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DoJ Files Suit Against Apple, Ebook Publishers
forkfail writes "The Department of Justice has filed suit against Apple and a number of book publishers, including Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster, claiming that they worked in collusion to artificially rig prices on eBooks."
I have a book in the iBookstore. I set the price on it. Apple sells it for that price and gives me 70%. I have the same book in the other bookstores. I have no control over the price. They give me what they want, which is half of what Apple gives me. I have no choice or say in the matter. And the Department of Justice sues Apple? That's just wrong.
One of the things that might bury Apple is the "you cant have your ebook priced cheaper anywhere else" requirement - with the price including Apples cut.
The paperback was $38 shipped and the downloadable version was $97. Excuse me but that's insane.
Although some eBooks are cheap or free, most of the popular ones cost as much or more as their dead tree counterparts
Well here's the spin I just heard on MSNBC (you can decide how accurate it is). "The standard price for ebooks was $9.99 but when Apple started selling them, they colluded with the publishers and raised that price to 14.99 or even 19.99. So claims the DOJ."
If that is true, it's called price-fixing and forming a cartel. It is illegal under U.S. Consumer Protection Laws (antitrust).
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
Dumping is the act of charging a lower price in a foreign market than one charges in the domestic market. They are not dumping, they are selling loss leaders, an action common in every brick and mortar supermarket or electronics store.
This is exactly what is at issue in the hub-and-spoke model of collusion (cf. section beginning "Information Sharing in the UK") the DOJ is alleging.
Quoting myself from elsewhere:
blog
Technically “petroleum products by value” – and that’s important.
First, the US has a lot of refiners. Low cost Nigerian crude oil is shipped to the US, we ship higher cost gasoline, etc. back to Nigeria.
Second, thanks to fracking, we have a lot of natural gas. And we export a lot of that – either directly or indirectly (like Propane, Petrochemical Feedstocks)
More text from the complaint suggesting that DOJ has hard evidence:
"Beginning no later than September 2008, the Publisher Defendants' senior executives engaged in a series of meetings, telephone conversations and other communication in which they jointly acknowledged to each other the threat posed by Amazon's pricing strategy and the need to work collectively to end that strategy. By the end of the summer of 2009, the Publisher Defendants had agreed to act collectively to force up Amazon's retail prices and thereafter considered and implemented various means to accomplish that goal."
"The Publisher Defendants directly discussed, agreed to, and encouraged each other to collective action to force Amazon to raise its retail e-book prices."
"Publisher Defendants took steps to conceal their communications with one another, including instructions to 'double delete' e-mail and taking other measures to avoid leaving a paper trail."
"They received assurances from both each other and Apple that they all would move together to raise retail e-book prices."
"All five Publisher Defendants agreed in 2009 at the latest to act collectively to raise retail prices for the most popular e-books above $9.99. [Then quotes internal email]."
"Apple concluded that competition from other retailers, especially Amazon, would prevent Apple from earning its desired 30 percent margins on e-book sales. Ultimately, Apple, together with the Publisher Defendants, set in motion a plan that would compel all non-Apple e-book retailers also to sign onto agency or else, as Apple's CEO put it, the Publisher Defendants all would say, 'we're not going to give you the books'."
"As it negotiated with the Publisher Defendants in December 2009 and January 2010, Apple kept each Publisher Defendant informed of the status of its negotiations with the other Publisher Defendants. Apple also assured the Publisher Defendants that its proposals were the same to each and that no deal Apple agreed to with one publisher would be materially different from any deal it agreed to with another publisher."
"Each publisher defendant rquired assurances that it would not be the only publisher to sign an agreement with Apple that would compel it either to take pricing authority from Amazon or to pull its e-books from Amazon. The Publisher Defendants continued to fear that Amazon would act to protect its ability to price e-books at $9.99 or less if any one of them acted alone. Apple supplied the needed assurances."
"Near the time Apple first presented the agency model, one Publisher Defendant's CEO used a telephone call, ostensibly made to discuss a marketing joint venture, to tell Penguin USA CEO David Shanks that 'everyone is in the same place with Apple'."
"On the evening of Saturday, January 23, 2010, Apple's Mr. Cue e-mailed his boss, Steve Jobs, and noted that Penguin USA CEO David Shanks 'wanted an assurance that he is 1 of 4 before signing'."
There's about 20 pages worth of evidence, with email and telephone conversations quoted. This will be a big case. It looks like Steve Jobs and the publishing companies' CEOs were personally involved in the conspiracy.