Apple gripes about antitrust monitoring

[Greg Anos]

But it still was a violation of US law...

[pl001]

Originally Posted by Ralph Sir Edward

But it still was a violation of US law...

Sure, but who needs facts to argue about it? Certainly not Apple.

[fjtorres]

Originally Posted by SteveEisenberg

By making it less likely that Amazon would gain control over the publishers, I think the agency years increased the chance that when I want book x, it will be in existence.

That may have the (misguided) publishers' thinking but the reality is that during the period the price fix was in effect, mid-2010 through mid-2013, (give or take a month) the net share movement has been from B&N, Fictionwise, BoB, Sony, and maybe Kobo and Google to Apple. There is no evidence to suggest Amazon lost any ebook share; if anything, the whining over their power only grew louder during the conspiracy years.

The conspiracy achieved three things: one good for consumers, two dubious at best, none good for the conspiring publishers.

The good thing it did was accelerate indie book acceptance by consumers and established mid-listers by providing pricing cover so indie ebooks could range as high as $6. Indie ebooks were always going to be a force in the long run but going from single digits to 25-30% unit share in three years?

The first bad outcome was that by removing price competition they killed creative retailing tools the smaller vendors relied on stay afloat. They also made Amazon a more attractive channel for consumers because, with the prices equalized, Amazon's other advantages became decisive.

The second bad outcome was that the "guaranteed" high margin on Agency titles gave the retailers added revenue to play with and Kobo, Nook, and Amazon chose to use it to move their dedicated readers to a near-cost pricing model. (Anybody see coincidence in Kobo moving to higher reader prices as the price fix started to be dismantled?) This foreclosed the US market to smaller hardware-only reader vendors.

The effect of Agency was to kill small ebookstores and drive out most reader vendors in favor of the big walled gardens. The only winners were Apple, who were able to launch their ebook business without having to compete on price, and Amazon, who have seen their competition crippled and neutered just as ebook adoption exploded.

As Scott MacNeally of SUN said, when HP bought APOLLO, "Now I only have to worry about what one opponent might do." Before Agency, Kindle faced gadget competition from the likes of Sony, Samsung, Acer, and Asus, as well as Nook, Kobo, and the small niche gadget vendors. After Agency, their strongest foes are Apple and Kobo and Kobo is the only cross-platform player that might be growing.

Yup, the conspiracy sure hurt Amazon...

[bgalbrecht]

Originally Posted by fjtorres

Yup, the conspiracy sure hurt Amazon...

When the publishers guaranteed that the price was the same everywhere, and sold only books with DRM, the only way Amazon could ever stop being their biggest ebook retailer is if some other company comes out with a more popular ereader platform. For all the publishers' grandstanding, this was never about the Amazon ebook monopoly, it was about the fear that discounted ebooks would cannibalize their hardcover sales, which is where they make the most profits. By controlling (and raising) the ebook price, they could slow the adoption of ebooks and preserve the hardcover profits.

Apple, on the other hand, was in it to ensure that they didn't have to discount ebooks in order to compete with Amazon.

[tubemonkey]

Originally Posted by bgalbrecht

When the publishers guaranteed that the price was the same everywhere, and sold only books with DRM, the only way Amazon could ever stop being their biggest ebook retailer is if some other company comes out with a more popular ereader platform. For all the publishers' grandstanding, this was never about the Amazon ebook monopoly, it was about the fear that discounted ebooks would cannibalize their hardcover sales, which is where they make the most profits. By controlling (and raising) the ebook price, they could slow the adoption of ebooks and preserve the hardcover profits.

Whenever you have fixed prices, it doesn't matter where you buy the item. Suddenly, the retailer has to find another enticement to get prospective buyers into their stores. That's why you frequently see store gift cards offered during Black Friday for some items. It's because stores aren't allowed to offer direct discounts.

Apple, on the other hand, was in it to ensure that they didn't have to discount ebooks in order to compete with Amazon.

When your bottom line hinges on high margins, the only way to compete is to get publishers to set prices at a level higher than your competition offers. What a corrupt way to conduct business.

[fjtorres]

Originally Posted by bgalbrecht

When the publishers guaranteed that the price was the same everywhere, and sold only books with DRM, the only way Amazon could ever stop being their biggest ebook retailer is if some other company comes out with a more popular ereader platform. For all the publishers' grandstanding, this was never about the Amazon ebook monopoly, it was about the fear that discounted ebooks would cannibalize their hardcover sales, which is where they make the most profits. By controlling (and raising) the ebook price, they could slow the adoption of ebooks and preserve the hardcover profits.

Apple, on the other hand, was in it to ensure that they didn't have to discount ebooks in order to compete with Amazon.

Yup.

All the talk about Amazon being behind the DOJ antitrust case is silly; Amazon benefited from the elimination of the smaller bookstores and the bigger hardware vendors as well as the shift to indie ebooks. The high BPH ebook prices made indie ebooks respectable and desirable and Amazon is stronger in the indie world than any of their competitors.

The longer the fix lasted, the stronger Amazon got and the weaker the non-Apple competition got. An Amazon/Apple duopoly suits Amazon just fine because iBooks only runs Apple hardware.

[afv011]

"While Apple would prefer to have no monitor, it has failed to show that it is in the public interest to stop his work," Cote said. "If anything, Apple's reaction to the existence of a monitorship underscores the wisdom of its imposition."

Source

I'm liking this judge...

[pwalker8]

Originally Posted by afv011

Source

I'm liking this judge...

