6 ms·

If you look at emails and communication from people involved, it seems pretty clear to me that Apple knowingly and actively participated in a conspiracy to fix

by Pyxl101 11y ago

If you look at emails and communication from people involved, it seems pretty clear to me that Apple knowingly and actively participated in a conspiracy to fix prices. They really took the leading role in organizing the publishers and proposing the illegal-price fixing model. I will give you an overwhelming amount of evidence just in one comment, and a link to explore further details. "From: Eddy Cue To: Steve Jobs Subject: Books - Publisher update Date: Tue, 15 Dec 2009 Steve, [...] Clearly, the biggest issue is new release pricing and they [the publishers] want a proposal from us. Everyone was estatic to see Apple and what it could mean for their industry." ... "They decided they had to come up with a way that would move the whole market off 9.99 and they think an agency model is the only way to do it." "They believe that this is the best chance for publishers to challenge the 9.99 price point ...." Clearly and explicitly recognizing that collusion is the only way to achieve the price that they desire. ... "I am told Random House is concerned about the future of e-books and the potentially dominant role played by Google and Amazon. Would it make sense for the 2 of us to have meetings / diner with Markus Dohle, Brian Murray, John Sargent..." Conspiracy to meet and fix prices. Collusion like this across competitors is illegal price fixing. Competitors do not have a legitimate reason to meet and discuss common pricing. ... "You are absolutely correct: we've always known that unless other publishers follow us, there's no chance in getting Amazon to change its pricing practices." ... "It is important to Apple that there be 'some level of reasonable pricing'. They feel the only way to get this is for the industry to go to the agency model." (additional illegal collusion to fix prices) "When they thought it through, they didn't think anything else would keep the market from its current pricing 'craziness'" (i.e., market prices -- demonstrating conspiracy to fix prices) "[Eddy Cue, Apple] also thinks that book prices are becoming too low - he is worried about consumer perception. Therefore he suggests an 'agency model'". ... "To: Carolyn Reidy (Simon & Shuster) From: Eddy Cue (Apple) Subject: iTunes Date: Mon, 04 Jan 2010 "[...] As we discussed, here is what I think is the best approach for ebooks. Just like the App Store, we are proposing a principal-agency model [...]" The same email is repeated and sent to Markus Dohle of Random House, and then John Sargent of Macmillan, and very similarly to David Young of Hachette Book Group. "After talking to all the other publishers and seeing the overall book environment, here is what I think is the best approach for ebooks", Eddy Cue wrote to David Young, and to David Shanks of Penguin, and Brian Murray of Harper Collins. He goes on to outline the illegal price fixing scheme which they successfully colluded to implement. ... Additional points that establish the case: - Additional emails go on to demonstrate how the model will be forced on all retails and result in the price fixing - Graphs of data of how prices changed over time as Apple deployed its price-fixing scheme. - Apple provides information about one competitor's prices and desires to another, explicitly communicating one competitor's pricing desires to the other. - Evidence of collusion as copy/pasted statements make their way into material from several publishing house leaders, all on the same day following meetings with Apple. - "Agency is anti-price war territory." Yup. - Clear recognition by the competitors that they were engaging in illegal price fixing. "We would have to 'get everyone else to go to the agency model'. When I said, 'but of course we can't talk to our competitors', [Eddy Cue] said he didn't mean other publishers, but our accounts - to which I replied, if we make these our terms, then they are our terms." Carolyn Reidy, discussing her deal with Apple to other people. - Additional evidence of Apple taking an active role in conducting these discussions with publishers and bringing about the actual consensus of getting them all to agree to it. Apple was the common party that actually brought the coordination about by facilitating the conversation and proposing the actual price fixing terms. - Publishers recognize that their deals with Apple force them to an agency model for all sales. - One publisher balks about being forced to do this. Apple enlists other publishers to convince them. Further publishers are waiting for other publishes to agree, before they agree to terms with Apple (collusion; they should be making deals independently) United States of America v. Apple, Inc. - https://www.justice.gov/atr/case-document/file/486701/download https://www.justice.gov/atr/case-document/file/486701/downlo... I think the evidence is pretty overwhelming. Have you examined the actual data? I hope this provides a good starting point. (These conspiracies to fix prices seem common for Silicon Valley companies, don't they? Apple and other tech companies were similarly involved in antitrust litigation: https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L... )

