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Justice Department Calls Apple the "Ringmaster" In e-book Price Fixing Case
An anonymous reader writes "Back in April 2012, the U.S. Justice Department filed an antitrust lawsuit against Apple and a number of publishers for allegedly colluding to raise the price of e-books on the iBookstore. As part of its investigation into Apple's actions, the Justice Department collected evidence which it claims demonstrates that Apple was the 'ringmaster' in a price fixing conspiracy. Specifically, the Justice Department claims that Apple wielded its power in the mobile app market to coerce publishers to agree to Apple's terms for iBookstore pricing."
Such activities involve a pretty large number of people. It's interesting how they collectively can keep it a secret for a pretty long time.
...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
...and customers get bent over; thank Apple
And the rest of us have to pay a premium for its Monopolistic abuse. Call me a hater.
What is missing from the article is this is saint Jobs corrupt to the core.
"Jobs explained to his biographer that he told the publishers, "We’ll go to the agency model, where you set the price, and we get our 30 percent, and yes, the customer pays a little more, but that’s what you want anyway.” http://thehill.com/blogs/hillicon-valley/technology/299875-doj-accuses-steve-jobs-of-being-ringmaster-in-price-fixing-scheme.
Thankfully Microsoft is slowly catching up so we will be back with that evil duopoly again.
It's acceptable to grammar nazi myself, isn't it? :-)
When you're dead, you don't know you're dead. It only affects the people around you. Same thing when you're stupid.
The DoJ's case alleges that the agency pricing model had a clause where the publisher wouldn't sell their books in other stores for less than they were charging in the iBookstore. If true, this is Collusion, and falls under anti-trust laws. http://definitions.uslegal.com/c/collusion/
Such activities involve a pretty large number of people. It's interesting how they collectively can keep it a secret for a pretty long time.
It is was published in his biography. This has been going on for forever.
Did you read the article. "Under the old model, Amazon controlled about 90 percent of the market, but after the publishers instituted the new pricing scheme, Amazon's share fell to 60 percent." http://thehill.com/blogs/hillicon-valley/technology/299875-doj-accuses-steve-jobs-of-being-ringmaster-in-price-fixing-scheme
Amazon didn't get caught because its done nothing wrong. (well its done lots of things, just not in this instance)
http://thehill.com/blogs/hillicon-valley/technology/299875-doj-accuses-steve-jobs-of-being-ringmaster-in-price-fixing-scheme "Under the old model, Amazon controlled about 90 percent of the market, but after the publishers instituted the new pricing scheme, Amazon's share fell to 60 percent."
Its not amusing at all. Amazon dominate by competing on old fashioned things like price, Not being corrupt. I find it sick that your defending a mega corporation (again), when the illegal corrupt actions affect everyone.
I find it amusing the Apple is accused of being a "ringmaster" when it's Amazon that is in total dominance of the electronic book market and pricing.
This story is about collusion with publishers, not about market share. Read the article, there is a part where they discuss Amazon.
lucm, indeed.
This is even messier because it deals with books, mostly copyrighted works. Copyright is a state-granted artificial monopoly - mix in anti-collusion statues and you get one fine convoluted mess.
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
...but don't let it put you off. http://www.macstories.net/stories/understanding-the-agency-model-and-the-dojs-allegations-against-apple-and-those-publishers/ It basically explains the two things "agency Model" and The most favourite nation clause (which is what you talk about).
Price fixing e-books? Yippie disposable income doesn't actually rate at this point; we have bigger problems.
Yeah it kind of does. Ignoring the fact that this is also about protecting education...and history has taught us how important that is, and well books are kind of a big deal from a political perspective..from an information perspective...its why people want to burn them. This is an open attack on capitalism, and on the consumer by Apple which needs an immediate ban on Apple products. Books are precious
It is not only important, but Apple employees need to start being Jailed starting with the board.
Vertical price fixing pertains to arrangements between a manufacturer, distributor, supplier or retailer. Horizontal price fixing, which would involve competitors colluding to set prices, remains illegal. Courts have held that vertical maximum price fixing, like the majority of commercial arrangements subject to the antitrust laws, should be evaluated under the rule of reason. Therefore, suppliers of goods and services don't necessarily violate antitrust laws by setting maximum prices their retailers can charge.
http://definitions.uslegal.com/p/price-fixing/ I don't like Apple, as in refuse to buy their products and services, but this seems like Vertical price fixing which seems fair as this agreement guarantee's Apple prices are fair within the market of that particular eBook.
