When John Bumstead looked at listings for his products on Amazon.com in early January, he was waiting for the guillotine to fall.
A small online business owner from Minneapolis, Minnesota, Bumstead specializes in refurbishing and selling old MacBooks, models he typically buys from recyclers and fixes up himself. But on January 4th, Bumstead’s entire business dwindled into nonexistence as his listings were removed from the platform due to a new policy limiting all but the largest companies and specially authorized providers from selling Apple products.
Apple made a special deal with Amazon to basically exterminate all third party repair services and used Apple product sellers that aren’t specifically approved by Apple. The result is a sharp increase in pricing on used Apple products sold on Amazon – exactly what Apple wants, of course – and smaller, non-Apple approved resellers are dying off.
Charming. And people actually claim Apple has morals and values.
Apple’s actions are clearly unethical, however amazon’s complicit help in blocking apple’s competitors deserves scrutiny as well.
“Amazon is constantly working to enhance the customer experience, and one of the ways we do this is by increasing selection of the products we know customers want.” – amazon
F you amazon! This is a serious blow to market competition and these actions are diametrically opposed to customer interests. I hope they get all the bad publicity they deserve until they reverse course and admit their policy betrayed customer interests. Just think if all manufacturers started following this precedent with deals prohibiting competition and sales of used products in common marketplaces.
Shame on both companies!
Crap like this, along with screwing over self-published authors and small publishing houses by allowing scammers to scan and upload knockoff ebooks for sale, makes me want to drop my Prime membership. At this point the only thing we use it for is the “free” video and music service, we mostly buy physical products online from traditional retailers and eBay. Netflix is cheaper and carries much less moral baggage (hell, they use and contribute to FreeBSD and other open source projects).
The harder part of voting with my wallet will be giving up my iPhone. With the demise of Windows Phone and Google’s neverending war on privacy, there isn’t anywhere to go except back to a dumbphone and PDA combo like it’s 2002.
Does anyone even make stand-alone PDAs anymore?
I don’t think so, but I can probably throw something together with a Raspberry Pi, a cheap touch screen, and my 3D printer.
Or get a Pinebook Pro
Amazon has been doing this for a while.
* You can no longer sell some movie brands (like Marvel)
* Some GPU / Motherboards are off limits (PNY / Gigabyte)
* Some electronics (Logitech)
I can understand where there are fakes for cosmetics / clothing etc. There is eBay for that, where customers know the risk. However the clearly labeled used products (which come with original serial numbers / boxes / etc), this limitation does not seem to be customer oriented, but rather for pushing prices up.
On the other hand, Amazon is not the best place to sell used laptops. The “very liberal return policy” (no questions asked even when customer is at fault) is not helpful for expensive items. Fortunately there are still other avenues to sell used items.
A company can neither be moral or immoral. Morality is not determined by a company’s desire to maximize profits. A company’s sole purpose is to maximize profits. It would have been best to simply say that you disagree with the company’s actions.
Perhaps, Thom should use “ethics”. Anyway, it does not matter which one of them you use, Apple clearly lacks it.
haus,
I find this type of argument is mostly used by those who want to disown responsibility. You can play semantic games, but a company’s actions are not spontaneous, a company is little more than a proxy for those who control it making conscious moral/ethical decisions (whether they care to admit it or not).
Anyways, your opinion of corporate behavior seems strongly biased in favor of apple every time they come up. When it comes to other company abuses you think something should be done to fix them, yet when it comes to apple’s abuses “a company’s sole purpose is to maximize profits” and “it’s best to simply say that you disagree with the company’s actions”.
>”I find this type of argument is mostly used by those who want to disown responsibility.”
Sound like the opinion of someone who doesn’t believe in or live in a capitalistic country.
>”a company’s actions are not spontaneous, a company is little more than a proxy for those who control it making conscious moral/ethical decisions (whether they care to admit it or not).”
Those who control it have a fiduciary responsibility to maximize profits. You (like Thom) appear to equate maximizing profits with an ethical quandary. Just because you and he framed the discussion in this way doesn’t make it so.