acqq 11y ago
I consider Apple guilty for the high-tech employment agreements, but not for working to make the same terms for their e-book store with all the publishers. As far as I understand, they also sold other things already under the same conditions for all the publishers (music, apps). I understand the courts had another view, but I don't agree. The publishers did raise prices, but they just wanted for the possibility to do so anyway. It was inevitable, in my view, it was Amazon that forced (by having an effective monopoly until Apple appeared) all the publishers to sell the way they didn't like, so of course it was unstable state, possible to be preserved only if the Amazon's monopoly remains.
- Pyxl101 11y ago
  > Apple guilty for the high-tech employment agreements, but not for working to make the same terms for their e-book store with all the publishers. Sorry, you have it all wrong. This isn't about Apple giving the same deal to all publishers. This was about Apple convincing all publishers to give all other retailers the same deal as Apple -- and all at the same time, as a single group across essentially the entire industry, thus resulting in price fixing and price increases. Imagine the absurdity if the manufacturer of a car (motor vehicle) could dictate the terms at which their cars were sold by all retailers. Essentially, the manufacturer exclusively determines the price that all auto sellers must charge. Does that analogy make better sense? No car dealership can offer a discount because the manufacturer has exclusive control. Then imagine that it's not just one auto manufacturer: it's all of them, all at once. That's what happened with ebooks - virtually the entire industry colluded. It's not just working to get the same terms for their publishers, it was also getting those publishers to, in concert all with each other, force all of their retailers to do the same thing. Only with the collusion of a cartel could they have achieved this, and the result was illegal price-fixing that harmed consumers. Competitors are not allowed to collude, and not allowed to collude to raise prices. Competitors have no legitimate business to meet and discuss with each other and make agreements about what price they'll all offer together, as that's an illegal cartel, yet that's what happened as a result of the conspiracy that Apple led. > The publishers did raise prices, but they just wanted for the possibility to do so anyway Publishers always had control over the price at which they sold their books to retailers. They just did not have control over the price at which those retailers subsequently resold them to consumers. And why should they? When books were historically sold at wholesale price for 50% of their retail price, why should a publisher stop a retailer from competing on price, by offering (say) a 190% markup rather than 200%, if the retailer has a more efficient operation? Once the book is "handed off" from the publishers to the retailer, what legitimate reason is for the publisher to control that transitive resale -- and why should the publisher have control over all of those resales among all retailers? That is the cartel that Apple brought about. Imagine if the manufacturer of a toothbrush had the power to force all stores that sell it to have the same price. Why should they have that power? Why can't stores offer a discount if they have a more efficient supply chain, or more insightful pricing strategy? And then suddenly all toothbrush manufacturers in the entire industry did the same thing at the same time? I hope this paints a better picture of what happened with Apple and ebooks, and the reason why they were convicted of illegal collusion to fix prices. The true reality of the situation, in my opinion, is that with the advent of the Internet, the incremental value of publishing has begun to drop. Authors are increasingly required to deliver fully complete and ready-to-publish manuscripts, rather than handing off a draft to the publisher for editing and typesetting. Furthermore, individual authors are better able to market themselves and generate interest online than in the older days when advertising had a higher cost, and required printing a large order of books up front and buying retail space. It's becoming cheaper and cheaper for authors to offer books online themselves. Consider what's happened with books like The Martian: it was (as I understand it) self-published as an ebook, and then gained a following, and eventually Hollywood bought the film rights. The value added by a publisher diminishes if they're not printing and distributing your physical book - they become a publicist. So, publishers saw the reality for what it was, and saw that their industry was all trending toward undifferentiated "perfect competition". They reacted to the situation by cooking up a collusion across the industry to conspire to keep prices artificially higher than they otherwise would have been, using the combined market power of their collusion to bring it about.

