
​Apple gets smacked by $450M e-book price-fixing fine - CrankyBear
http://www.zdnet.com/article/apple-gets-smacked-by-450-million-e-book-price-fixing-fine/
======
6stringmerc
> _Apple did not conspire to fix e-book pricing and this ruling does nothing
> to change the facts We are disappointed the Court does not recognize the
> innovation and choice the iBooks Store brought for consumers. While we want
> to put this behind us, the case is about principles and values. We know we
> did nothing wrong back in 2010._

Unless I've read patently false accounts of the behavior, discussions, and
conduct of Steve Jobs on behalf of Apple circa the iBooks store preparation
and roll-out, this is one of the most laughably false statements that a lawyer
has put to paper in 2016. The year is still early though.

~~~
tehwebguy
Price fixing doesn't just mean the fixed their own price, otherwise the dollar
store would be in trouble.

When Amazon has 90% of the market it's silly to call what Apple did price
fixing. Apple didn't work with competitors to fix prices for consumers, they
told _publishers_ to get on board or get bent.

That should be an option every company has, unless they own the market, IMO.

Edit: Somehow typed the word "eBay" instead of the word "what" \- for THAT I
do blame Apple ;)

~~~
Oletros
> Apple didn't work with competitors to fix prices for consumers

No, they worked with publishers to fix the prices for consumers

~~~
acqq
But didn't they just work with the publishers on determining the model for the
Apple iBook store? Even if they discussed and agreed for some pricing model to
which all adhered in at that moment effectively just starting iBook store, how
was that colluding?

The iBook store didn't exist before, so Jobs had to win the publishers
somehow, that means that all had to agree to some model that would be
favorable to them and certainly more favorable than Amazon's.

And how was that anti-competitive or worse?

Does anybody have some exact references, like the court decision that explains
that?

~~~
Oletros
Here it is the DOJ ruling [0]. The link comes from this blog [1]

> The iBook store didn't exist before, so Jobs had to win the publishers
> somehow, that means that all had to agree to some model that would be
> favorable to them and certainly more favorable than Amazon's.

They forced the model TO ALL the stores

[0] [http://dearauthor.com/wp-content/uploads/2013/07/Cote-
Decisi...](http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decision-on-
Price-Fixing.pdf)

[1] [http://dearauthor.com/features/industry-news/thursday-
news-j...](http://dearauthor.com/features/industry-news/thursday-news-judge-
cote-finds-apple-conspired-to-raise-prices-with-publisher-by-implementing-
agency-pricing/)

~~~
acqq
Thanks. And what about the current ones? The linked materials are from 2013.
Based on what was the 2013 ruling confirmed now? Or on previous appeals?

I'm reading the 2013 material and I can't find the "meat." OK, they establish
that Apple did propose the "agency model" which was not available to the
publishers by Amazon, that Apple did say it was ready to sell books for more
than 9.99 that was an Amazon's _fixed_ price. But how was that "making
conspiracy"?

Amazon held the market, the publishers effectively had _no choice_ before
Apple introduced their store. Apple offered something different. The
publishers were able to make new deals with Amazon. And? What was actually
wrong to do? To even mention that they were willing to sell the books for the
price that publishers liked more, even if it's higher than 9.99? Why? That is
in the document claimed as the "start of conspiracy." How is that? To design
the iBook store to have an "agency model"? Why is that not allowed? To even
meet the publishers about all that? How should it be otherwise done? What was
Apple supposed to do? Just offer what Amazon offers? Isn't that the opposite
of the any reasonable principles?

Does it mean nobody is allowed to disrupt the current model of the effective
store monopolist? That he can't sell in his store at higher prices? That he
cant have another model in his store? That he can't discuss his own model?
What?