>”Anyways, your opinion of corporate behavior seems strongly biased in favor of apple every time they come up.”
I’ve come to Apple’s defense when people attempted to hold Apple to the same standard to that of a PC manufacturer and vice versa. To own a platform affords a company greater opportunity (and responsibility) to govern it… both legally as well as “morally.”
It’s a disingenuous argument to make (for example) when suggesting that Apple’s business model adhere to a PC standard. (And vise-versa). It’s something that happens often in these forums (not to mention featured-content)
In fact you are guilty of exactly this as you’ve automatically equated the management of a managed (closed?) platform to that of being abusive behavior if only because it’s not how every other company (that doesn’t have a platform to govern) does it.
haus,
We must always remember to keep human rights above corporate rights. Money and corporations are not the ends, they are the means. Corporations have no right to exist on their own. We’ve embraced capitalism and allowed corporations to exist because they were a means to improve the human condition. And for decades it has done that, however at the extremes we’ve witnessed the robber barons with so much wealth and control that it hurled the majority into mass poverty. Corporations must not have free reign to exploit and harm society just because it’s profitable for them. The answer is, today as it’s always been, to have a government that keeps the balance. Unfortunately, government has become corrupted by the very corporations they’re meant to regulate. Many industries have their own people assigned to government posts overseeing themselves, this is incredibly naive. Alas many people are going to be in the front row learning forgotten lessons from the past as corporate greed continues unleashed.
Of course I’d like to hold apple (and other companies) to higher ethical standards than you do. You apparently justify holding them to no moral standards whatsoever so long as they’re maximizing profits, but frankly this is one of the most naive and dangerous opinions to justify bad actors. There are many good arguments for capitalism, but if you throw away ethics in the process then you end up amplifying it’s worst aspects.
In a previous post of yours, you favor breaking up companies that are abusive, but here you exempt apple specifically because they are not anti-competitive…
https://www.osnews.com/story/129990/facebook-co-founder-its-time-to-break-up-facebook/#comment-10400722
…yet here we are with an article that directly shows apple controlling markets and being anti-competitive, and yet you still defend apple. Look at your post history, you go out of your way to defend apple even when it means denying well known facts, like apple banning competing technology (ie browsers and open source codecs). Sure, you have the right to your opinion, but what’s your motivation for defending apple even when their actions are harmful? It’s not just some issues, you side with apple on literally every issue. I don’t get that, is there actually some logic to it? I suppose I won’t get a clear answer, but without an explanation, how am I supposed to conclude this is anything other than fanboyism?
>”We must always remember to keep human rights above corporate rights.”
Sounds great and yet this issue has nothing to do with human rights. It’s simply a company looking after its best interests be it even to the disadvantage of another company. Ironically enough, you have the nerve to equate the interests of another COMPANY to that of a human right while at the same time doing so in the name of human right defense. The rest of your comment goes so far as to equate the ills of corporate culture to that of capitalism.
>”Of course I’d like to hold apple (and other companies) to higher ethical standards than you do. “”
You did it again and you don’t even realize it. You’ve auto-equated your preferred platform to that of a higher ethical standard. You certainly have some Chutzpah.
>”You apparently justify holding them to no moral standards whatsoever so long as they’re maximizing profits”
No, I simply don’t equate this action as a moral misgiving as you and Thom do. I do this not out of subjective perspective but instead simply because it’s true. There is no moral quandary to be had for a company to maximize their profits. While there can be harm done under the name of profit maximization, this scenario is not inclusive of that standard.
>”…yet here we are with an article that directly shows apple controlling markets and being anti-competitive,”
The rationalization for Apple being broken up was solely because of their size. It wasn’t because they did wrong or were even at risk of having a monopoly or even abusing one. This on the other hand was NOT the case for Microsoft during their anti-trust trial nor is it now with Google and Facebook… both of these companies not only have monopoly positions in their markets but they are abusing them by restricting content like that of a publisher while at the same type declaring themselves to be platform and thus immune from lawsuits related to free speech restriction.