Thanks. I don't use iTunes, or iAnything, but the reported prices in the article ($12.99 to $14.99) are equal to or less than typical prices on Amazon and B it's dawning on me now that if Apple's been strongarming the publishers to achieve this situation, then, yes, that could be antitrust behavior. I was initially thinking they were colluding to fix prices artificially high for themselves, when it seems it was to raise other vendor's prices. Actions like refusing to approve apps for the crap store if the pricing wasn't fixed is definitely against things like the Sherman act.
When you're dead, you don't know you're dead. It only affects the people around you. Same thing when you're stupid.
Sorry, I initially misunderstood the problem - I was cooking dinner and more or less skimmed the article. I was thinking they were colluding to enable them to fix their prices at a higher price point, then it dawned on me that they were colluding to raise the publisher's prices to other vendors so they could undercut them, and using strongarm tactics to do it... Thinking a little slow tonight - had a reading comprehension fail! :-)
When you're dead, you don't know you're dead. It only affects the people around you. Same thing when you're stupid.
It is all in how you say it; if you say that if the publisher offers a better price to another outlet, they must match that price for Apple, then it is ok. The tricky part is that if Apple's clause says that Apple can match any other retailer's price and give the publisher 30%, but that would seem like it still isn't collusion; it creates a situation where selling to Amazon at wholesale is better than selling to Apple at an Agency model. Hence the publisher's collusion amongst themselves to force Amazon to the agency model.
What I understand of the agreement seems pretty clean from Apple's perspective, but not as much for the publishers.
Sounds like Amazon's monopoly was broken. What's the problem with that again?
Amazon gained its market share by competing on price, Apple got forming a cartel with publishers using price-fixing.
The bottom line is non-apple customers are being hurt by this, including children.
Thanks. I did some more research on it, and realized that I misunderstood the problem when I first read (skimmed?) the article. It seems they were using strongarm tactics to coerce the publishers into charging higher prices to their competition. I don't use iAnything, and really have no idea how big Apple's book store is, or how many e-books they sell. My library system has quite a selection of e-books for checkout, and I prefer to do that over buying them, anyway.
When you're dead, you don't know you're dead. It only affects the people around you. Same thing when you're stupid.
The issue is how much collusion was there between Apple and the publishing companies to set these prices--which, according to the e-mails, was quite a bit. Apple was working to craft an agreement that all the publishers would agree to, not individual agreements with the publishers. That's collusion.
"agreement" among competing firms.
But they don't fit the definition of cartel. The agreement is not between Amazon and Apple. It's between Apple and someone selling an eBook.. If Apple and Amazon had an agreement, as in a Horizontal price fix, then it would be a cartel. If I were to have a book on the store, I could prize my book at $20 on Amazon, and if tell apple they can sell it at $25, they have the right to not allow purchases through their store. Im not sure why someone would do that other than the hope people probably blindly buy things without price checking on some sites more than others.
It's worth noting that all of the publishers have settled with DoJ without a fight.
It's worth noting that Apple hasn't. You do realise the publishers may have colluded without Apple's involvement.
Hmmm... You know that's exactly what is in all government contracts too, right? You can't charge anyone less than what you charge the government for the same thing. Sounds kind of similar.
Those clauses are on the price the supplier sells to the retailer.
This agreement forced the lowest final price for the customer to be in the istore - which is to say that even if Amazon wanted to be cheaper than apple by taking a loss, they wouldn't be allowed. You are thus using collusion to fix not just your price but other people's. It's certainly an anti-trust violation and everyone involved deserves the fullest punishment possible.
I think if Apple had not required publishers to sell in other stores at or above the iBookstore prices, this wouldn't be an issue that the DoJ would pursue.
Other than anti-Apple fanboys
Ah, the fanboy chestnut.
I make my living writing iOS and Mac OS software. I'm commenting from a Mac Pro with an embarrassing number of iPhones, iPads and iPod touches connected to it. If anything, I can be accused of being an Apple fanboy.
What is wrong with being a monopoly? Simply being a monopoly is not a problem, and is not illegal. What IS illegal is when the power of that monopoly is used to gain an unfair (anticompetitive) advantage in a DIFFERENT area.
http://online.wsj.com/public/resources/documents/ebooks04112012b.pdf from the filing
"The purpose of this lawsuit is to enjoin the Publisher Defendants and Apple from further violations of the nation's antitrust laws and to restore the competition that has been lost due to the Publisher Defendants' and Apple's illegal acts. Defendants'
ongoing conspiracy and agreement have caused e-book consumers to pay tens of millions of dollars more for e-booksthan they otherwise would have paid"
Putting pressure on your suppliers is not predatory or illegal. Every successful business pressures it's suppliers. Sometimes the pressure is cost, sometimes delivery, sometimes quality, etc. You may as well complain that the consumers are the real predators here, because they are the ones who want the low prices from Amazon, Walmart, etc.