~~~
kryptiskt
The publishers aren't allowed to coordinate on such matters, that's a cartel
of suppliers, and Apple isn't allowed to arrange such coordination between
them.

~~~
acqq
> Apple isn't allowed to arrange such coordination between them.

But they coordinated without Apple anyway, it's also in the court decision
that the executives had meetings among them before Apple even appeared on the
e-book scene:

[http://dearauthor.com/wp-content/uploads/2013/07/Cote-
Decisi...](http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decision-on-
Price-Fixing.pdf)

"On a fairly regular basis, roughly once a quarter, the CEOs of the Publishers
held dinners in the private dining rooms of New York restaurants, without
counsel or assistants present, in order to discuss the common challenges they
faced, including most prominently Amazon’s pricing policies."

Apple made the iPad, with the reading experience up to then unmatched by
anybody (no tablet with such characteristics existed before 2010), wanted to
open the e-book store, gave the publishers the offer they liked, but
definitely didn't invent that communication between the publishers.

What was Apple supposed to do, given that whatever coordination existed, it
existed even before Apple approached the publishers? Apparently not a single
publisher was satisfied with Amazon's (monopolist) terms. Of course Apple
offered them different terms.

~~~
readams
Apple was a participant in the conspiracy. The publishers all settled a long
time ago though.

~~~
acqq
How was it a participant if it just opened its store under a different model
from Amazon in order to attract the publishers? Even the model wasn't invented
by Apple:

"Hachette and later HarperCollins surprised Apple with their suggestion that,
instead of a wholesale model, Apple adopt an agency model for the distribution
of e-books."

It sounds like
[http://www.indiana.edu/~p1013447/dictionary/nomfall.htm](http://www.indiana.edu/~p1013447/dictionary/nomfall.htm)
(They "conspired" because we call them "participants.") It doesn't actually
prove anything.

~~~
KirinDave
It participated by being the definition of a participant. It designed a
marketplace around appealing to the publishers who were eager to fix prices.

A fact that the publishers decided not to contest.

~~~
acqq
As far as I see, Apple just opened their own store and was able to win the
publishers to sell there. The publishers did what they wanted to do, including
communicating among themselves even before Apple appeared, insisting on higher
prices, proposing the agency model and making their new deals with Amazon.
I've quoted all the supporting parts from the court decision in my other
posts.

I still don't see any argument under which Apple had to insist on the same
terms that Amazon had. And Apple didn't have to insist on the same terms, and
had the right to open their own store, what it actually did wrong?

Can anybody really say that Apple _had_ to say "no we won't open the store if
the prices aren't the same as at Amazon"?

Apple actually made the clause that their prices are allowed to be minimal of
all other stores. And Apple didn't have the problem to sell items even for
$0.99, that's how they started with the iTunes store years earlier.

~~~
KirinDave
It doesn't matter if the publishers were looking for a partner to fix prices
with even without Apple.

Apple was the one to provide the service, and ultimately enabled it. How can
you possibly suggest that leaves Apple blameless?

~~~
acqq
It's just the store that Apple opened, and Apple didn't fix the prices. It had
working mechanisms to sell even for $0.99, like they did with songs. It didn't
enable fixing, it just became the competition to Amazon. The publishers used
their leverage to negotiate new deals with Amazon. Until then they weren't
able, it was Amazon that was effectively a monopoly.

What was Apple supposed to do, in your opinion, as it wanted to open its
e-book store?

~~~
revelation
You probably want to read the original case material before conjectring any
further, which quotes extensively from emails at the highest levels of Apple
and participating publishers.