by Pyxl101 11y ago

acqq 11y ago

I consider Apple guilty for the high-tech employment agreements, but not for working to make the same terms for their e-book store with all the publishers. As far as I understand, they also sold other things already under the same conditions for all the publishers (music, apps). I understand the courts had another view, but I don't agree. The publishers did raise prices, but they just wanted for the possibility to do so anyway. It was inevitable, in my view, it was Amazon that forced (by having an effective monopoly until Apple appeared) all the publishers to sell the way they didn't like, so of course it was unstable state, possible to be preserved only if the Amazon's monopoly remains.

Pyxl101 11y ago
> Apple guilty for the high-tech employment agreements, but not for working to make the same terms for their e-book store with all the publishers. Sorry, you have it all wrong. This isn't about Apple giving the same deal to all publishers. This was about Apple convincing all publishers to give all other retailers the same deal as Apple -- and all at the same time, as a single group across essentially the entire industry, thus resulting in price fixing and price increases. Imagine the absurdity if the manufacturer of a car (motor vehicle) could dictate the terms at which their cars were sold by all retailers. Essentially, the manufacturer exclusively determines the price that all auto sellers must charge. Does that analogy make better sense? No car dealership can offer a discount because the manufacturer has exclusive control. Then imagine that it's not just one auto manufacturer: it's all of them, all at once. That's what happened with ebooks - virtually the entire industry colluded. It's not just working to get the same terms for their publishers, it was also getting those publishers to, in concert all with each other, force all of their retailers to do the same thing. Only with the collusion of a cartel could they have achieved this, and the result was illegal price-fixing that harmed consumers. Competitors are not allowed to collude, and not allowed to collude to raise prices. Competitors have no legitimate business to meet and discuss with each other and make agreements about what price they'll all offer together, as that's an illegal cartel, yet that's what happened as a result of the conspiracy that Apple led. > The publishers did raise prices, but they just wanted for the possibility to do so anyway Publishers always had control over the price at which they sold their books to retailers. They just did not have control over the price at which those retailers subsequently resold them to consumers. And why should they? When books were historically sold at wholesale price for 50% of their retail price, why should a publisher stop a retailer from competing on price, by offering (say) a 190% markup rather than 200%, if the retailer has a more efficient operation? Once the book is "handed off" from the publishers to the retailer, what legitimate reason is for the publisher to control that transitive resale -- and why should the publisher have control over all of those resales among all retailers? That is the cartel that Apple brought about. Imagine if the manufacturer of a toothbrush had the power to force all stores that sell it to have the same price. Why should they have that power? Why can't stores offer a discount if they have a more efficient supply chain, or more insightful pricing strategy? And then suddenly all toothbrush manufacturers in the entire industry did the same thing at the same time? I hope this paints a better picture of what happened with Apple and ebooks, and the reason why they were convicted of illegal collusion to fix prices. The true reality of the situation, in my opinion, is that with the advent of the Internet, the incremental value of publishing has begun to drop. Authors are increasingly required to deliver fully complete and ready-to-publish manuscripts, rather than handing off a draft to the publisher for editing and typesetting. Furthermore, individual authors are better able to market themselves and generate interest online than in the older days when advertising had a higher cost, and required printing a large order of books up front and buying retail space. It's becoming cheaper and cheaper for authors to offer books online themselves. Consider what's happened with books like The Martian: it was (as I understand it) self-published as an ebook, and then gained a following, and eventually Hollywood bought the film rights. The value added by a publisher diminishes if they're not printing and distributing your physical book - they become a publicist. So, publishers saw the reality for what it was, and saw that their industry was all trending toward undifferentiated "perfect competition". They reacted to the situation by cooking up a collusion across the industry to conspire to keep prices artificially higher than they otherwise would have been, using the combined market power of their collusion to bring it about.