10 ms·

> Apple didn't work with competitors to fix prices for consumers No, they worked with publishers to fix the prices for consumers

by Oletros 11y ago

andrewstuart2 11y ago
Right, they didn't have to work directly with their competitors; they went above their heads.
acqq 11y ago
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 11y ago
  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-Decision-on-Price-Fixing.pdf http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decisi... [1] http://dearauthor.com/features/industry-news/thursday-news-judge-cote-finds-apple-conspired-to-raise-prices-with-publisher-by-implementing-agency-pricing/ http://dearauthor.com/features/industry-news/thursday-news-j...
  - tehwebguy 11y ago
    > They forced the model TO ALL the stores So far nothing has explained to me how Apple forced the pricing model upstream to Amazon - has anyone read this and determined that?
    - dilemma 11y ago
      The agency model has something called "most favored nation" which forces the same retail price on all channels and retailers.
      - acqq 11y ago
        So is opening the store based on an agency model illegal? Is illegal being willing to sell the stuff in the own store for a higher price? By which laws? What was the actual illegal step in the process of opening their new store that Apple have made? Why shouldn't they be able to offer a different deal to the publishers than what Amazon have offered? > The agency model has something called "most favored nation" "Most Favored Nation" clause, as stated in the court document: http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decision-on-Price-Fixing.pdf http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decisi... "The MFN guaranteed that the e-books in Apple’s e-bookstore would be sold for the lowest retail price available in the marketplace." Why shouldn't be Apple able to propose that in its contract? It's on publishers to accept it or not. It was obviously the opposite of "raising prices" it was a protection for the Apple book store to remain competitive. Why should Apple be responsible for what the publishers do with their own contracts to Amazon once the Apple's store opens? Of course the existence of Apple's store changes the market conditions, and why shouldn't it?
        dilemma 11y ago
        Apple set a specific price ($16.99 or so) for iBooks, then used MFN to make sure that that was the "lowest" price, effectively increasing prices elsewhere from say $9.99 to the same $16.99. That is, they fixes the price at a higher level than before.
        acqq 11y ago
        Weren't the publishers those that set the price? Apple just agreed not to insist on low prices like Amazon (it's in the court decision). As far as I understand, the publishers weren't able to increase the prices by Amazon until they renegotiated their deals with Amazon. Why should Apple be guilty that the publishers made new, what they saw as better for them deals with Amazon once the Apple's store opened? It's the Amazon that got the competition at that moment, not that Apple behaved anti-competitive. Amazon effectively haven't had any competition before. Once it had, the publishers wee able to renegotiate.
  - acqq 11y ago
    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 11y ago
      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 11y ago
        > 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-Decision-on-Price-Fixing.pdf http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decisi... "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.
- fpgeek 11y ago
  Try reading this: http://www.drinkerbiddle.com/files/ftpupload/PORTAL/Kunz_Article_Final_Nov_2013.pdf http://www.drinkerbiddle.com/files/ftpupload/PORTAL/Kunz_Art... This is an article the legal reasoning behind why the iBookstore MFN clause was an antitrust violation - it was designed to impose financial penalties on publishers that did not get all of their retailers to switch to an agency pricing model. This is similar to an earlier case about Toys 'R Us. They got a group of toy manufacturers to agree to restrict their toy sales to warehouse clubs, so long all the manufactures in the group agreed to do so.
  - acqq 11y ago
    So they really claim that Apple's sin was that they put in the contract MFN in the form "if the price is lower is some other store it can be that low in our store too." Strange. Edit: "the use of a unique "most favored nation" (MFN) clause. Under the DOJ's reading of the Seventh Circuit's Toys "R" Us decision, the DOJ argued that this was a per se violation of Section 1 of the Sherman Act."
    - Oletros 11y ago
      No, this is not what is claimed
- muddi900 11y ago
  The publishers settled. They admitted guilt. Collusion happened. Beyind that, Apple's practices extended to iOS. All ebook vendors from then on had to take 30% cut of whatever price the publisher. Then apple forced all vendors trying to sell their wares on iOS to only sell through their merchant interface, with no price disparity allowed. And what is Apple's cut? 30%. So any vendir trying to sell ebooks on iOS had to relinquish all their margins to Apple, pretty much locking all vendors out of the sales point. Amazon is the only one that benefitted from this, ironically, since they were well established and did not need iOS sales to survive. All other competitors just withered away.
  - sambe 11y ago
    Didn't they settle and /not/ admit guilt? That's often one of the reasons to settle.
    - acqq 11y ago
      And the settlement of the publishers also doesn't incriminate Apple, IMHO. It was documented that the publishers communicated between themselves even before Apple appeared.
      - muddi900 11y ago
        Not all conspiracies are enacted by secret cabals. Apple may have joined later, but three levels of federal court, plus settlement in a civil suit, have now shown us they were in fact guilty of conspiring.
    - muddi900 11y ago
      I can't seem to find the terms of the settlement anywhere but they did pay the punitive settlement. If you believe you are innocent you fight, which is what Apple did. These circular arguments only exist because the culprit in the case is Apple. Apple tried to fix prices by colluding with a cartel of book publishers instead compete in a free market. They have been found guilty of this by one court, the decision has been upheld by another court and the Supreme Court has rejected there appeal. It then used its market power to force all competitors off iOS. They literally killed the ebook market.
- mattlutze 11y ago
  The publishers were all connected through Apple and agreed to charge a normalized price for all their eBooks, and inflating that price across the board. Remember, eBooks were first as expensive as normal books, then a lot cheaper, then suddenly expensive again. Competing suppliers agreeing on anti-competitive acts is what collusion is.
  - acqq 11y ago
    > Competing suppliers agreeing on anti-competitive acts is what collusion is. Anti-competitive to whom? To Amazon, the owner of the only e-book store who actually forced the publishers to the prices they didn't like? And how it affected Amazon? It lost the monopoly and the upper hand.
    - Oletros 11y ago
      > Anti-competitive to whom? To the costumers as the DOJ said. Please, if you don't want to read what the case is about, stop posting. You're your repeating the same things again and again. And they are wrong.
    - kalleboo 11y ago
      In that case, file an antitrust suit against Amazon. Two wrongs don't make a right.
    - mattlutze 11y ago
      http://dictionary.law.com/Default.aspx?selected=232 http://dictionary.law.com/Default.aspx?selected=232 https://www.law.cornell.edu/wex/collusion https://www.law.cornell.edu/wex/collusion https://www.law.cornell.edu/wex/collusive_bidding https://www.law.cornell.edu/wex/collusive_bidding https://www.ftc.gov/enforcement/anticompetitive-practices https://www.ftc.gov/enforcement/anticompetitive-practices https://www.accc.gov.au/business/anti-competitive-behaviour https://www.accc.gov.au/business/anti-competitive-behaviour The suppliers agreed to perform mutually beneficial acts, with Apple as a mediator and facilitator (see the emails and meetings referenced in this HN thread), which systematically reduced competition between the suppliers in the eBook market. It's quite plain, which is why Apple has been required to pay $450M in damages.

