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How is preventing your competitors from undercutting your price not anti-competitive? It's preventing the one thing that causes competition to lower prices. You

How is preventing your competitors from undercutting your price not anti-competitive? It's preventing the one thing that causes competition to lower prices. You're literally explaining how Apple is using this to avoid resellers competing against apple stores. Besides they're no longer their products, Apple lost ownership of them after they sold them. If someone chooses to resell them that's their business, Apple is not involved in that sale at all. Technology companies have too much control over what people can and can't do with their products as is, let's not give them even more control. Of course just because it's anticompetitive does not mean that competition is always desirable, with concert tickets for example it's quite clear that competition is hurting more than it helps. Though I find "artists should get a say who can see their concert" much more reasonable than "Apple gets final say over all sales of Apple-manufactured products".

mwint 4y ago
> Besides they're no longer their products This is correct for used devices, or course, but people in the wholesale chain will have signed contracts agreeing not to sell below MSRP. It’s called “undercutting the channel”, and it’s very frowned on in the physical goods distribution industry.
- whimsicalism 4y ago
  Those aren't "third party resellers" which is what is being discussed.
  - rootusrootus 4y ago
    How does a third party get an iPhone at wholesale price, then? They're not going to undercut the channel if they have to buy at retail prices.
    - jtbayly 4y ago
      They don't have to get it at wholesale price. They could have gotten one as a prize, but not want it. They could have gotten a great deal on one from AT&T or Verizon or T-Mobile, but just want to turn the deal into more cash by keeping their old phone and selling the new one. They might have gotten cash back by buying it on a credit card and be willing to sell it for slightly under MSRP to arbitrage the difference. All of these could lead to lower than MSRP prices.
      - mikestew 4y ago
        They could have gotten one as a prize, but not want it. Your examples are unlikely to be how a "third-party reseller" obtained the phone(s).
        commoner 4y ago
        Many people sell unwanted gifts and purchases that are not eligible for free return on marketplaces such as Amazon and eBay unopened. It's easy to sign up as an Amazon Marketplace seller, since there is an Individual plan with no monthly fees: https://sell.amazon.com/pricing#selling-plans https://sell.amazon.com/pricing#selling-plans In the past decade, Amazon started adding brand restrictions to prevent marketplace sellers from offering items on certain listings unless they met requirements set by the brand owner. This collapsed Amazon's marketplace for used goods of restricted brands and also hindered individuals selling new goods of restricted brands on Amazon. This lawsuit focuses on new goods of one of these restricted brands.
      - mwint 4y ago
        > They might have gotten cash back by buying it on a credit card and be willing to sell it for slightly under MSRP to arbitrage the difference. Has anyone made this work? I tried to make it work. Even at 10% (Discover IT category + end of year match), you can’t buy something, have it shipped to you, sell it, ship it, and make money. Any online marketplace eats your profit very quickly with assorted fees.
        snazz 4y ago
    - from 4y ago
      There’s a pretty massive grey market in iPhones. There’s a couple of ways they are sourced but basically: - Buy Apple gift cards for 70-80% of face value from let’s just say dubious sources and then use that to buy phones - Fedex or warehouse employees stealing to supplement their salaries - Authorized retailers who break their agreement - Buyback websites or stores where people bring phones and get paid like 60% of retail or less if it’s locked. Some of this is just people wanting to return a gift they got without asking the giver for the receipt but most of the phones bought at these kind of stores are obtained through “credit mulling” where they gather up a bunch of homeless people and pay them $20 to go into an AT&T store and get a phone on credit. - Currency arbitrage: if the Euro drops and companies don’t update their prices and you are able to get VAT refunds then you could be able to get a phone for less than it’s American retail value. This (big drop in yen) combined with the camera shutter is why Japanese spec iPhones can be a lot cheaper. https://www.hanggroup.com/price/ https://www.hanggroup.com/price/ is a company with 9 figure revenue that purchases these no questions asked. You can see the most they pay for a phone is $1050 for the 14 pro max which is $50 below retail.
      - from 4y ago
        Also I should add carrier auctions, store bankruptcies/liquidations, gaming credit card points but these are much less common than the methods listed above.