Start with the opening presentation:

[https://www.justice.gov/atr/case-
document/file/486701/downlo...](https://www.justice.gov/atr/case-
document/file/486701/download)

~~~
studentrob
What is it about the DOJ that makes them produce unsearchable, low-resolution
PDF documents?

I spent 5-10 minutes looking through that document and can't find anything
that makes Apple look bad. I see the publishers telling each other to "double
delete" each other's emails. That looks bad. But it isn't obvious to me that
Apple is engaging in any illegal behavior based on the email quotes in that
document.

It seems more like consumers and government were accustomed to Amazon's
pricing model, in which they sometimes take a loss. Then, when publishers
wanted to set their own prices, they sought a service that would allow them to
do that and found Apple. I'm a consumer and don't like high prices, but I can
also understand how a publisher might like to decide how to price their books.
It's beyond me why that should be deemed illegal.

<rant> If the DOJ or FBI get an increased budget I hope some of that goes
towards increasing their transparency by not only making information
available, but also making it searchable.

And why do I need to pay for C-Span transcripts? Wouldn't it be nice if we
could all read and search through what our representatives are saying? </rant>

~~~
KirinDave
The first slide after the coversheet. The deck is a narrative of illegal
activity best processed in order. It's not a dense document.

At what point will you admit Apple's wrongdoing and stop talking about the
searchability? Please have the grace to admit you were wrong in public.

Apple did this on the principle that they should have the right to collude
with the industry and increase prices to the consumer. That's what the company
did. Its partners in this process all agreed to settle. The only people who
continued to protest this characterization were at Apple. And they just lost a
massive court case over it.

I dunno what more you want.

~~~
studentrob
> At what point will you admit Apple's wrongdoing and stop talking about the
> searchability? Please have the grace to admit you were wrong in public.

Hi Kirin, I'm a different commenter with my own opinion.

Increasing transparency of government actions is something I care about. I
also believe in competitive markets.

The first slide isn't evidence showing Apple knowingly conspired to do evil,
in my opinion, and nor is the rest of the deck. _Before_ Amazon started
selling eBooks, publishers were able to sell hardcover books, i.e. new
releases, for a higher price point. Then Amazon, being the only ebook
retailer, was able to _very quickly_ undercut the publishers' in-store new-
release prices _on a global scale_ due to the nature of digital products and
their position as a monopoly in the ebook retailer market. This cost the
publishers money. Then Apple appeared as another retailer and publishers asked
Apple to give them their agency model back. And, publishers said they would
only join Apple if all the publishers would do it. Apple said okay.

Regardless of this court decision, I imagine we'll see more agency model
pricing in the future when more options open up for publishers.

It's perfectly fine if you disagree. I'm not trying to convince you. I'm just
sharing my opinion.

This case was in court for years. If it were so cut and dry as you proclaim,
the case would have been over much sooner.

~~~
KirinDave
Hi StudentRob.

I am not pointing a mind control ray at you or threatening your family. I'm
saying the evidence strongly suggests your opinion is not founded in reality.

"Evil" is not an interesting conversation here. "Legality" is another. Apple
saw an opportunity to break the Google+Amazon pricing lock on the market. They
realized this opportunity by working with publishers to beachhead a new model.
They acknowledged that this _explicitly_ raised prices for consumers, and
would only work if the publishers all used Apple as the leverage.

I know you want to say this is in favor of competition. Apple sure does. But
everyone agrees that it was _illegal._ You can't just say "Apple Happened To
Be There™." They facilitated the entire process, and it was built on the back
of their dominance in desktop computing, mobile and media reach.

