
DOJ Calls for Apple to End Book Deals, Link to Rival Bookstores - daegloe
http://allthingsd.com/20130802/doj-calls-for-apple-to-end-book-deals-link-to-rival-bookstores/
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daegloe
Apple's obligatory response:

“Plaintiffs’ proposed injunction is a draconian and punitive intrusion into
Apple’s business, wildly out of proportion to any adjudicated wrongdoing or
potential harm. Plaintiffs propose a sweeping and unprecedented injunction as
a tool to empower the Government to regulate Apple’s businesses and
potentially affect Apple’s business relationships with thousands of partners
across several markets. Plaintiffs’ overreaching proposal would establish a
vague new compliance regime—applicable only to Apple—with intrusive oversight
lasting for ten years, going far beyond the legal issues in this case,
injuring competition and consumers, and violating basic principles of fairness
and due process. The resulting cost of this relief—not only in dollars but
also lost opportunities for American businesses and consumers—would be vast.”

[http://allthingsd.com/20130802/apple-slams-feds-proposed-
e-b...](http://allthingsd.com/20130802/apple-slams-feds-proposed-e-book-
remedies-as-a-draconian-and-punitive-intrusion/)

~~~
lostlogin
Seems a weird solution, given they aren't the gorilla in the ebook market -
but what comes to mind when reading this, are the battles Microsoft had with
regulation. I wonder if this is the beginning of the same era for Apple.

~~~
dragonwriter
> Seems a weird solution, given they aren't the gorilla in the ebook market

While some of the remedies are related to the market that was affected by the
illegal actions they were found to have engaged in, the remedies as a whole
aren't limited to the ebook market, and it seems more concerned with Apple
using its mobile position and related retail platforms to facilitate similar
publisher schemes in other markets to the one it engaged in in the e-book
market.

Which, IMO, is what you'd expect of a company that wasn't found to be
leveraging a monopoly or otherwise abusing power as a dominant player in one
market, but instead was found to have used a significant-but-not-necessarily
unique position in one market to provide a pivotal role in a price-fixing
conspiracy among producers in another market.

~~~
bilbo0s
"...the remedies as a whole aren't limited to the ebook market, and it seems
more concerned with Apple using its mobile position and related retail
platforms to facilitate similar publisher schemes in other markets to the one
it engaged in in the e-book market..."

Wait...

So Amazon bought all their eBooks on the wholesale model, basically, they pay
a fixed price for the book, maybe $5 and sell the book for whatever...
including selling for a loss if they choose.

Apple came along and said we will sell for whatever the publisher of the book
wants us to sell for... and then we will take a percentage of that.

Now forgive me for my shameless selfishness here...

but that immediately calls to mind the App market to me.

So I have a question...

Would "...in other markets..." mean that Apple could conceivably be barred
from letting me sell my App for whatever price I wanted on the App store? Or
does it mean that they would just have to provide a link to my app on another
store that would be selling my app at a loss?

I hope that's not true. In this case, that would mean that Apple, Amazon and
Google would get to set the price at which one could sell one's app, since
they own the store, and I would be just the publisher.

Well... technically, they couldn't set the price I could sell my app at, they
could only refuse to buy my app and put it on their store for anything but
their "wholesale" price.

I hope none of this applies to the app market.

Sigh.

Maybe I should have gone for that Law degree.

~~~
AsymetricCom
I've read articles saying that Amazon's App store does this. i.e. if they see
you selling your app cheaper for iOS, they can go pricematch it. Or, if you
give it away for free, Amazon can do the same thing an pay you nothing (since
a percentage of zero is zero). AFAIK, Apple won't do the same thing, they'll
just reject your app if it uses the wrong APIs or competes with a market they
want to own in the near-term.

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Steko
You gotta love antitrust regulators that work hard to further entrench the
dominant competitor.

Get your External Antitrust Monitor resumes up on LinkedIn kids, xmas is
coming early this year.

~~~
freehunter
That's because being the dominant competitor is not illegal. Price fixing and
colluding to drive competitors out of the market by extending a powerful
position in one market into another market _is_ illegal.