That's what I call circular logic. It's equally valid to say that complaining about monitoring shows that the monitoring is excessive. The issue isn't that stopping his work is in the public interest, the issue is whither or not his work exceeds his mandate or Judge Cote's legal authority. While I'm sure she believes that there is no limit on her legal authority (as do many judges), there is indeed a limit. As I've said before, it will be interesting to see what the response of the appellate court is to this situation.

[Sydney's Mom]

Another way of saying this is that Apple's refusal to recognize that it has done anything wrong shows that they have learned nothing, and it is in the public interest to make sure Apple abides by the antitrust laws. They aren't coming in saying we drafted this new antitrust policy, and have required that every employee acknowledge they have read the policy and have to comply. They have not set up a management level committee to review various aspects of the business.

Although this trial may have seemed silly to some, this is a very important antitrust case. This is one of the most blatant examples ever seen. The DOJ probably spent millions on this case. Then you have the use of the courts, by a big company that is used to throwing its weight around. If the Judge had not set up an antitrust monitor, she would have been accused of improper bias because setting a monitor up to ensure compliance with discrimination/risky lending/antitrust violations/et al. is routine.

[SteveEisenberg]

Originally Posted by Sydney's Mom

Although this trial may have seemed silly to some, this is a very important antitrust case. This is one of the most blatant examples ever seen.

Most democracies have some kind of competition laws roughly comparable to US antitrust. If this was one of the most blatant cases ever seen, I think you would see Apple losing in France and Germany the same way it is losing in the US.

Apple is guilty of doing something in the US that it would be essentially illegal not to do in France and Germany. This is course doesn't prove that publishers should set minimum prices. But it does kindda suggest that, morally, it's not a slam-dunk Standard Oil kind of case.

Originally Posted by pwalker8

As I've said before, it will be interesting to see what the response of the appellate court is to this situation.

If this goes to the Supreme Court, it could be more interesting. Aren't most of the justices published authors? And the ones who aren't, probably are considering it! If so, they have a financial interest. But they can't all recuse themselves.

[fjtorres]

Originally Posted by SteveEisenberg

Apple is guilty of doing something in the US that it would be essentially illegal not to do in France and Germany.

Nope.
Conspiring to fix prices is equally illegal on both sides of the pond.

http://worldnews.nbcnews.com/_news/2...r-price-fixing

Apple and friends got called on the carpet by the EU. They got off with a wrist slap but they were at risk for deeper penalties until they played the "Amazon is evil" card.

One more time: the crime was *conspiring to raise prices*, not the agency model.

[SteveEisenberg]

Originally Posted by fjtorres

Nope.
Conspiring to fix prices is equally illegal on both sides of the pond.

Apple and friends got called on the carpet by the EU. They got off with a wrist slap but they were at risk for deeper penalties until they played the "Amazon is evil" card.

Some EU countries legally allow price competition between booksellers, and some don't. I presume that if you discuss obeying French law in France, that's fine, but if you discuss applying French principles to your British book business, that's not.

It's not that Amazon is evil. But if Amazon gets such a big market share that suppliers can't plausibly stop doing business with them, and Amazon doesn't use that market power to squeeze said suppliers, there eventually will be a stockholder revolt. Jeff Bezos probably can withstand that, but Amazon will eventually come under great pressure to monetize its market power.

Originally Posted by fjtorres

One more time: the crime was *conspiring to raise prices*, not the agency model.

Of course, you are right about the conspiracy point, even though I don't exactly think a civil antitrust violation is a crime.

When the antitrust restrictions expire, one publisher can announce they will insist on agency. Then the others can do the same, or not, their choice. It's not that different than if the same offer and response was made over a lunch meeting, but only the latter is illegal. I did oversimplify.

[bgalbrecht]

Originally Posted by SteveEisenberg

When the antitrust restrictions expire, one publisher can announce they will insist on agency. Then the others can do the same, or not, their choice. It's not that different than if the same offer and response was made over a lunch meeting, but only the latter is illegal. I did oversimplify.

Random House was never part of the DOJ suits even though they had had meetings with Apple, and also went to agency pricing a year after the other publishers. The DOJ was never against agency pricing, it was about the discussions between Apple and the publishers and their unified ultimatum to Amazon (and other retailers) that they either switched to agency pricing on April Fools Day 2010, or not be able to sell ebooks.

[bgalbrecht]

Originally Posted by SteveEisenberg

It's not that Amazon is evil. But if Amazon gets such a big market share that suppliers can't plausibly stop doing business with them, and Amazon doesn't use that market power to squeeze said suppliers, there eventually will be a stockholder revolt. Jeff Bezos probably can withstand that, but Amazon will eventually come under great pressure to monetize its market power.

If the publishers want to diminish Amazon's dominance in ebook retailing, they should drop DRM and/or refuse to sell ebooks using a proprietary format. I don't have an Amazon ereader, but Amazon has one of the easiest websites to navigate and buy ebooks. With DRM and a proprietary ebook ereader that doesn't allow someone to buy DRMd ebooks and sideload it onto the ereader, the publishers are ensuring the average ebook buyer will never buy one of their ebooks from any other retailer. Their solution was to hitch their wagon to another retailer with a closed system with a proprietary ebook format, albeit with fixed retail prices and a fixed gross margin. Of course, unlike Amazon and Walmart, Apple's never been about keeping prices low.

[Graham]

Originally Posted by pwalker8

It's equally valid to say that complaining about monitoring shows that the monitoring is excessive.

As the link you're referring to states, the monitor made just two visits and conducted just 13 hours of interviews. Only four Apple employees other than their lawyers were questioned. That is hardly excessive.

Graham