And while no SINGLE slide tells that whole story in a single pithy quote, the
ENTIRE linked deck certainly tells that story. You've been given a smoking gun
and Eddy Cue's fingerprints and replied, "Gosh that sounds complex, why isn't
this easier to search?"

~~~
studentrob
Hi Kirin,

> I am not pointing a mind control ray at you or threatening your family.

That's good. It would be really strange if you were. This is an internet
conversation which I consider to be pretty casual. Most likely, only you and I
will ever read this, and whoever else reads it will stop when they find it
uninteresting.

> "Evil" is not an interesting conversation here.

That's subjective. I say it's interesting, you think it isn't. I have no
problem with that.

> You can't just say "Apple Happened To Be There™."

I gave a summary of my take on the situation. Again, I see no problem with
that.

It's hard for me to see Apple as a ring leader as the DOJ claims, or that
publishers were convinced by Apple to pursue this course. They already had
this plan together _before_ Apple came to the table. Apple was more like the
final piece to the puzzle than the ring leader. _They_ asked _Apple_ for a
proposal and told Apple the terms under which they would agree, essentially
creating the proposal themselves, yet having it come from Apple's mouth.

Perhaps it will make you feel better to know that I believe Apple ought to
have known better about the risks of appearing like the master conspirator in
this case. As I mentioned in another comment, Apple ought to have known better
about the risks, and it seems they could have launched this model, albeit
slower, without such a concerted effort.

> You've been given a smoking gun and Eddy Cue's fingerprints and replied,
> "Gosh that sounds complex, why isn't this easier to search?"

None of us are privy to all the details of this case. We get summaries, and
I'm saying they are in a lousy format, unsearchable and low resolution. It's a
side rant but relevant towards increasing transparency of our government. We
all have limited time, and making things easier to read helps everyone. If you
feel that's off topic, that's cool. My comment about the DOJ's awful document-
creation skills is not the basis of my support of Apple. However, it does
contribute to my theory that our government does not understand technology,
and that we need more representatives who have technical knowledge like Ted
Lieu.

~~~
KirinDave
Apple doesn't have to be a ring leader to be legally responsible for their
actions. I don't know why you act like that is the case, but I can see you'd
rather do anything other than admit Apple was guilty of any sort of wrongdoing
here. You will talk about literally anything other than the simple naked fact
they participated.

So please, respond as you like. But I'm filtering out your posts from now on.
You're the exact kind of person I shouldn't engage with on HN.

~~~
studentrob
> Apple doesn't have to be a ring leader to be legally responsible for their
> actions

It _does_ make a difference in the ruling and applied punishment.

The 7th circuit's decision from Toys R Us vs. FTC decision states,

 _As TRU correctly points out, the critical question here is whether
substantial evidence supported the Commission 's finding that there was a
horizontal agreement among the toy manufacturers, with TRU in the center as
the ringmaster, to boycott the warehouse clubs._ [1]

The Toys R Us ruling was referenced in the 2nd circuit court of appeals ruling
against Apple. Therefore, the above statement has bearing and Apple did need
to be perceived as the ringleader to receive the brunt of the punishment.

> So please, respond as you like. But I'm filtering out your posts from now
> on. You're the exact kind of person I shouldn't engage with on HN.

That's your choice. I think I've been cordial. Feel free to point out anywhere
I haven't been respectful. If disagreement is disrespectful to you, I don't
know how else I can help.

[1] [http://antitru.st/toys-r-us/](http://antitru.st/toys-r-us/)

------
bipin_nag
The news is fine but why drag Amazon into it?

>At Amazon headquarters, however, they're probably popping open the champagne.

>Amazon, however, is probably grinning like the Cheshire Cat.

The author is not doing justice to his job as a reporter. If you want to opine
then separate it from the facts. Amazon which has nothing to do with the
ruling gets depicted as a villain and Apple which actually is guilty doesn’t
get its share of bad words. What is worse is that he starts to paint Amazon
that way before he gives any of the details of ruling.

~~~
rjbwork
>The author is not doing justice to his job as a reporter. If you want to
opine then separate it from the facts.

Implying internet bloggers are reporters. The prestige of the journalist today
is in the toilet because the barrier to entry is essentially nil. You can just
start writing for some fly by night site and get hundreds to thousands of
readers overnight, without any basic understanding of the profession or
established practices.

~~~
baldfat
> Implying internet bloggers are reporters.

If your making a living by reporting your a reporter. Just like all other
professions you make a living at it that's your profession. To belittle that
profession if they don't have a degree or at a smaller place well that isn't
quite the same thing. This is the place where journalism lives since there are
so few non-internet reporting positions.