~~~
Steko
I haven't claimed that Amazon did anything illegal or that Apple didn't. The
claim I'm making is that the remedy for Apple's transgression needn't be a
gift to Amazon. And while the DoJ _could_ decide to look into Amazon's own
actions for various reasons, does anyone seriously think a proper penalty
might include the DoJ enabling a "Buy at Barnes & Noble" button on Amazon.com?

~~~
freehunter
I read your post. The point I was trying to make was that Apple did something
illegal and got busted for it. Amazon either hasn't done anything illegal, or
hasn't gotten busted. The judgement for Apple isn't to help Amazon, it's to
pay back the damaged they have done to their competitors. Since it was deemed
that Apple hurt Amazon, Nook, etc, they now have to pay that back by hurting
themselves.

What would be Apple's punishment? A fine? That's hardly going to deter the
world's most valuable company. What they did hurt their competitors. The
punishment is that they now have to help their competitors regain what they
lost. This is not unprecedented by any means. In the two cases where Microsoft
was deemed to have an illegal monopoly, they had to give their competitors
access to their proprietary APIs (US v Microsoft, a gift to Apple and Linux
vendors) and include downloads to competing browsers (EU vs Microsoft, a gift
to Google, Mozilla, and Opera).

~~~
Steko
I think most of the punishments they set up for Apple are perfectly reasonable
and on top of those I'd go ahead and yeah I'd add a huge fine. IDK on the
amount, something at least as large as everything they've made on books and
then tripled or perhaps based on the avg price of ebooks before and after
times the volume i.e. what consumers paid based on the price increases Apple
was responsible for.

I think the record companies (et al) might want the ability to raise Apple's
prices without the governement ok-ing it so that item maybe could be modified
with their input.

I think the Amazon gift is silly. You say "What they did hurt their
competitors." but that's not what Apple is accused of. Apple is accused of
hurting consumers while Amazon profits actually increased. You bring up
Microsoft but Apple does not have a monopoly on ebooks like Microsoft did in
browsers. Not even remotely. They aren't even the largest competitor. By a
mile.

~~~
freehunter
Was IE dominant in the browser space in 2007? It feels like Chrome or Firefox
had surpassed them by then. Microsoft still got hit because it was the Most
Favored Browser on the most dominant OS platform.

Again, having a monopoly isn't illegal. Abusing a monopoly to force unfair
competition in a new market _is_ illegal. Apple isn't taking the hit because
they're dominant in ebooks, but because they're not playing fair with ebooks
when it comes to the mobile device market where they _are_ a strong player.

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ben1040
>allow for two years rival e-book retailers like Amazon and Barnes & Noble to
provide links from their e-book apps to their own e-bookstores without paying
any fee or commission to Apple on sales made through them.

This doesn't exactly seem fair to all the other companies who would still have
to give up 30% commission over to Apple but can't raise their price (e.g.
Netflix, Dropbox, etc).

~~~
dragonwriter
> This doesn't exactly seem fair to all the other companies who would still
> have to give up 30% commission over to Apple but can't raise their price
> (e.g. Netflix, Dropbox, etc).

The term at issue is a remedy for harms done by Apple's role in the ebook
publisher price fixing scheme, which isn't relevant to Netflix, Dropbox, etc.

