5 ms·

You left out the little bit about Apple and the publishers, who, as Adam Smith put it in The Wealth of Nations in 1776: "People of the same trade seldom meet to

by hga 11y ago

You left out the little bit about Apple and the publishers, who, as Adam Smith put it in The Wealth of Nations in 1776: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

enlightenedfool 11y ago
He defined capitalism.
- hga 11y ago
  Such conspiracies are not even remotely confined to capitalist systems, this is a problem with human nature that no system is capable of fixing.
vonklaus 11y ago
This makes limited sense. While Apple did fix prices, 90% of control of the market of a highly elastic good was controlled by a single entity engaged in dumping, which drove out all other competition. If Adam Smith believed in supply and demand (he did, he wrote the book on it) I think it would be hard to argue that responding to a monopoly with 90% distribution of a good with a price increase would make much sense. Even if we assume that it was only with many big publishers, for a subset of books, and that Barnes and Noble and Borders didn't exist and compete. I would be interested to know if they even made that much in profit. If I could buy a car at 9 out of 10 places I go for $5000, why the fuck would I seek out the one place selling an identical car for $5300? If by chance I didn't shop around, it is likely that I am not motivated by price, and thus descrimination here has a negligible effect. Now that all small book retailers and Borders Books have gone out of business, and Barnes and Noble is quite close we can look back with 100% certainty and say Apple's anti-competitive tactics of meeting a supply flood with increased pricing was the linchpin in their demise. As we know from history, people will hunt for a bad deal, and ruthlessly work against their own self interest even with significant friction.
- Oletros 11y ago
  > 90% of control of the market of a highly elastic good was controlled by a single entity engaged in dumping Do you have a source for that accusation of dumping? To my knowledge, the ebook division was profitable. > If I could buy a car at 9 out of 10 places I go for $5000, why the fuck would I seek out the one place selling an identical car for $5300? There was no place to buy the car for $5000
  - vonklaus 11y ago
    Source: https://news.ycombinator.com/item?id=11240961 https://news.ycombinator.com/item?id=11240961 edit: just to be clear, that is a link to this thread, which references the article we are discussing. That article includes a link to the amicus brief filed on Apples behalf from the publishers making that exact claim to the Supreme Court.
    - Oletros 11y ago
      Are you saying that your proof that Amazon was doing predatory pricing is an Amicus Brief supporting Apple where the publishers that were accused with apple make the claim? It is a joke, isn't?
      - vonklaus 11y ago
        I was claiming you didn't read the bloody article mate. I am not trying to be rude, but if a sworn statement by the people selling books[0], who have the receipts, to the highest court in the land doesn't convince you Amazon itself stated similar numbers on the record. Amazon head of kindle saying apple is overstating market share, we have at least 70-80 percent, "[apple's] math doesn't add up", in the cnet article Amazon; We have 70-80 percent of the e-book market"[1] Crediit Suisse also released a famous report with the 90% figure, which was discussed by the wallstreet journal[2]. The daily finance also stated that figure citing interviews as well as the CS report. I was just having a bit of a laugh at the absurdity of charging them with anti-competitive tactics, when in fact they introduced competition in a welkl agreed upon narrative that is quite literally the definition of a monopoly. It can also be evidenced buy the fact that, they engaged heavily in dumping and while not 100% proveable, the booksellers were aware of their price structure. Knowing that dumping, being charachterized by an outsized market actor selling significant capacity below market value to drive competition out of business, we can retroactively assume with some confidence that booksellers claims of dumping, followed by a steep price reduction and numerous inbdustry actors going out of business could be a decent heuristic to assdume they are correct. Once again, my point isn't whether Apple was right or wrong, but that it is difficult to assume a rational body would conclude given this information, that Apple had inflicted 450M worth of damage, and also ignore the tight concentration of supply Amazon was allowed to control. The second point I will now make, which I make here daily now, is that these dynamics are dangerous and we need to be careful about reliance on a single entity as it can be damaging. It is unpredicatable how the laws are enforced, granting a monopoly to one company who uses it to upsell ads and tracking software and fining them under 1/10th of the CEOs annual pay for a 4 year offense, and the implication that a player with 3/4ths of the market control(likely more by their own admission) was allowed to manipulate prices while 2 companies buying and selling goods, negotiated the price they were willing to sell to the market, were served a 450m fine for anti competitive dealings. I am very concerned about how things are playing out. And I hope others are as well. edit: further youyr original posit: >"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." I wanted to point out that while if we assume Smith to be correct here, it is irrelevent. You seem to raise the point that 2 people of the same industry meeting to discuss business is bad for competition. However, Apple a buyer/market maker meeting with suppliers is what one would expect, as that is how markets work. Maybe they were nefarious, but meeting with buyers and negotiating the terms of a new platform and price structure seem fairly in line with what I would expect to find in the economy. If the publishers themselves all met in secret and withheld supply then I don't see how, even if complicit, it would solely fall on apple & if they did in fact do that, Amazon had secured the rights, so Apple would actually be worse off having colluded & agreed to a higher price, while a market leading competitor enjoyed a better rate. [0]http://www.scotusblog.com/wp-content/uploads/2015/12/No-15-565-Amicus-Brief-with-Stamp.pdf http://www.scotusblog.com/wp-content/uploads/2015/12/No-15-5... [1]http://www.cnet.com/news/amazon-we-have-70-80-percent-of-e-book-market/ http://www.cnet.com/news/amazon-we-have-70-80-percent-of-e-b... [2]http://blogs.wsj.com/marketbeat/2010/02/16/analyst-amazon-e-book-share-to-fall-from-90-to-35/\ http://blogs.wsj.com/marketbeat/2010/02/16/analyst-amazon-e-... [3]http://www.dailyfinance.com/2010/02/17/amazons-e-book-market-share-may-plummet-great-news-for-amazon/ http://www.dailyfinance.com/2010/02/17/amazons-e-book-market...