I think if Apple had not required publishers to sell in other stores at or above the iBookstore prices, this wouldn't be an issue that the DoJ would pursue.
That's not illegal. And this whole thing is absurd because it levels the playing field. Amazon can no longer force publishers into shitty deals, which is what was happening before Apple entered the picture.
Amazon would tell publishers "you will sell to us at this (absurdly low) price, or we won't carry your print book". They are the real predator here.
Starting to look like we're in violent agreement here.
I find it silly that the DoJ has brought this case. But they have, and I'm trying to understand their justification for doing so. The collusion angle is the only one I can come up with that holds any water.
In the ebook market, Amazon is far more dangerous than Apple and the publishers. Accusations have been made that Amazon pays publishers up to $15 for each of those $9.99 Kindle sales. If so, that's dumping to drive competitors out of business, and falls under anti-trust law. It's also why, when buying ebooks, I buy directly from the publisher first, from iBookstore second, and Amazon last. Even if buying from the first two means I pay a bit more.
Other than anti-Apple fanboys
Ah, the fanboy chestnut.
It's only a "chestnut" because people use it to mean "someone who likes something I don't like", which, quite ironically, is almost universally more fanboyish than the person being called a fanboy.
I personally think "fanboy" is a good term (to be a fan of something), but the OSS/Linux/Android crowd perverted it to mean the above.
I make my living writing iOS and Mac OS software. I'm commenting from a Mac Pro with an embarrassing number of iPhones, iPads and iPod touches connected to it. If anything, I can be accused of being an Apple fanboy.
My apologies, I jumped the gun.
No problem. I've just grown tired of fanboy accusations and how that ruins otherwise intelligent discussions.
Amazon "dominance" was totally a result of them converting their existing physical book customers into digital customers. They were doing this years before Apple even put out the IPad. B&N, and Kobo were also late. They were out there with only Sony as a competitor. So they had 90% share when it was them vrs Sony. Sony didn't have a huge website with millions of book sales. So of course Sony was clobbered. When Amazon main physical book rival B&N came out with the Nook their share went down. Then the Apple launched IBooks and prices went up on best sellers. Then their was the lawsuit. Then prices went down.
It is not completely legal just because the agreements are written on different sheets of paper. That is moronic. They have a witness testifying about collusion. About meetings with Apple discussing what other publishers want.
A tried and true false equivalency argument. Afterall, if the world isn't perfect we can't think some things are bad and deserved to be punished. But why are you worried about those silly little Justice department issues when there are so many other important issues? See, false equivalency can get you too, until world peace exists and everyone lives in a mansion there are far bigger problems than tackling the real crime we can prosecute today.
Apple cost the American book buying public Billions in increased prices. They weren't trying to break an Amazon monopoly, they were trying to fix prices to make their own entry into the market more profitable. Everyone in this country and probably world that purchased an eBook after Apple entered the market paid almost double what they would have under market pricing. Those billions could have been put to charity and social welfare and instead they were put into the coffers of Apple. Apple's market manipulation very well could have cause starvation. See I can make false equivalency arguments just like you.
Apple and the publishers illegally colluded, unlike Apple the publishers were smart enough to see this was very illegal and immediately settled with the government and as a result got to keep most of their ill gotten gains. Apple will fight and lose, and hopefully it costs them much much more. Personally I think people should be in jail for what they did. You don't deserve a slap on the wrist when you steal billions through collusion.
There is nothing illegal about being a monopoly. You don't get to justify corrupt behavior just because it damages an even bigger shark.
Yes, Amazon is "the real predator" here. Not the folks who charge the same for providing electronic bits as they do for purchasing, printing, inventorying, and distributing the physical product.
That statement clearly shows who you are representing in this argument. The publishers are overcharging for electronic versions of their IP. They jumped at the chance offered by Apple, to justify this rape of the consumer. While you would be correct to point out that Amazon does nothing from altruistic motive, that's irrelevant. In this case, they felt they would profit from a situation where there was unfettered (or less fettered) competition, possibly even *gasp* between publishers themselves!. Apple, also not acting altruistically, just jumped on the opposing position, which the publishers (rightly) saw as the best opportunity for the continuation of these windfall profits.
