Quote:
Originally Posted by Sonist
I think you are completely misunderstanding the issue, which was not one of market share, but of price fixing.
Amazon had and still has the majority of the ebook market.
But I will repeat, again: Amazon did not deeply discount across the board with the aim of dumping ebooks until it ran its competitors out of business. Amazon deeply discounted a select number of titles, generally those on the bestseller list, while it was often undercut, sometimes significantly, by smaller etailers for less popular titles, such as the Updike books I mentioned.
What Apple did was something completely different: It colluded with the largest publishers to fix a floor for ebook prices. With such a floor, small etailers could not discount bellow what Apple (or, effectively, everyone else) charged for a title. So most of them went out of business.
Apple does not like competing on price. As we see, Apple does not like "freemium," either. So, if Apple wants to enter a market where it has competitors competing on terms it does not deem profitable enough for its model, Apple uses its considerable weight to distort the market and change the terms to ones it likes, so that it can gain the market share it wants.
What Apple does is illegal in most advanced countries, but because there are no criminal penalties against individual officers, Apple considers whatever nominal (relative term) fines its shareholders will end up paying in the future, part of the cost of getting what it wants.
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Apple's story is they did not collude with the publishers, but rather entered into negotiations with each publisher separately. As far as I can tell, then was no actual evidence presented in the trial that Apple did collude with the publishers. The "smoking gun" was an email from Steve Jobs to one of the publishers stating what he thought the price tiers for ebooks should be, a model that was abandoned early in the negotiations. There was a fare amount of evidence that the publishers agreed among themselves that they wanted to set the prices, i.e. agency pricing, but it's unclear if that amounts to price fixing, much less is per se anti-trust as Judge Cote asserted. We will see at some point in the near future what the appeals court says about the matter.
No Apple doesn't play the race to the bottom game. They compete on quality and customer experience rather than price. My impression is that Apple's business model in the ebook field is oriented towards those people who buy occasional best sellers rather than those readers who spend lots of time searching for the best bargain. Their ebook store doesn't appeal to me, but I suspect that I am not a target customer. Apple appears to prefer a tiered pricing structure, similar to the music pricing structure in the iTunes store. To the best of my knowledge, Apple doesn't have a most favored nations clause in place when it sets the prices.