I’m glad you brought this article up as its a great example of the flawed parallels people draw between Apple and the PC marketplace where people (such as yourself) believe Apple is guilty of a mis-deed simply because they don’t run the Mac and iOS platform like that of platforms without single covering bodies. When you own the product/platform, you get to dictate how its run.
>”you go out of your way to defend apple even when it means denying well known facts, like apple banning competing technology (ie browsers and open source codecs).”
Here you’re doing it yet again! Apple owns the platform. They are not legally or morally obligated to run their company like that of a platform without a single covering body. It’s akin to Ford being sued for being the exclusive provider of each car’s dash board. You would have an argument if Ford was a kit car company (like that of PCs for example but Ford (like Apple) own’s their product/platform and to hold it to the standard of the kit car/PC companies is disingenuous. THAT WAS THE POINT!
For the record, you are the prime example of that type of person for whom I respond-to on platforms such as this.
haus,
I’m pretty consistently in favor of consumer rights. This is the motive that explains most of my posts here.
Your excuse for not breaking up apple was that it’s not anti-competitive, yet when apple is clearly being anti-competitive, you just pile on excuses for apple rather than admitting their faults. Like I said, when you defend apple on every single issue, how am I supposed to conclude this is anything other than fanboyism? There’s literally no intellect there as far as I can discern, your rule seems to be “if company==apple, then defend against any criticism”. I *hope* that I am wrong because this is a very shallow mindset, but insofar as I can tell this is literally the full extent of your logic every time. Please show me that I’m wrong and give me a real criticism of apple that disproves this implicitly biased rule.
>”Your excuse for not breaking up apple was that it’s not anti-competitive, yet when apple is clearly being anti-competitive”
Your rationalization that presumes that Apple is anti-competitive is based on your insistence of applying a non-integrated business model to that of an integrated one.
>”you just pile on excuses for apple rather than admitting their faults.”
My entire argument is that your rational is wrong at the outset. I’s only natural that you might think the way you do if you can only think within your box.
>”when you defend apple on every single issue, how am I supposed to conclude this is anything other than fanboyism?”
I don’t defend apple on every single issue. I only require that you you rationalize the difference between integrated and non-integrated business models. The fact that you can’t, don’t or won’t is what reeks of fanboyism as your argument implies that there is only one business model and those that don’t align to it must be stubborn.
>”Please show me that I’m wrong and give me a real criticism of apple that disproves this implicitly biased rule.”
I don’t care what you think of me. I only care that you not spread flawed ideas.
Maybe in your fantasy, but in reality apple uses it’s market power to create anti-competitive markets that block competing repair shops, app stores, resellers, etc. There’s no pinning that stuff on me or my rationalization, it’s the truth plain and simple.
So, you were unable to give a real criticism of apple, noted.
I think you’re more upset that I’m actually right about your bias and you can’t disprove it without speaking ill of apple. It’s a pickle, haha 🙂
>”Apple uses it’s market power to create anti-competitive markets that block competing repair shops, app stores, resellers, etc.”
You think that because it would be for a non integrated company. A company that owns the platform is within their right (both legally and “morally” to rein-in all third party services.
>”There’s no pinning that stuff on me or my rationalization, it’s the truth plain and simple.”
It would be for a non-integrated company (Apple manages its platform as an integrated company). That doesn’t mean that they can’t act anti-competitively as parts of their business are not integrated however with regard to these specific points… you’re wrong.
>”So, you were unable to give a real criticism of apple, noted.”
I can, have and do. I’m here solely to correct you right now though.
>”I think you’re more upset”
Again, I don’t care what you think. You’re wrong.
haus,
If you believe that some anti-competitive corporate behaviors are, or should be, legal and moral, you are entitled to that opinion. However the first sale doctrine expressly allows manufacturer’s products to be resold without the manufacturer’s approval.
Branding them an “integrated company” doesn’t change their actions. Regardless of how you try to justify anti-competitive behavior, the damage to competition who are being banned by apple is evident.