> Apple didn't work with competitors to fix prices for consumers No, they worked with publishers to fix the prices for consumers

by Oletros 11y ago

> Apple didn't work with competitors to fix prices for consumers No, they worked with publishers to fix the prices for consumers

andrewstuart2 11y ago

Right, they didn't have to work directly with their competitors; they went above their heads.

acqq 11y ago

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 11y ago
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-Decision-on-Price-Fixing.pdf http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decisi... [1] http://dearauthor.com/features/industry-news/thursday-news-judge-cote-finds-apple-conspired-to-raise-prices-with-publisher-by-implementing-agency-pricing/ http://dearauthor.com/features/industry-news/thursday-news-j...
- tehwebguy 11y ago
  > They forced the model TO ALL the stores So far nothing has explained to me how Apple forced the pricing model upstream to Amazon - has anyone read this and determined that?
  - dilemma 11y ago
    The agency model has something called "most favored nation" which forces the same retail price on all channels and retailers.
    - acqq 11y ago
      So is opening the store based on an agency model illegal? Is illegal being willing to sell the stuff in the own store for a higher price? By which laws? What was the actual illegal step in the process of opening their new store that Apple have made? Why shouldn't they be able to offer a different deal to the publishers than what Amazon have offered? > The agency model has something called "most favored nation" "Most Favored Nation" clause, as stated in the court document: http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decision-on-Price-Fixing.pdf http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decisi... "The MFN guaranteed that the e-books in Apple’s e-bookstore would be sold for the lowest retail price available in the marketplace." Why shouldn't be Apple able to propose that in its contract? It's on publishers to accept it or not. It was obviously the opposite of "raising prices" it was a protection for the Apple book store to remain competitive. Why should Apple be responsible for what the publishers do with their own contracts to Amazon once the Apple's store opens? Of course the existence of Apple's store changes the market conditions, and why shouldn't it?
      - dilemma 11y ago
        Apple set a specific price ($16.99 or so) for iBooks, then used MFN to make sure that that was the "lowest" price, effectively increasing prices elsewhere from say $9.99 to the same $16.99. That is, they fixes the price at a higher level than before.
        acqq 11y ago
        Weren't the publishers those that set the price? Apple just agreed not to insist on low prices like Amazon (it's in the court decision). As far as I understand, the publishers weren't able to increase the prices by Amazon until they renegotiated their deals with Amazon. Why should Apple be guilty that the publishers made new, what they saw as better for them deals with Amazon once the Apple's store opened? It's the Amazon that got the competition at that moment, not that Apple behaved anti-competitive. Amazon effectively haven't had any competition before. Once it had, the publishers wee able to renegotiate.
- acqq 11y ago
  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 11y ago
    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 11y ago
      > 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-Decision-on-Price-Fixing.pdf http://dearauthor.com/wp-content/uploads/2013/07/Cote-Decisi... "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.
fpgeek 11y ago
Try reading this: http://www.drinkerbiddle.com/files/ftpupload/PORTAL/Kunz_Article_Final_Nov_2013.pdf http://www.drinkerbiddle.com/files/ftpupload/PORTAL/Kunz_Art... This is an article the legal reasoning behind why the iBookstore MFN clause was an antitrust violation - it was designed to impose financial penalties on publishers that did not get all of their retailers to switch to an agency pricing model. This is similar to an earlier case about Toys 'R Us. They got a group of toy manufacturers to agree to restrict their toy sales to warehouse clubs, so long all the manufactures in the group agreed to do so.