      - mwint 4y ago
        > Apple gift cards [...] from let’s just say dubious sources Is this where the gift cards harvested from scam operations go?
        from 4y ago
        The Nigerian or Indian scammer will usually get 40-50 cents on the dollar in their local currency or crypto from a Chinese "gift card trader" who then sells it on Paxful or in Wechat/Whatsapp groups for 10-20% more than that. The groups doing it on a large scale have "shoppers" who spend all day buying electronics with the cards for a % of the amount.
brookst 4y ago
> Besides they're no longer their products, Apple lost ownership of them after they sold them. First sale doctrine is only for retail sales that have no contract outside the sale. In distribution, contracts can absolutely dictate terms. This is a good thing. It lets, for instance, Boeing require purchasers to properly maintain airplanes (it hurts Boeing when they fall out of the sky). It also lets manufacturers offer lower prices on the condition that products be displayed or promoted in certain ways. This is very common in retail ("we'll give you 5% off quantity 100 on the condition they're promoted in ads and an endcap in each store"). The Apple / Amazon example is resale price maintenance. There's some good background on US law in the area: https://en.wikipedia.org/wiki/Resale_price_maintenance#United_States_law https://en.wikipedia.org/wiki/Resale_price_maintenance#Unite... In this specific example, where the claim is that Amazon and Apple colluded to raise prices by only allowing authorized Apple resellers on amazon.com, I guess I'm kind of sympathetic to Apple. At least inasmuch as they can show that sales from unauthorized resellers generate more warranty/support/other expense, or brand damage from even worse stuff like fraud and counterfeits. It seems like the real complaint is with the resale price maintenance in Apple's authorized reseller program. Which may be a fair complaint. But why not go after that? If the price maintenance is illegal, it should be illegal everywhere, not just Amazon. And if it's legal, it should be legal on Amazon as well.
- scarier 4y ago
  To be fair, even if Boeing's legal team cuts the CYA maintenance clause out of the purchase agreement, absolutely nothing will change in terms of actual maintenance on the aircraft they sell. The FAA requires all certified aircraft flying in US airspace to be maintained in accordance with the manufacturer's approved instructions as a condition of airworthiness. Doesn't seem like a great analogy for consumer electronics sales.
- eptcyka 4y ago
  > I guess I'm kind of sympathetic to Apple. At least inasmuch as they can show that sales from unauthorized resellers generate more warranty/support/other expense Could you provide some proof for such statements?
factsarelolz 4y ago
>Apple is not involved in that sale at all. Apple is still on the hook to provide at least the bare minimum of support which costs Apple money.
- smoldesu 4y ago
  They choose to offer that support themselves, there is no "hook" for them to be on. If their business model is found to be incompatible with a fair economy, they'll be forced to adapt.
boogahB00 4y ago
How is selling not rent seeking? Do we still need sales reps for technology at this point? Is the value of it not plainly aware to the end user? Retail middle men made sense in an era of vastly different solutions to logistics problems. The USs problem is individuals are better at individual decision making but we have all these lifelong sales reps, wannabe thought leaders, and politically correct economic of a bygone era to validate. Best Buy, for example, is a car dealership; a land owning rent seeker not inventing anything.
tjsix 4y ago
"How is preventing your competitors from undercutting your price not anti-competitive? It's preventing the one thing that causes competition to lower prices." Because Minimum Advertised Price (MAP) policies are one of the most common practices used by the large majority of consumer goods manufacturers and brands, especially in the electronics or higher end goods space. Every retailer who is an authorized seller of a brand that employs a MAP policy has agreed to advertise/list/publish the product at a price no lower than MAP, or risk losing their reseller status. Note that I did not say they can't sell for a lower price, just that they cannot show a lower price to the general public to elicit a sale. MAP is not just beneficial for the brand though, who's products remain priced accordingly to limits the brand has set; it's beneficial to the retailer who can count on a minimum set margin and not have to worry about being undercut by another retailer. It also benefits the end consumer by ensuring the retailer and brand retain enough margin on the sale to facilitate after-sale support and service as well provide the means to stay in business along with the benefit of helping to protect resale values (for applicable products). MAP policies themselves are fully legal under current anti-trust laws (in the US).

