Linked by Thom Holwerda on Fri 2nd Aug 2013 15:30 UTC
Apple
Apple Inc deserves a five-year ban from entering anti-competitive e-book distribution contracts and should end its business arrangements with five major publishers with which it conspired to raise e-book prices, federal and state regulators said on Friday.

The U.S. Department of Justice and 33 U.S. states and territories proposed those changes after U.S. District Judge Denise Cote in Manhattan last month found in a civil antitrust case that Apple played a "central role" in a conspiracy with the publishers to raise e-book prices.

The DoJ also requires that competitors such as Amazon and Barnes & Noble be allowed to include links to their own stores in their iOS applications, which Apple had prohibited.

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RE[2]: Everyone is wrong
by atsureki on Sun 4th Aug 2013 07:18 UTC in reply to "RE: Everyone is wrong"
atsureki
Member since:
2006-03-12

http://www.macstories.net/stories/understanding-the-agency-model-an...

This article explains why Amazon is NOT putting other online sellers of eBooks out of business.


Well, I called your bluff and read that whole article. It doesn't say anything to absolve Amazon of predatory pricing or explain how other retailers can compete by also dumping content below wholesale prices. If you were referring to the classic razor/blade loss leader example, comparing that to this case is ludicrous, because that model requires the higher volume item (content/blades) to be profitable, while the entry point item (hardware/razor) is the loss-leader. The more ebooks you sell at Amazon's prices, the more money you lose. That makes it impossible to be an ebook retailer in Amazon's world.

Amazon can bend the Robinson-Patman rules by asking for a larger co-op which is what they have been doing. That larger co-op has to be offered to all other retailers which it has been.


I have no idea what you mean by this.

Therefore, under current wholesale agreements, it is ultimately up to the publisher to decide whether to offer content at a specific price. And once they offer it to Amazon at that price, then they have to honor it for all direct accounts. It will be the publishers then who bend the rules. What Apple and those publishers did, as outlined in the above links and the court documents, is beyond bending the rules. It was a full blown violation of the laws as they stand.


Yeah, that's probably all true, except the notion that there's any such thing as merely "bending" rules in a pure legal sense. I chose the word 'wrong' rather than the word 'illegal' for a good reason: because I'm talking about what damages the market, what the DoJ "should" be protecting the consumers from, not about who had a better case in court given the letter of the law.

Now if Amazon uses predatory pricing to gain unfair market advantage, and then subsequently raises the cost, excessively, to consumers, then and only then will they have violated the law in the same fashion as Apple & those publishers did.


What other purpose could there possibly be? Maybe if Amazon would release numbers on Kindle profitability, we could be assured that, at the average attach rate, they're not dumping.

Oh, whoops: http://www.forbes.com/sites/kellyclay/2012/10/12/amazon-confirms-it...

They're dumping. And it's unfairly putting competitors out of business.

Your thesis falls into the false equivalency meme when the actual facts are elucidated as I have now shared. Sorry.


Sorry, which facts? Your link only explains the difference between wholesale and agency and how Apple went about getting the publishers to switch to agency, which admittedly includes a few shady moves. If we strip the word 'conspiracy' of its pejorative connotational baggage and pretend, for the sake of argument, that Apple 'conspired' with publishers to throw a surprise birthday party, we can look at the respective motives for what they really are. Apple needed the agency model to break Amazon's iron grip on the ebook market. Amazon used the DoJ to fight that strategy and maintain its own power over the market. Now we can actually talk about right and wrong. Or rather, wrong and wrong.

Somewhere in the course of all this, I noticed another one.
The DoJ is wrong because:
-It assumes artificially low prices in the short term are better for consumers than a stable system where we are presented with real prices from the beginning.

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