Apple Agrees To $450 Million Ebook Antitrust Settlement

An anonymous reader writes: Last year, a U.S. District Judge ruled that Apple conspired with publishers to control ebook prices in violation of antitrust laws. Apple launched an appeal which has yet to conclude, but they've now agreed to a settlement. If the appeal verdict goes against Apple, they will be on the hook for $450 million, most of which will go to consumers. If they win the appeal, they'll still have to pay $70 million. $450 million is much more than the other publishers had to pay, but much less than the expected penalty from a damages trial set for August (and still only about one percent of Apple's annual profit).

Comments

Fines don't mean anything to them!

[Anonymous Coward]

For a company which makes billions (and has probably made enough profit from this endeavour to justify the fine) fines like this mean nothing. Until people start getting jailed like normal people would do things like this will continue to happen. You can bet your ass if a CEO got 5 years in jail that company wouldn't set a single foot wrong after that for fear of it happening again.

Re:Fines don't mean anything to them!

[ShanghaiBill]

Many murderers spend less than 5 years in jail.

I'm going to have to go ahead and ask for a citation on that one, bro.

In 1987, the average time-served for 2nd degree murder in Florida was 6.8 years. That is more than five, but that is the average, so many murders served less time. Sentences are much more than that, but "time served" is, on average, only 60% of the original sentence, and in many cases, less than half. Plenty of other states have a reputation for more lenient sentencing than Florida, and more lenient parole boards.

Re:Fines don't mean anything to them!

[PopeRatzo]

In 1987, the average time-served for 2nd degree murder in Florida was 6.8 years [state.fl.us]. That is more than five, but that is the average, so many murders served less time.

Do you know how to read a graph?

If you look at the page you link to, you will see that the 6,8 year average for second degree murder was twenty years ago. The average by 2003 climbed to 21,6 years and the average murderer close to 27 years.

Now, since your original statement was in the present tense I'm still going to have to go ahead and call bullshit. The average SECOND DEGREE murder convictee will spend 21.6 years in the joint as of 2003, and the sentences were on the rise at that time. With all the mandatory sentencing laws going around, I will bet you that the average is higher today, ten years later.

Also, remember we're talking about Florida. If you're white and you kill a black guy in Florida, and you pay a $25 fine and get two tickets to a Marlins game and a coupon for more ammo.

So, there's still no indication that "many murderer spend less than 5 years in jail". You wanna hit up the Google and take another shot at it? I've got nothing to do tonight.

Cost of doing business

[dirk]

The thing I haven't seen addressed (and probably never will) is exactly how much money Apple was able to make from this. My guess is that they benefited far more than 450 million dollars from this. So if that is the case, why would they not do the same thing again since they came out ahead in the long run? You can't make the penalty less than what the company made by breaking the law, as it just becomes a cost of doing business at that point. If they don't get caught they make a boatload of money and if they do get caught they just make less money (but still make money).

Re:Cost of doing business

[Anubis IV]

My guess is that they benefited far more than 450 million dollars from this.

The entire eBooks market was only making $3 billion in revenue in each of 2012 and 2013. And I think we'll all agree that the market of today is much larger than it was back in 2010, when Apple and the iPad entered the scene with their combination of an Agency Model and Most Favored Nation clauses, which were deemed to be anticompetitive when used together.

  Apple's share of the market in 2010 was somewhere between 10% and 20%, depending on who you believe (most suggest it was 10%, but let's go with 20% for the sake of argument, since it'd mean they'd have made more money). So, if we use 2012's numbers (which, again, will be larger than 2010's actual numbers), their revenue would have only been $600 million at most during that time. I'll admit that I am not an accountant, so I may be misusing these numbers, but as I understand it, their 30% cut for the agency model would be taken out of the $600 million, meaning they'd receive roughly $180 million in a year.