- acqq 11y ago
  So they really claim that Apple's sin was that they put in the contract MFN in the form "if the price is lower is some other store it can be that low in our store too." Strange. Edit: "the use of a unique "most favored nation" (MFN) clause. Under the DOJ's reading of the Seventh Circuit's Toys "R" Us decision, the DOJ argued that this was a per se violation of Section 1 of the Sherman Act."
  - Oletros 11y ago
    No, this is not what is claimed
muddi900 11y ago
The publishers settled. They admitted guilt. Collusion happened. Beyind that, Apple's practices extended to iOS. All ebook vendors from then on had to take 30% cut of whatever price the publisher. Then apple forced all vendors trying to sell their wares on iOS to only sell through their merchant interface, with no price disparity allowed. And what is Apple's cut? 30%. So any vendir trying to sell ebooks on iOS had to relinquish all their margins to Apple, pretty much locking all vendors out of the sales point. Amazon is the only one that benefitted from this, ironically, since they were well established and did not need iOS sales to survive. All other competitors just withered away.
- sambe 11y ago
  Didn't they settle and /not/ admit guilt? That's often one of the reasons to settle.
  - acqq 11y ago
    And the settlement of the publishers also doesn't incriminate Apple, IMHO. It was documented that the publishers communicated between themselves even before Apple appeared.
    - muddi900 11y ago
      Not all conspiracies are enacted by secret cabals. Apple may have joined later, but three levels of federal court, plus settlement in a civil suit, have now shown us they were in fact guilty of conspiring.
  - muddi900 11y ago
    I can't seem to find the terms of the settlement anywhere but they did pay the punitive settlement. If you believe you are innocent you fight, which is what Apple did. These circular arguments only exist because the culprit in the case is Apple. Apple tried to fix prices by colluding with a cartel of book publishers instead compete in a free market. They have been found guilty of this by one court, the decision has been upheld by another court and the Supreme Court has rejected there appeal. It then used its market power to force all competitors off iOS. They literally killed the ebook market.
mattlutze 11y ago
The publishers were all connected through Apple and agreed to charge a normalized price for all their eBooks, and inflating that price across the board. Remember, eBooks were first as expensive as normal books, then a lot cheaper, then suddenly expensive again. Competing suppliers agreeing on anti-competitive acts is what collusion is.
- acqq 11y ago
  > Competing suppliers agreeing on anti-competitive acts is what collusion is. Anti-competitive to whom? To Amazon, the owner of the only e-book store who actually forced the publishers to the prices they didn't like? And how it affected Amazon? It lost the monopoly and the upper hand.
  - Oletros 11y ago
    > Anti-competitive to whom? To the costumers as the DOJ said. Please, if you don't want to read what the case is about, stop posting. You're your repeating the same things again and again. And they are wrong.
  - kalleboo 11y ago
    In that case, file an antitrust suit against Amazon. Two wrongs don't make a right.
  - mattlutze 11y ago
    http://dictionary.law.com/Default.aspx?selected=232 http://dictionary.law.com/Default.aspx?selected=232 https://www.law.cornell.edu/wex/collusion https://www.law.cornell.edu/wex/collusion https://www.law.cornell.edu/wex/collusive_bidding https://www.law.cornell.edu/wex/collusive_bidding https://www.ftc.gov/enforcement/anticompetitive-practices https://www.ftc.gov/enforcement/anticompetitive-practices https://www.accc.gov.au/business/anti-competitive-behaviour https://www.accc.gov.au/business/anti-competitive-behaviour The suppliers agreed to perform mutually beneficial acts, with Apple as a mediator and facilitator (see the emails and meetings referenced in this HN thread), which systematically reduced competition between the suppliers in the eBook market. It's quite plain, which is why Apple has been required to pay $450M in damages.