~~~
CapitalistCartr
Saying a blogger isn't a reporter is not belittling. Its correct. Blogging
isn't reporting, as plumbing isn't carpentry.

~~~
baldfat
> Blogging isn't reporting, as plumbing isn't carpentry

Care to qualify that with something that even makes that analogy work? Blogger
and Reporting are almost meaningless words. Some of the best reporting in
technology would also be called a blog. Mary Jo Foley is a great example and
re/code with Walt Mossberg and Kara Swisher.

------
maxxxxx
Maybe the case has merit or not but I am really tired of just imposing fines.
We have reached a point where big companies and banks can do whatever they
want and the worst thing that can happen is to pay a small portion of their
earnings. Basically they are outside the law.

~~~
gwright
IMNAL, but I think you are trying to apply criminal legal theory to a civil
situation. In this case the law dictates redress of the infraction through
restitution and not punishment.

I'm not sure I would want to live in a world where administrative regulations
were punishable through imprisonment. I think there would be some pretty
severe unintended consequences to economic activities.

Helpful definition of criminal vs. civil law:
[http://www.diffen.com/difference/Civil_Law_vs_Criminal_Law](http://www.diffen.com/difference/Civil_Law_vs_Criminal_Law)

~~~
maxxxxx
My point is that the little guy gets destroyed in the same situation whereas
the big guy gets way with it.

~~~
lmm
The little guy usually gets destroyed for doing something unambiguously
illegal that was unambiguously illegal at the time. Whereas the big guy gets a
(proportionately) small fine for... well, ultimately the court decided they
were breaking the law, but it was more a matter of making a judgement call the
wrong way.

This case may be more clear-cut, but that's generally why you see these
differences.

~~~
maxxxxx
A while ago I did some reading about lawsuits against pharmaceutical companies
that promoted unapproved uses of their drugs. There is a very good book about
epo. According to that reading the main reason is they get small fines is that
the government doesn't have the budget to go after big companies. They simply
can't afford it and take what they can get.

~~~
lmm
You won't find any clear bright line violations there though. Doctors can
prescribe drugs off-label. Pharmaceutical reps can talk about what other
doctors have done, they just can't promote off-label uses. It's very much the
kind of judgement call I was talking about.

------
gdilla
Apple is actually innocent here. What Apple wanted was the dinosaur publishing
industry to adopt the agency model for pricing ebooks. The publisher sets the
price, and revenue is split 70/30\. This was the model for all digital goods
on iTunes for the previous decade. The publishing industry had always been a
wholesale model. They set the 'list' price on the book jacket, and the
retailer would 'discount' it to the consumer. The retailer would pay the
publisher the wholesale price, which was about 50% of list. Amazon loved the
wholesale model because they compete on price.

Amazon, at the time, was trying to create an expectation for consumers that
all ebooks were $9.99. What the consumer didn't know was that Amazon was
taking a loss on each ebook. Amazon was able to get publishers on board with
their plan by paying the 'list' price on an ebook, and turning around and
selling it for a loss at 9.99. Amazon's long play was 1) creating a market for
ebooks in a price band they thought was attractive and 2) forcing the
publishers to capitulate later when they had more leverage. Amazon never
wanted agency pricing since they would lose their competitiveness if it ever
came to bare.

But Apple was successful - it eventually got publishers to adopt agency
pricing, and that also meant Amazon ebooks had to adopt agency pricing (if
you're setting the price, you can't give one outlet a better price). Amazon
hated this development and championed this price fixing suit as a result.

If you ever wondered why physical books are priced less than ebooks at times,
this is why. Agency pricing.

~~~
jsight
> Apple is actually innocent here.

Ok, I get that they were going up against a monopolist who appears to be
dumping. In what world does responding to that by building a cartel of
suppliers engaging in monopolistic behavior to raise the pricing above the
price of physical books and fix the pricing across all retailers turn into
"innocence"?

We as consumers are worse off for what Apple did here.