To say the least, you'd have a hard time making the case that the $180 million they made was somehow $450 million or more greater than the amount they'd have made had they not engaged in anticompetitive practices. Though, if I recall correctly, treble damages were being pursued, so that may explain a large chunk of the discrepancy. Even so, it is highly doubtful Apple benefitted by anywhere even in the ballpark of the amount they are being fined.

Opportunity cost

[KamikazeSquid]

You don't have to eliminate all possibility of profit for the fines to be an effective disincentive ... you just have to reduce profit to the point where engaging in different kinds of business or modifying business practices becomes more profitable than the alternative.

Jobs' aggressiveness

[Tablizer]

It appears that one key to Apple's rocketing "success" under Jobs was that he knew he was dying soon and burned bridges left and right in order to grab as much early-mover market-share as possible to gain leveraging power for Apple.

People couldn't blame his bad moves on Apple itself because the dude behind it would be worm-bait when it all came out such that the reputation of the company wouldn't take such a huge hit. He was a voluntary shock-absorber.

We also have the employee "poaching" situation in addition to this Ebook move. I bet more will come out someday.

One has to give Jobs credit for using every weapon at his disposal, including death. His slimebaggery was masterful chess (except maybe for ignoring doctors).

Re:Jobs' aggressiveness

[Tablizer]

I read the Isaacson biography, and it was pretty clear that money was NOT Job's main motivator; it was a means to an end to him. He really wanted to build "insanely great" things and see his ideas transform the future.

He almost went broke in some cases by funneling his own money into projects. Somebody who values money wouldn't part with it that long for a gamble.

He was driven to see his concepts turn into products people wanted badly. In his mind, the future was his orchestra to conduct his way.

One can arguably compare him to great movie directors who drive those around them insane trying to put their vision on screen in careful detail. It gave us masterpieces like 'Odyssey 2001, but many of the project "minions" used up their Excedrin (or 60's equiv).

"Greed" is not quite the right word. "Obsession" is more like it. Maybe there is a word or phrase that means "obsession to the point of harming others"?

Perhaps in his mind, progress is more important than comfort, a kind of social darwinism where struggle for survival is a "necessary evil" to be a viable species. Or it may merely be narcissism, or a combo: those who don't aggressively scrape to be at the very top spot "deserve" to be stepped on: A+ or death.

Re:LMAO

[whoever57]

Yeah, much better to let Amazon to run all the book publishers out of business. :rolleyes:

Yes, the DOJ should totally prosecute the theoretical future anti-trust actions by Amazon, while ignoring the actual increase in prices brought about by market manipulation of Apple. :rolleyes.

Re:Fanbois

[Noah Haders]

I'll bite... this whole ebook antitrust issue is a joke. the whole point of Apple's ebook efforts was to provide a bulwark against the Amazon Ultron-like eater-of-worlds mopolistic behavior. It was a last ditch effort from apple and the publishers to try and prevent Amazon from eating and owning the entire author and book industry, from writing books to editing them to printing them to selling them.

the irony of course is that Amazon is the one that pushed the DOJ in the first place, and that an "independent" lawyer involved on the plaintiff's side does a lot of work for amazon and even works out of Amazon's building.

this whole ebooks trial is like DOJ partnering with M$ to crush OS/2. Welome to the monoculture, I hope your book industry shaped exclusively on five star reviews.

Re:Fanbois

[rahvin112]

Regardless of what you think of Amazon and them being a monopoly, Apple colluded with publishers to raise the price of ebooks. It was anti-competitive at it's core and it's illegal under US law. Not to even mention that it cost the average US buyer $5 per book.

The only joke was that it took them more than 5 years to sue over it because everyone buying ebooks at the time noticed the dramatic $5 price increase in all books. After the Apple deal there were many ebooks that cost MORE than the paper book.

Re:LMAO

[Anubis IV]

Setting aside Apple for the moment, there's nothing "theoretical" about Amazon engaging in actions of this sort. They've been doing it as long as Apple has, at least.