"But wait!" (you will say) "You can't expect the publishers to act against their own interests, can you?" Well, no. But if eBooks went away entirely, or at least proved to be an insignificant part of the publishing industry, I think they'd be pretty happy about it. Their own actions speak to this, as they would rather discourage the purchase of eBooks (by insisting on profit in the mega-multiples compared to production cost) than compete against their own based-on-paper business model.
The disruptive technology of eBooks is causing these various actors to behave in non-intuitive ways, which gives YOU the opportunity to put forth FUD, confusing arguments, and false dilemas on behalf of (apparently) the publishers.
The publishers will learn. Eventually, many millions of lobbying $$ down the road, there will be legislation protecting the practice of charging $10.00 for something that costs them $1.50 to provide, since it costs them $x+$1.50 to produce the paper version. But until then, if it walks like collusion, and quacks like collusion and results in higher prices than necessary or justifiable to consumers, some parts of the government will actually perform their jobs and try to prevent it.
"To be fair, I was left completely unsupervised." ~Anon
What behavior?
Price fixing.
When Hynix et al. got done for RAM price fixing you didn't defend them. When Samsung got done for LCD price fixing, I'll bet you didn't defend them.
Price fixing is anti competitive and illegal. It's illegal because it harms consumers and producers.
Tim Cook should go to jail? For making sure no-one else was allowed to sell books for less than he did?
Fixed that for you.
It sounds quite a bit more serious when you say what is actually going on.
Whilst jail is a bit of an over-reaction (not nearly as bad as you "B-B-B-But Apple is god and can do no wrong" knee jerk response) this does need to be punished. Severely and harshly and this needs to be more than just a slap on the wrist fine.
Calling someone a "hater" only means you can not rationally rebut their argument.
According to their latest 10-Q filing AAPL has about $140Billion in cash and cash equivalents... and make $70B in gross profit every year...
Short of breaking them up... there's no monetary punishment you could levy on AAPL.
While they're not too big to fail, they are too big to punish.
It's like your grandmother spanking a grown elephant, it won't do any good other than make a bit of noise.
If the ends and the means involve more freedom and consumer choice, then yes.
The freedom to pay more? More choices at the exact same inflated price?
A patriot must always be ready to defend his country against his government. -edward abbey
Not defending Apple's pricing, in fact I think that they are in many ways douchebags, but why is this an antitrust situation? They are negotiating with vendors to reach the price point they desire. They are just reaching for a higher price point, instead of a lower one. .... If Apple's customers are such zealots that they won't consider other sources for their media, let them pay the prices.
Well whether you are a zealot or not, you don't have a choice BUT to pay Apple's prices. Even if you want to buy from Amazon. This wasn't about Apple setting a higher price point for Apple, this is about Apple forcing the publishers to set a higher price point for EVERYONE.
"What I understand of the agreement seems pretty clean from Apple's perspective, but not as much for the publishers."
Which is of course why they've been accused of being the ringmasters, because it's clean from Apple's perspective.
Still, it's not as if the people who called Apple the ringmasters in this case are legal professionals or anything is it. At least we have a random Joe on Slashdot to clarify the situation who obviously knows the law better.
More and consumer choice is a useful tennet of capitalism when it means prices are pushed down by competition.
But as in this case because of Apple and co's practices the prices have gone up then the tennet of increased consumer choice is irrelevant.
It's also dishonest to say it gave customers more freedom. It may have given them more choices to purchase from, but it gave them less freedom in terms of what price to pay.
As long as it's a dollar less than physical books, they are price cutting by their innovation, and are heroes.
"Hey! You're trying to rip us off (in this market you created which didn't even exist a few years ago, and still offers a way better price than physical printing)! How dare you!"
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
The separate pieces of paper is just to clarify that the agreement is between apple and the publisher, not publishers with other publishers and apple because that would be collusion between publishers. Could you please link the witness testifying? Because it sounds like this isn't illegal price fixing.
Do you imagine the pun was intentional?
We can argue all we want about just who colluded with whom, but why not fix the root problem? Digital data are always going to be copied (and copy-able), and the sooner the law recognizes that, the sooner publishers as well as retailers (including Apple and Amazon) will adjust their prices to what people are willing to pay. As a close friend said to me,"Keep finding me free epubs on the net until the store price drops below $5." iTunes, for example, continues to sell a zillion tracks despite the plethora of torrent files available. The same model (i.e. acceptable price point) will work for books.
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