~~~
gdilla
I'm not so sure that ever came to pass. I think all Jobs was saying is, if you
don't adopt agency pricing, the value of your goods will be artificially low.
If you adopt agency pricing, you can keep it high (that is, the same as
physical).

------
Arzh
Well if Apple felt that Amazon was acting as a monopoly, and unfairly blocking
them from entering the market with low prices why did they not request an
investigation from the FTC instead of doing something they knew was illegal?

~~~
tyre
For the same reason Uber did not try to fight taxi regulation in every local
municipality instead of doing what they knew to be illegal.

Litigation takes a really long time. By the time you win, you've lost.

Jobs wanted to launch iBooks _right now_ and was willing to cut corners to get
what he wanted.

~~~
sangnoir
I wish we could create a "Galt's Gulch" and quarantine all the toxic
individuals/entities who believe that the rules don't apply to them. They
would be free to "cut corners" and "win" to their hearts content only amongst
themselves.

~~~
andyfleming
Sometimes innovation requires breaking rules. Uber wouldn't have had the
success it's had if it had gone through "proper" channels. While it made them
successful, I'd argue that it also benefited consumers.

~~~
saalweachter
"It also benefited consumers" is not a get out of jail free card.

If I break into warehouses, steal merchandise by the truckload, and sell it at
a tenth the price, that also benefits my consumers.

~~~
icebraining
Who says it should be a "get out of jail free card"?

I think that's a good approach: someone _openly_ breaks a rule that they think
is unfair and/or outdated, and then society can decide whether to re-evaluate
the rule or fine them (even into bankruptcy, if they're a company).

------
seanp2k2
450 mil for this but 1.3 for Verizon super cookies, and Verizon doesn't even
have to stop doing it. I guess Apple should hire better lobbyists.

~~~
madaxe_again
They _did_ just embarrass and piss off the federal government - $449M of this
along with "no appeals sorry" probably sits under the heading "revenge".

~~~
Sanddancer
The supreme court is rather independent of the executive branch and of law
enforcement. Furthermore, this was an appeal of an appellate court's ruling
that occurred last year. Keep in mind that the Supreme Court primarily
concerns itself with cases that potentially set or clarify precedence. As they
didn't feel that any new legal ground would be made here, they didn't take the
case.

------
programminggeek
Notice how authors get lost in this? Apple + 5 major publishers vs. Amazon.
What a joke.

As an author it's a great time to self publish and make it work on your own,
but I find it absurd that ANY of those companies would attempt to dictate the
price of books.

P.S. You can read my book about creative work for free here:
[http://brianknapp.me/books/creative-
pursuit/](http://brianknapp.me/books/creative-pursuit/) I talk about the
importance of Self Publishing in Chapter Four.

------
legulere
Meanwhile in most of Europe we have (e-)book price fixing by law:
[https://en.wikipedia.org/wiki/Fixed_book_price_agreement](https://en.wikipedia.org/wiki/Fixed_book_price_agreement)

------
xchaotic
Can you correct me if I'm wrong but now Apple can repatriate some of it
massive overseas cash hoard and offset it against the $450M fine without
attracting any tax on it as it is a loss. technically their balance books will
be $450M worse off but they wouldn't have been able to use that money anyway
without attracting a high tax on it. is that correct?

~~~
delinka
I'm pretty certain they're taxed on the money simply because it crosses a
border. It's not treated as revenue which can be offset by expenses.

------
univalent
They probably have this in petty cash. What use is a fine of this amount? It
is like fining a football player 1500 for an illegal hit.

------
runholm
[statement from Apple:] Apple did not conspire to fix e-book pricing and this
ruling does nothing to change the facts

Isn't that exactly what a court ruling does. It settles what really happened.

------
donatj
Can I get an honest explanation of why what they did was "bad"? They set the
price of products they sell in conjunction with the publishers?

Isn't that what every major seller of goods does? I watched a documentary on
Wal-Mart a while back where they were working with Chinese DVD player mfgs to
get the price Wal-Mart wanted.