Still unwilling to criticize apple to disprove apparent bias, noted again.
This may fall on deaf ears, but I would ask that when considering whether something is ethical or not, the aim should not be to find a rationalization that puts apple in the clear, instead consider the long term repercussions of what happens when we allow anti-competitive business practices to become normalized. Do you want a few ultra-powerful corporations to have absolute power over competition? There will be no independent stores, repair shops, resellers, etc, small businesses will need the permission of dominant players on top who control everything. I doubt even you want this future, so you should appreciate how anti-competitive business models that “rein-in all third party services” are the most efficient path to a future where only a few corporations get to control everything. You obviously object to my opinion because it came up in the context of apple, but this should not be about apple versus company X or Y, we must recognize the totality of what is happening! Apple is just one of several influential corporations who are consolidating their control across the board.
Reinstate slavery !
In a country that has things like “work full time and still be poor, or lose your health insurance; until we get bored and fire you anyway”, slavery might be an improvement (the slave’s owner has a duty to take care of their slaves). 😉
No wonders how some countries gets to the top… At least they sent some people to the moon. Such an achievement. Now you just have to thrown your old Mac to the bin and get a new one. What is the half life of (chip) silicon anyway ?
very interesting.
It is completely normal for premium brands to limit re-sellers on Amazon. Otherwise your brand premium attribute will be discounted into the floor and destroyed. Everybody uses the same product pages so the only way for multiple sellers to compete is on price.
I feel bad for the refurb re-seller and I think an exception should be made or approval should be possible to get. However it would be an exception. What has happened is normal.
A refurb section on Amazon for extending the life of all products would be amazing. They kind of have it already with the “available form other sellers” section. I never pay full price for games. A better delineation on the site could enable the second hand re-sellers to be protected, for the planet’s sake. Not holding my breath as Amazon will only do it for money.
There is a Philip K Dick story about the planet becoming an entire population of warehouse robots. Move over SkyNet. Amazon is our future!
Where is the “free and unencumbered competition”, the “open market” ? When a product is sold, it is sold once for good, why the brand could have the right to prevent you from reselling it refurbished ? Imagine if car brands gets a cut of second hand cars each time they are sold on the refurbished market, would you find it normal since they already had their margin on the original sale ? What is this called again, racketeering ?
Iapx432,
I don’t know if that’s true. I found information about amazon’s “Brand Registry”, which gives manufacturers the ability to control how their products are displayed and help fight counterfeits, however my understanding is that it does NOT stop 3rd party resellers. The information I’ve found suggests amazon does not normally help manufacturers delist competing resellers who aren’t otherwise in violation of seller rules.
https://www.skubana.com/manufacturer-imposed-limitations/
https://sellercentral.amazon.com/forums/t/authorized-resellers/59511/3
Do you have information clearly showing that amazon will normally work with manufacturers to limit resellers?
To the extent that this were true, I think it could warrant an antitrust lawsuit because amazon controls half of the ecommerce market and quid pro quo deals that limit competition to such a degree are likely red flags. On the other hand, government regulators are in a bizarro phase right now with whitehouse appointments chosen to do the opposite of their job functions, so enforcement may be unlikely.
Alfman asked: “Do you have information clearly showing that amazon will normally work with manufacturers to limit resellers?”.
(If anyone could reply and tell me how to do proper quotes that would be great too).
Amazon does not usually work directly with brands, even more so on knocking down sellers. Amazon creates an ecosystem with rules that you operate to achieve your goals. Amazon operates the rules to achieve their goals as well. My source had 1,800 resellers on Amazon in September 2018. They now have 84. The the procedure is nasty but perfectly within the rules. They issued new terms to all their retailers prohibiting them from selling on Amazon. This is legal. Next they used a system in Amazon to accuse every reseller of selling counterfeit product. In order to prove that the product was not counterfeit the reseller has to show the invoice whereby they purchased the product legitimately. This effectively identifies the retailer who breached the new sales terms and then the brand can threaten that retailer with being cut off from supply of the branded goods. If the retailer sold to a third party then the third party is put on a “do not sell list” and thenceforth anyone who sells to that retailer can be cut off by the brand. If the Amazon reseller decides to ignore the counterfeit challenge and does not provide proof of legitimate purchase then there is an assumption of guilt and their entire site, not just the offending branded products, can be completely shut down. They know this so most would rather loose one brand than loose everything, especially in the fourth quarter. Amazon is fully aware of this practice and allows it because they cannot be complicit in selling counterfeit. As an aside, the best way to deal with a counterfeit manufacturer is to sue all their retailers. Much easier than trying to find and sue the manufacturer directly in Outer Mongolia.