Insofar as the kind of thing Apple did here would be relevant to app makers in
markets other than the ebook market, those app makers are beneficiaries of the
provisions of the propsed remedy that exist to prevent Apple from engaging in
schemes that are similar to the ebook scheme in other markets.

~~~
AsymetricCom
I could understand why apple would get a 30% of scamware f2p shit recoded
flash games that couldn't exist without their ripoff platform. But why should
they get 30% of book sales when they don't even care about piracy or make any
serious efforts to stop it?

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ehm_may
I've heard quite a bit about this case over the past month or so, but don't
understand it.

Can someone explain what Apple 'fixing' e-book prices means and how that is
illegal?

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MBCook
Amazon used to buy all their eBooks on the wholesale model; the same one used
for print books. They would buy the books from the publisher at a fixed price
(say $10 each), and then sell them at whatever price they wanted. Amazon often
sold the books at/below cost to get people to buy Kindles.

So when Apple decided to start the iBook store, all the publishers decided to
use that as an opportunity to band together and force Amazon to use the agency
model, which is how Apple sells apps (publishers set the price, Apple gets a
cut).

The had the effect of causing book prices to go up (because, again, Amazon
often sold at or below cost). Because Apple was the new player whose contracts
caused this, they got in trouble.

Many people find this quite questionable. Prices will go _up_ with this
settlement because publishers get more control. Amazon had a _de facto
monopoly_ , which Apple actually broke up. Also, this wasn't Apple's idea, _it
was the publishers_.

Of course, Apple was more than happy to take advantage of the situation, so
they weren't exactly innocent.

It's a really a strange case.

~~~
revelation
Why do people keep bringing Amazon into this? It's like asking a criminal on
his philosophy to life. It simply doesn't factor into the law. Amazon is not a
party to the case, and it is not a defense.

They fixed prices, and theres no situation where this yields a upside to
customers. And in fact, it didn't. That's why they had to pay up, and Apple,
failing to come to terms with the DOJ, will now have to pay much much more
dearly for ever bringing this into a court.

~~~
MBCook
Amazon's position in the market before this case is one of the things that
makes it interesting. If Apple went to into a competitive market and pulled
this it would be pretty clear cut. But instead they went into a market
dominated by a de facto monopoly. In fact many people believe that _Amazon_
should have been investigated for it's practices in the 'pre-iBooks' era.

> They fixed prices [...]

This is something I'm not sure about. From what I've read it sounds like all
the publishers already wanted to do this and Apple was just the perfect
opportunity to force the issue.

But as I said above, Apple clearly knew this was the case and used it to their
advantage. They didn't set out fix prices, but they weren't against it.

> And in fact, it didn't.

This is a little odd too. Because of the agency model and the most favored
nation contracts, prices went up. But if prices were artificially low before
hand, was this a harm to consumers or a correction that would have happened
eventually anyway?

There are some interesting twists in this case that make it a lot less clear-
cut than most price fixing schemes. Apple probably deserves some kind of
punishment for their behavior. On a personal level I'd really like the ability
to buy books in the Kindle app, that seems like a fair punishment. I love my
Kindle, but I do think Amazon might have been abusing their monopoly.

Of course the publishers were all guilty as hell, but they settled quickly. If
they had tried to fight this too, I wonder if we'd hear as much about Apple.
They're the only ones left standing and fighting.

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6502hero
Wow, this opens up the market a LOT. Fortuitous timing for B&N's ailing Nook
division?

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addandsubtract
Puts this in a whole new light: [http://qz.com/87184/the-steve-jobs-emails-
that-show-how-to-w...](http://qz.com/87184/the-steve-jobs-emails-that-show-
how-to-win-a-hard-nosed-negotiation/)

HN discussion:
[https://news.ycombinator.com/item?id=5752212](https://news.ycombinator.com/item?id=5752212)

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ryanwhitney
Anyone have insight into what sort of timeline this is on? How long Apple
could drag this out until books disappear from iTunes and consumers are stuck
with the Kindle iOS app and it's non-native text selection bullshit?

~~~
Steko
I don't think it prevents them from recontracting immediately with the
publishers, just they can't get most favored nation.

"entering new e-book distribution deals _which would free it from having to
compete on price_ "

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ChuckMcM
This was interesting _" without paying any fee or commission to Apple on sales
made through them."_

It is interesting because I see it as a request to keep Apple from enriching
itself but abolishing the fee entirely makes for a really harsh sanction.
We'll see what, if anything, the court decides is reasonable.

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r0s
It's sad and terrible to see the last, best vestige of old media being
constrained by supposed innovation.

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jolohaga
I can't wait to see links to iTunes on the Amazon web site one day.

