the hearing is there to get information, and you might as well get information from the largest practitioner. The only real problem with it at present is that so much of congress despises anything that involves more taxation that the hearing was, in net, more or less pointless. It's not a "punishment" for breaking the law. It doesn't mean that the government has it out for Apple at all. At worst, it means that not enough of them favor Apple vs favoring Microsoft, Google, etc.

      • clone
      • 7 years ago

      just because many tech players use volume to make up for tight margins doesn’t mean all industries do, the pharmaceutical industry doesn’t, the software industry, nope, the movie industry doesn’t nor the music industry or hotel, restaurant, insurance, sports and gaming, jewellery, big oil…. you name it, some work on tight margins many don’t and in some cases have been around quite a lot longer than the rest.

      this antitrust case eliminates the cartel that was formed in publishing (at least on the surface)…. it’s a good thing.

      p.s. you are correct that the main source for price fixing is the government but are you ready to eliminate all forms of oversight because you don’t agree with some of what they do especially when it’s enabled the company’s to sell $50 smartphones. $200 tablets. $400 ultrabooks?

    • ronch
    • 7 years ago

    So what? It’s not like Apple fanboys would care, considering they don’t care about paying for way- overpriced hardware either as long as it has an Apple logo on it. /sarcasm

    • WaltC
    • 7 years ago

    dpaus and xeridea got my + votes…;)

    Yep, Apple has really stuck its head in a noose this time…;) (Do I sound happy about this?…”Oh happy day…oh happy day-hey-hay!” How does that song go?)

    The state’s Attorneys General are waiting in the wings to pounce as soon as the Feds conclude their damage hearings, and then the EUC will be making a cameo appearance…most entertaining to be able to view Apple’s hubris skewer itself…!

      • Flatland_Spider
      • 7 years ago

      You know, if you’re not cheering for FOSS software, you’re cheering for a company that is probably just as bad.

    • xeridea
    • 7 years ago

    TL:DR:
    Apple found guilty of something, denies everything.

      • designerfx
      • 7 years ago

      yeah that part was equally damning. They have explicit proof of apple acting as the intermediary but the public statement was “apple doesn’t do that”?

      • Flatland_Spider
      • 7 years ago

      Of course, rule #1 of dealing with the law. Deny, deny, deny, and figure out how to get out of it without admitting anything.

    • dpaus
    • 7 years ago

    Apple manipulating prices to increase their profits?? First I’ve heard of that…

      • MadManOriginal
      • 7 years ago

      The sarcasm…it buuuuuurns!

      • ModernPrimitive
      • 7 years ago

      I thought they owned the patent for price fixing?

      • Scrotos
      • 7 years ago

      To be fair, it was the entire industry. Apple should have settled but decided to roll the die:

      [i<]Only Apple went to trial, while the publishers agreed to pay more than $166 million combined to benefit consumers. The publishers included Lagardere SCA's Hachette Book Group Inc, News Corp's HarperCollins Publishers LLC, Pearson Plc's Penguin Group (USA) Inc, CBS Corp's Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan.[/i<] Hey, you who buy books and e-books: How many of you got any of that $166 million to benefit YOU? Anyone? Anyone? Bueller?

        • Chrispy_
        • 7 years ago

        Lawyers ate it all.

        The man in the street got the privilege of seeing a bunch of lawyers driving around in their Maserati/Lamborghini/Ferrari.

      • superjawes
      • 7 years ago

      dpaus, you’re kind of an artist, and this comment is a masterpeice. Very nicely done.

        • RDFSteve
        • 7 years ago

        I’m RDFSteve, and even I have to acknowledge the exquisite frist-ness

      • beck2448
      • 7 years ago

      Wow! That is tragic! Those poor buyers being forced at gunpoint to buy Apple products is really unseemly!

        • rxc6
        • 7 years ago

        You are aware that in this case they made ebooks more expensive for EVERYONE, aren’t you?

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