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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

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...
stale2002 11y ago
Price dumping is good, not bad. The whole reason why competition is good, is because it lowers prices. The only "reason" why temporary price dumping is bad, is if it is being done for the purpose of raising the price in the future. But I don't think that was what was happening in this situation. Amazon wins by having prices as low as possible, and beating everyone else at the cost cutting game. This is awesome for consumers as it means low prices. The only thing that matters in monopoly/price fixing situations is what is good for consumers. Company welfare doesn't even enter into the equation.
- vonklaus 11y ago
  > The only "reason" why temporary price dumping is bad, is if it is being done for the purpose of raising the price in the future. > Amazon wins by having prices as low as possible, and beating everyone else at the cost cutting game. Amazon wins by dumping, making it very unattractive and then keeping prices low/stabile but using its bargaining power and unchallenged distriubution network to negotiate lower prices than competitorsm, thus it does higher volume, pays less and controls distribution. This is not good for competition, because there is little keeping them in check. So I think those ideas are "somewhat" at odds. Price dumping is often embargoed (thou difficult to detect) because short term it is good for the consumer, but bad for the competition. The idea is that you gain control and then you can use that to either keep market share or to raise prices. largely, dumping is unpredictable. It can backfire, thus great for the market, a competitor goes down and subsidizes many consumers with goods. Or it can buy repreive, in that short term they recover the losses but competitionb moves in, or they can get in at the beginning of a trend and prevent others from getting in. China did this with solar panels for a while and effectively subsidized solar for the world. It is "good" for someone most of the time, it is usually unclear who. In a scenario where the person dumping also owns most of the distribution of goods and the infrastructure running most applications, local delivery networks, and content distribution networks like streasming video, music and devices to consume biooks and other media, it isn't great. This goes for apple and amazon.

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...

stale2002 11y ago

Price dumping is good, not bad. The whole reason why competition is good, is because it lowers prices. The only "reason" why temporary price dumping is bad, is if it is being done for the purpose of raising the price in the future. But I don't think that was what was happening in this situation. Amazon wins by having prices as low as possible, and beating everyone else at the cost cutting game. This is awesome for consumers as it means low prices. The only thing that matters in monopoly/price fixing situations is what is good for consumers. Company welfare doesn't even enter into the equation.

vonklaus 11y ago
> The only "reason" why temporary price dumping is bad, is if it is being done for the purpose of raising the price in the future. > Amazon wins by having prices as low as possible, and beating everyone else at the cost cutting game. Amazon wins by dumping, making it very unattractive and then keeping prices low/stabile but using its bargaining power and unchallenged distriubution network to negotiate lower prices than competitorsm, thus it does higher volume, pays less and controls distribution. This is not good for competition, because there is little keeping them in check. So I think those ideas are "somewhat" at odds. Price dumping is often embargoed (thou difficult to detect) because short term it is good for the consumer, but bad for the competition. The idea is that you gain control and then you can use that to either keep market share or to raise prices. largely, dumping is unpredictable. It can backfire, thus great for the market, a competitor goes down and subsidizes many consumers with goods. Or it can buy repreive, in that short term they recover the losses but competitionb moves in, or they can get in at the beginning of a trend and prevent others from getting in. China did this with solar panels for a while and effectively subsidized solar for the world. It is "good" for someone most of the time, it is usually unclear who. In a scenario where the person dumping also owns most of the distribution of goods and the infrastructure running most applications, local delivery networks, and content distribution networks like streasming video, music and devices to consume biooks and other media, it isn't great. This goes for apple and amazon.