by hga 11y ago

enlightenedfool 11y ago

He defined capitalism.

hga 11y ago
Such conspiracies are not even remotely confined to capitalist systems, this is a problem with human nature that no system is capable of fixing.

vonklaus 11y ago

This makes limited sense. While Apple did fix prices, 90% of control of the market of a highly elastic good was controlled by a single entity engaged in dumping, which drove out all other competition. If Adam Smith believed in supply and demand (he did, he wrote the book on it) I think it would be hard to argue that responding to a monopoly with 90% distribution of a good with a price increase would make much sense. Even if we assume that it was only with many big publishers, for a subset of books, and that Barnes and Noble and Borders didn't exist and compete. I would be interested to know if they even made that much in profit. If I could buy a car at 9 out of 10 places I go for $5000, why the fuck would I seek out the one place selling an identical car for $5300? If by chance I didn't shop around, it is likely that I am not motivated by price, and thus descrimination here has a negligible effect. Now that all small book retailers and Borders Books have gone out of business, and Barnes and Noble is quite close we can look back with 100% certainty and say Apple's anti-competitive tactics of meeting a supply flood with increased pricing was the linchpin in their demise. As we know from history, people will hunt for a bad deal, and ruthlessly work against their own self interest even with significant friction.

Oletros 11y ago
> 90% of control of the market of a highly elastic good was controlled by a single entity engaged in dumping Do you have a source for that accusation of dumping? To my knowledge, the ebook division was profitable. > If I could buy a car at 9 out of 10 places I go for $5000, why the fuck would I seek out the one place selling an identical car for $5300? There was no place to buy the car for $5000
- vonklaus 11y ago
  Source: https://news.ycombinator.com/item?id=11240961 https://news.ycombinator.com/item?id=11240961 edit: just to be clear, that is a link to this thread, which references the article we are discussing. That article includes a link to the amicus brief filed on Apples behalf from the publishers making that exact claim to the Supreme Court.
  - Oletros 11y ago
    Are you saying that your proof that Amazon was doing predatory pricing is an Amicus Brief supporting Apple where the publishers that were accused with apple make the claim? It is a joke, isn't?
    - vonklaus 11y ago
      I was claiming you didn't read the bloody article mate. I am not trying to be rude, but if a sworn statement by the people selling books[0], who have the receipts, to the highest court in the land doesn't convince you Amazon itself stated similar numbers on the record. Amazon head of kindle saying apple is overstating market share, we have at least 70-80 percent, "[apple's] math doesn't add up", in the cnet article Amazon; We have 70-80 percent of the e-book market"[1] Crediit Suisse also released a famous report with the 90% figure, which was discussed by the wallstreet journal[2]. The daily finance also stated that figure citing interviews as well as the CS report. I was just having a bit of a laugh at the absurdity of charging them with anti-competitive tactics, when in fact they introduced competition in a welkl agreed upon narrative that is quite literally the definition of a monopoly. It can also be evidenced buy the fact that, they engaged heavily in dumping and while not 100% proveable, the booksellers were aware of their price structure. Knowing that dumping, being charachterized by an outsized market actor selling significant capacity below market value to drive competition out of business, we can retroactively assume with some confidence that booksellers claims of dumping, followed by a steep price reduction and numerous inbdustry actors going out of business could be a decent heuristic to assdume they are correct. Once again, my point isn't whether Apple was right or wrong, but that it is difficult to assume a rational body would conclude given this information, that Apple had inflicted 450M worth of damage, and also ignore the tight concentration of supply Amazon was allowed to control. The second point I will now make, which I make here daily now, is that these dynamics are dangerous and we need to be careful about reliance on a single entity as it can be damaging. It is unpredicatable how the laws are enforced, granting a monopoly to one company who uses it to upsell ads and tracking software and fining them under 1/10th of the CEOs annual pay for a 4 year offense, and the implication that a player with 3/4ths of the market control(likely more by their own admission) was allowed to manipulate prices while 2 companies buying and selling goods, negotiated the price they were willing to sell to the market, were served a 450m fine for anti competitive dealings. I am very concerned about how things are playing out. And I hope others are as well. edit: further youyr original posit: >"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." I wanted to point out that while if we assume Smith to be correct here, it is irrelevent. You seem to raise the point that 2 people of the same industry meeting to discuss business is bad for competition. However, Apple a buyer/market maker meeting with suppliers is what one would expect, as that is how markets work. Maybe they were nefarious, but meeting with buyers and negotiating the terms of a new platform and price structure seem fairly in line with what I would expect to find in the economy. If the publishers themselves all met in secret and withheld supply then I don't see how, even if complicit, it would solely fall on apple & if they did in fact do that, Amazon had secured the rights, so Apple would actually be worse off having colluded & agreed to a higher price, while a market leading competitor enjoyed a better rate. [0]http://www.scotusblog.com/wp-content/uploads/2015/12/No-15-565-Amicus-Brief-with-Stamp.pdf http://www.scotusblog.com/wp-content/uploads/2015/12/No-15-5... [1]http://www.cnet.com/news/amazon-we-have-70-80-percent-of-e-book-market/ http://www.cnet.com/news/amazon-we-have-70-80-percent-of-e-b... [2]http://blogs.wsj.com/marketbeat/2010/02/16/analyst-amazon-e-book-share-to-fall-from-90-to-35/\ http://blogs.wsj.com/marketbeat/2010/02/16/analyst-amazon-e-... [3]http://www.dailyfinance.com/2010/02/17/amazons-e-book-market-share-may-plummet-great-news-for-amazon/ http://www.dailyfinance.com/2010/02/17/amazons-e-book-market...