I genuinely don't understand the harm of their actions, and would be thrilled
if someone could explain?

~~~
prasadjoglekar
Short answer: Publishers were too weak individually to challenge Amazon's
ebook business model (the wholesale version). If all the publishers colluded
to stop selling to Amazon, that would be a violation of the anti-trust act.
Apple comes along and writes contracts with each publisher such that in
aggregate the contracts provide the cover to do exactly what the publishers
could not do on their own.

The harm in the short term was to Amazon - under threat of being cut off by
every publisher, it would have forced Amazon to move to a different model of
pricing. The follow on effect would be to raise prices for all consumers.

------
scottfits
The eBook fixing collusion is so obvious. I remember when eBooks where $4
because it makes sense -- no printing, no shipping, that's what it should
cost. Now it's $16.99 for some eBook, and I think it's a disgrace because
authors and customers get screwed with the rigged pricing.

~~~
Retra
You're not paying for shipping and printing, you're paying for writing. If you
want a shipment of bound, blank pages, you can get that for $4 any time.

~~~
flavor8
Uh, no. You're paying for middlemen (printing, marketing, big publishing, etc)
. Authors typically take 10 to 15%, either of royalties or net profit.

~~~
Retra
I've never paid for a printed ebook.

~~~
flavor8
Well no shit. You were arguing that the significant portion of the cost of
physical books is the writing. It's not.

~~~
Retra
No, I was arguing that one should not expect ebooks should not be massively
cheaper than paper books just because they aren't printed. There's still a lot
to pay for.

------
WalterBright
I find the modern view of monopoly peculiar:

"the market for retail distribution of electronic books ... was essentially a
monopoly, with Amazon.com ... controlling 90% of e-book sales. Amazon sold
many of the most popular e-books at a loss, making it difficult for other
retailers to enter the e-book market as they 'would run the risk of losing
money if [they] tried."

along with the 1999 conviction of Microsoft being a monopoly in part because
they gave away Explorer.

A monopoly is historically identified with having a higher than market price,
not a lower.

~~~
tyre
> A monopoly is historically identified with having a higher than market
> price, not a lower.

This is not the definition of a monopoly.

What Apple (and Amazon) are being accused of is predatory pricing to root out
competition. Monopolies are not bad because they raise prices. Over the long-
run, the _tend to_ do so, but raising prices itself is not "bad."

Monopolies are prosecuted when they use their position to discourage
competition, which stifles innovation. That's what Apple is in trouble for, by
lowering prices such that less-funded incumbents cannot enter the market.
That's what $MSFT was in trouble for with IE. Yes, they gave away a browser
for free, but in the process abused their power as distributor of Windows to
corner another market. No company could reasonably compete with a pre-
installed browser, meaning $MSFT would be discouraged from innovating.

In some instances, monopolies are a natural conclusion of free-market
dynamics. Centralizing production into one entity maximizes possible economies
of scale (ain't no scale like 100%!) Most government programs are based on
this principle. The assumption is the NASA, bringing together the financial
and technical capabilities of the entire United States, has the best
opportunity to advance aeronautic engineering.

In other instances, monopolies use their position to prevent competition.
These are the bad guys and gals. Think Standard Oil or the old AT&T.
Sometimes, multiple independent companies will collude to form a cartel and
abuse their collective market power. Airlines do this by raising ticket prices
together, despite no external force (like higher taxes, union wages, or oil
prices.)

NASA is a great example of a monopoly that does not abuse its position. It
actively encourages competitors (e.g. SpaceX) by granting the contracts.

EDIT: Replaced incorrect usage of "market power" with "predatory pricing".
Thank you @baddox and @chipotle_coyote for the corrections.

~~~
mcphage
> Monopolies are prosecuted when they use their position to discourage
> competition, which stifles innovation. That's what Apple is in trouble for,
> by price gouging here.