Using most favored nation clauses and the agency model, which is exactly what got Apple in trouble: http://www.selfpublishingrevie...
Leveraging their near-monopsony to try and gouge the publishers: http://www.teleread.com/ebooks...
Making hard-to-implement immediate demands when the publishers pushed back: http://www.thepassivevoice.com...
Delisting multiple publishers during re-negotiations: http://time.com/110412/amazon-...
Jacking shipping times from a few days to 3-5 weeks: http://www.washingtonpost.com/...
The author's guild is outright accusing Amazon of violating the Sherman Antitrust Act: http://bits.blogs.nytimes.com/...

Spend 30 seconds Googling around. You'll be shocked at what all Amazon has already done when it comes to this industry, and it's only been getting worse in recent years. It's like looking inside the door at a sausage factory: you'd have wished you never looked.

Re:Fanbois

[Anonymous Coward]

the whole point of Apple's ebook efforts was to provide a bulwark against the Amazon Ultron-like eater-of-worlds mopolistic behavior.

It was replacing one monopoly with another, in fact the Apple case was worse because it was Apple setting the baseline price and forcing publishers to sell at or above that price, Amazon did not collude with publishers to create a cartel like Apple tried to do.

The Amazon situation is bad, but Apple's cartel was worse.

Re:LMAO

[whoever57]

With the exception of the smashwords issue, all of those articles relate to Amazon fighting with publishers. Not one of those articles alleges (apart from the smashwords issue) that Amazon is forcing up the prices at other retailers.What does Wallmart do every day: negotiate with suppliers to get the best deal for itself. What is Amazon doing here?

Yes, there is a risk that Amazon may be so dominant that it can push up prices, but that is mostly a theoretical risk (smashwords excepted).

So, perhaps an investigation is warranted, but, in no way does that mean the Apple should not be fined for its actions.

Re:Fanbois

[Namarrgon]

Sadly for you, the "facts" are on Amazon's side here. Apple was being legally outcompeted, and resorting to illegal collusion needs to be smacked down, regardless of how much they hated seeing their potential marketshare slipping away. Maybe they should have tried to compete by lowering prices further, rather than raising them? Would be a better outcome for consumers.

Re:Fanbois

[farble1670]

the whole point of Apple's ebook efforts was to provide a bulwark against the Amazon Ultron-like eater-of-worlds mopolistic behavior. It was a last ditch effort from apple and the publishers to try and prevent Amazon from eating and owning the entire author and book industry, from writing books to editing them to printing them to selling them.

so your whole argument is that it was okay for apple to commit a crime to thwart amazon from becoming more successful? if amazon ended up breaking laws, so be it, and let them stand accountable at that point.

apple isn't some angel coming down from on high to protect the poor little ebook authors. they were simply trying to thwart a competitor from becoming dominant in the field. they wanted a (larger) piece of the pie, and they broke the law trying to get it.

the irony of course is that Amazon is the one that pushed the DOJ in the first place, and that an "independent" lawyer involved on the plaintiff's side does a lot of work for amazon and even works out of Amazon's building.

i don't think you understand what irony means.

Re:Fanbois

[Noah Haders]

not too much perhaps. how hard is it to write a book, how hard is it to edit a book, how hard is it to curate the book industry so the most promising books recieve support and funding, how hard is it to build an industry that supports authors so they can live and work and be professionals, so the entire publishing industry doesnt devolve into 99 cent fan fic? pretty darn hard.

Re:Fanbois

[hairyfeet]

Uhhh..spin it how you want but the emails showed beyond a doubt that Apple was price fixing and sorry, that is illegal. Also if you think Apple was price fixing "for good of the people"....BWA HA HA HA HA, that is damned funny, it was to increase their share and make sure no competitor could undercut them, again going against free market competition.

Of course they could always do like Amazon and take less profit per sale...ha ha ha, who am I kidding, Apple take less? never!