I believe the above system can be used for refurbished product as well. The above brand certainly does not do that.
I suspect that Apple does not have to go through all the above loops and that Amazon is actually working with them directly. However the effect Apple achieves is normal, as per my original point.
I agree with Kochise that prohibiting the second hand market is racketeering and shame on Apple.
I don’t agree that once a product is sold it can be a free for all. If the market is allowed to discount everything this will effectively deprive premium brands of the margin to do innovation and this would be bad for society. Innovation is risky, expensive and usually creates jobs in market, Without those in-market jobs the market cannot afford to buy anything. Every component of a supply chain needs an opportunity to add value and get paid for it, either on low cost or on differentiation. Otherwise the system will fail, warts and all.
Iapx432,
That was kind of the point, it’s not amazon blocking them so much as manufacture’s contracts with their own authorized sellers. Manufacturers can/do contractually prohibit authorized resellers from distributing goods to unauthorized markets. But those legal agreements are strictly between the manufacturer and authorized resellers. If some of those products get into the hands of unauthorized resellers (either as used products or bought in low cost markets like china), there’s little the manufacturer can do about them assuming the unauthorized resellers aren’t actually breaking the law. The manufacturer must crack down on it’s own authorized sellers for distributing products to the gray market. The unauthorized resellers have no legal contract for manufacturers to wack them with and the first sale doctrine gives us a legal right to resell products that we own with the manufacture’s blessing or not. Their approval is optional if we didn’t sign a contract stipulating what we can do as owners.
These gray market goods are authentic products where an unauthorized reseller takes advantage of market inefficiencies created by manufacturer price discrepancies (ie between US and china). It makes no sense for an unauthorized reseller to buy cheap products in china and resell them in the US unless they are more efficient than authorized channels. Understandably manufacturers may not like it, but in terms of capitalism the gray market is simply improving market inefficiencies and correcting inherently imbalanced price models.
I don’t disagree with you that manufacturers will try to make life hard for unauthorized resellers, by cutting off supply, limiting bulk purchases, grinding them down in courts, etc, but that’s quite a bit difference from the original assertion that amazon was the one doing it. My question was specifically about this assertion that it’s normal for amazon to limit 3rd party resellers since I was not aware of it. Do you have any information about amazon voluntarily entering a deal in which it blocks 3rd party resellers at the request of manufactures (prior to this deal with apple)?
We’re talking about 3rd party resellers who are selling authentic products. I have no issue with amazon blocking counterfeit products, but that’s a different problem. Regarding what we’re talking about here, I hesitate to call it a problem at all. If a beverage company sells bottled drinks for $25/bottle in the middle of the Sahara, but someone else buys the same bottles cheaper elsewhere and then resells them in the Sahara for $10/bottle, that’s not immoral. What’s more immoral is the company artificially hiking prices. To the extent they can get away with overcharging because there’s no competition, that would be one thing, however their entitlement to be protected from 3rd party resellers who are more efficient than they are at selling their own product is indefensible IMHO.
That assertion is only true for commodities, like the water in the Sahara example, which tend not to evolve features over time. For non commodities where there is ongoing product improvement, the original creator must generate margin to sustain the innovation. The Grey market player in fact may be less efficient than the original creator at selling, but because they do zero innovation they can be cheaper. If the grey market player is allowed to effectively eliminate the margin required to innovate needed by the original creator then the ongoing improvement stops and society is worse off, not more efficient. The original purpose of IP legislation was to preserve the margin and motivation to innovate. It was the foundation of the modern age, warts and all.