Has that helped competition at all? It seems like before Apple's foray, Amazon
owned the eBook market, and now... Amazon owns the eBook market. I don't
really see how competition could have gotten worse, and after Apple's legal
failures it hasn't gotten any better.

~~~
fpgeek
I'd say it is even worse than that. The years of strict agency pricing trained
people to not even bother looking at competing ebookstores, entrenching
Amazon's dominance.

~~~
mcphage
> years of strict agency pricing

You mean the years of strict wholesale pricing?

~~~
fpgeek
No, I mean 2010-2013 when agency pricing made shopping across ebookstores a
waste of time.

------
Johnnybe
Price fixing. Salary fixing. H1B fixing. Fuck you Apple.

------
bladerunner82
Mere beer money...

~~~
sangnoir
Why does that sound so much like a kid saying "That didn't hurt" while
furiously rubbing the punched arm?

Apple cared enough to try and appeal the case to the highest possible level
(SCOTUS). To paraphrase a commenter on Ars Technica: $500,000,000 is a _lot_
of iPads/MacBooks sold. All down the drain due to anti-consumer shenanigans.

~~~
Qwertious
Apple would appeal a $1,000,000 court case until and unless they expected to
lose more money by fighting it than by just paying the fine. And essentially,
$500mil is more than enough money for keeping on some lawyers for half a
decade.

Still, it's worth comparing to how much money they make. So, a half-billion
fine once in the last few years, and they made $18billion this quarter:

[http://moneymorning.com/2016/01/26/q1-apple-
earnings-2016/](http://moneymorning.com/2016/01/26/q1-apple-earnings-2016/)

I honestly don't see Apple being seriously hurt by this.

~~~
sangnoir
Apple partisans act as if the money is coming from Apple's petty-cash drawer.
My point is somewhat similar to your: in that they would do anything not to
pay the half a million dollars.

Comparing to the numbers in their last FY (Oct '15), the settlement is 0.94%
of their annual _profit_. I too wouldn't be "hurt" by a 1% fine of my net
annual income, but I'd rather put it to better use.

------
idibidiart
Retribution for standing up to the tyranny?

------
cm2187
When I think of how much shit a bank would get for a headline like that...

------
whitegrape
Cool, nearly half a billion in repatriated money that won't be shuffled to
offshore accounts...

------
vonklaus
Makes sense. Apple gets sued for charging more than a retailer that owned 90%
of the market in an Anti-Trust case and is fined $450 million.

Verizon is a common carrier that manipulated the traffic in the service it
provides from its government granted monopoly for 4 years and is fined 1.350M.

This is why people vote donald trump. It is the voting equivalent of YOLO.
It's basically the civic equivalent of a weapon, and proving the point that he
can get elected may draw into stark contrast that we might need to make a few
tweaks here in there with how we operate going forward.

~~~
andrewvc
So, you're saying that since there are major issues with the current system
the best idea is just to burn it to the ground by electing a reckless maniac?
That's just a way to make sure everyone is equally screwed.

~~~
jessaustin
Historians centuries from now will never understand how the famous and wealthy
scion of one of the wealthiest families in the most famous and wealthy city in
the world was ever perceived to be a "reckless maniac" outsider. This guy is
as inside as inside gets. His entire public persona is a calculated pose. He
was recorded saying that he would develop such a persona, were he ever to
deign to run for office. A vote for Trump is the opposite of a vote to burn
down anything, no matter what the rubes think.

If, as seems more and more likely, Trump is elected, I guarantee the
following: no "border wall" will be built, the TPP and TTIP will _both_ be
ramrodded through, and the "1%" will get even more "1%" than they already are.

~~~
archgoon
> He was recorded saying that he would develop such a persona, were he ever to
> deign to run for office.

Source? There's a quote about him claiming that he'd "run as a republican,
since they're the dumbest voters in the country." but that quote has been
debunked.

[http://www.snopes.com/1998-trump-people-
quote/](http://www.snopes.com/1998-trump-people-quote/)