I do not. Amazon has two very important goals. One is to have the broadest possible selection, The second is to sell at a competitive price relative to other sellers.. A third goal, becoming more important recently, which is to make money. All three are somewhat conflicting. The whole Amazon retail machine is built around balancing these three goals. It seems like the selection goal trumped the efficient sales goal in the case of Apple. Bezos calls Amazon “The Everything Store”, not “The Cheapest Store.”
Edit: And the quotes worked. Thank you!.
Iapx432,
How so? It’s your prerogative to care about brands or not, but the supply and demand aspects are still there regardless of what you are buying. If a 3rd party can beat the authorized reseller because authorized channels are inefficient, then what’s the problem? Why should they be entitled to block more efficient competitors (assuming they’re not scamming anyone of course).
That doesn’t add up because we’re talking about the same products from apple!! Apple manufactured and got paid for both, the difference is where apple sells them. Gray market resellers exist due to artificial price discrepancies between markets. It would be infeasible for a third party to come in and beat apple’s prices unless apple’s authorized channels are over-inflating prices in a market begin with.
Think of it this way:
Apple’s price of products in china = X = apple r&d + manufacturing + misc costs + profits
Apple’s price of products in US = X + worldwide shipping&handling + authorized reseller profits + extra profits.
Gray market reseller price in US = X + worldwide shipping&handling + unauthorized reseller profits
Gray market resellers will struggle to beat apple’s authorized reseller prices IF the authorized channels are already efficient (and given apple’s scales of economy, they should be). The unauthorized reseller would have no efficiency advantages over the authorized reseller. However apple raises price margins significantly in US markets to make extra profit for itself, and that’s the reason authorized sellers are less efficient compared to unauthorized resellers. Unauthorized resellers are simply re-balancing prices in artificially inflated markets, their utility to the market is proportional to the scale of the discrepency.
But these are official apple products… Nothing was stolen, copied, cloned or ripped off! Apple already got paid it’s fair share on products sold. The problem is that apple wants to control the sale of things after it’s already sold them (ie used products, and products in cheap markets like china) and I don’t think apple deserves any sympathy for that.
The point of answering this was to show that this kind of deal was “normal”. We knew it was normal for apple to attack repairshops and phone recycling shops, however going to platforms like amazon and having them ban product listings for legitimate resellers is a new low. Presumably apple is giving amazon some kind of kickback, but it’s a disgrace that amazon is playing along. Deals to promote manufacturer control set a bad precedent for consumers.
lapx432,
Well crap, wordpress keeps reformating my post.
Basically you need to use blockquote and /blockquote surrounded by less-than and greater-than as you would in html.
Let’s try this again:
<blockquote>quoted text</blockquote>
Alfman – You are right that Apple gets paid the same anyway. I left out some causality. Here is a more complete picture.
In addition to investment to drive innovation you need decent retail partners who maintains decent physical and on-line virtual stores that can promote and educate on the innovations. These retailers will not work with a brand that allows other channel players who eliminate the cost of presentation and promotion and deprive them of margin. So in order to continue to carry a product they will push back on the manufacturer for margin and that is where the capacity to innovate breaks down. More recently, and in Apple’s case for quite some time, the brands themselves are also the retailer. However they still have the same costs as full function independent retailers and so will not want competition from bare bones retailers.
Just to be clear, all this applies to new product. I can see why a brand would also try to prohibit second hand sales as well, especially a brand like Apple whose products actually serve reasonably well for up to a decade. I don’t agree with it, but I understand the motivation to sell more new product.
Iapx432,
Sure, I don’t think anyone has trouble understanding apple’s motivations. Clearly we understand why they fight for more tax cuts & loopholes, fight repair shops, prohibit recyclers from refurbishing phones, negotiate deals that ban competing stores, lobby against right to repair, etc so they can make their next trillion. But we need to step back and ask ourselves if this is really the role model we want to use for the future?