mwint 4y ago

> Besides they're no longer their products This is correct for used devices, or course, but people in the wholesale chain will have signed contracts agreeing not to sell below MSRP. It’s called “undercutting the channel”, and it’s very frowned on in the physical goods distribution industry.

whimsicalism 4y ago
Those aren't "third party resellers" which is what is being discussed.
- rootusrootus 4y ago
  How does a third party get an iPhone at wholesale price, then? They're not going to undercut the channel if they have to buy at retail prices.
  - jtbayly 4y ago
    They don't have to get it at wholesale price. They could have gotten one as a prize, but not want it. They could have gotten a great deal on one from AT&T or Verizon or T-Mobile, but just want to turn the deal into more cash by keeping their old phone and selling the new one. They might have gotten cash back by buying it on a credit card and be willing to sell it for slightly under MSRP to arbitrage the difference. All of these could lead to lower than MSRP prices.
    - mikestew 4y ago
      They could have gotten one as a prize, but not want it. Your examples are unlikely to be how a "third-party reseller" obtained the phone(s).
      - commoner 4y ago
        Many people sell unwanted gifts and purchases that are not eligible for free return on marketplaces such as Amazon and eBay unopened. It's easy to sign up as an Amazon Marketplace seller, since there is an Individual plan with no monthly fees: https://sell.amazon.com/pricing#selling-plans https://sell.amazon.com/pricing#selling-plans In the past decade, Amazon started adding brand restrictions to prevent marketplace sellers from offering items on certain listings unless they met requirements set by the brand owner. This collapsed Amazon's marketplace for used goods of restricted brands and also hindered individuals selling new goods of restricted brands on Amazon. This lawsuit focuses on new goods of one of these restricted brands.
    - mwint 4y ago
      > They might have gotten cash back by buying it on a credit card and be willing to sell it for slightly under MSRP to arbitrage the difference. Has anyone made this work? I tried to make it work. Even at 10% (Discover IT category + end of year match), you can’t buy something, have it shipped to you, sell it, ship it, and make money. Any online marketplace eats your profit very quickly with assorted fees.
      - snazz 4y ago
  - from 4y ago
    There’s a pretty massive grey market in iPhones. There’s a couple of ways they are sourced but basically: - Buy Apple gift cards for 70-80% of face value from let’s just say dubious sources and then use that to buy phones - Fedex or warehouse employees stealing to supplement their salaries - Authorized retailers who break their agreement - Buyback websites or stores where people bring phones and get paid like 60% of retail or less if it’s locked. Some of this is just people wanting to return a gift they got without asking the giver for the receipt but most of the phones bought at these kind of stores are obtained through “credit mulling” where they gather up a bunch of homeless people and pay them $20 to go into an AT&T store and get a phone on credit. - Currency arbitrage: if the Euro drops and companies don’t update their prices and you are able to get VAT refunds then you could be able to get a phone for less than it’s American retail value. This (big drop in yen) combined with the camera shutter is why Japanese spec iPhones can be a lot cheaper. https://www.hanggroup.com/price/ https://www.hanggroup.com/price/ is a company with 9 figure revenue that purchases these no questions asked. You can see the most they pay for a phone is $1050 for the 14 pro max which is $50 below retail.
    - from 4y ago
      Also I should add carrier auctions, store bankruptcies/liquidations, gaming credit card points but these are much less common than the methods listed above.
    - mwint 4y ago
      > Apple gift cards [...] from let’s just say dubious sources Is this where the gift cards harvested from scam operations go?
      - from 4y ago
        The Nigerian or Indian scammer will usually get 40-50 cents on the dollar in their local currency or crypto from a Chinese "gift card trader" who then sells it on Paxful or in Wechat/Whatsapp groups for 10-20% more than that. The groups doing it on a large scale have "shoppers" who spend all day buying electronics with the cards for a % of the amount.

brookst 4y ago

> Besides they're no longer their products, Apple lost ownership of them after they sold them. First sale doctrine is only for retail sales that have no contract outside the sale. In distribution, contracts can absolutely dictate terms. This is a good thing. It lets, for instance, Boeing require purchasers to properly maintain airplanes (it hurts Boeing when they fall out of the sky). It also lets manufacturers offer lower prices on the condition that products be displayed or promoted in certain ways. This is very common in retail ("we'll give you 5% off quantity 100 on the condition they're promoted in ads and an endcap in each store"). The Apple / Amazon example is resale price maintenance. There's some good background on US law in the area: https://en.wikipedia.org/wiki/Resale_price_maintenance#United_States_law https://en.wikipedia.org/wiki/Resale_price_maintenance#Unite... In this specific example, where the claim is that Amazon and Apple colluded to raise prices by only allowing authorized Apple resellers on amazon.com, I guess I'm kind of sympathetic to Apple. At least inasmuch as they can show that sales from unauthorized resellers generate more warranty/support/other expense, or brand damage from even worse stuff like fraud and counterfeits. It seems like the real complaint is with the resale price maintenance in Apple's authorized reseller program. Which may be a fair complaint. But why not go after that? If the price maintenance is illegal, it should be illegal everywhere, not just Amazon. And if it's legal, it should be legal on Amazon as well.

scarier 4y ago
To be fair, even if Boeing's legal team cuts the CYA maintenance clause out of the purchase agreement, absolutely nothing will change in terms of actual maintenance on the aircraft they sell. The FAA requires all certified aircraft flying in US airspace to be maintained in accordance with the manufacturer's approved instructions as a condition of airworthiness. Doesn't seem like a great analogy for consumer electronics sales.
eptcyka 4y ago
> I guess I'm kind of sympathetic to Apple. At least inasmuch as they can show that sales from unauthorized resellers generate more warranty/support/other expense Could you provide some proof for such statements?

factsarelolz 4y ago

>Apple is not involved in that sale at all. Apple is still on the hook to provide at least the bare minimum of support which costs Apple money.

smoldesu 4y ago
They choose to offer that support themselves, there is no "hook" for them to be on. If their business model is found to be incompatible with a fair economy, they'll be forced to adapt.

boogahB00 4y ago

How is selling not rent seeking? Do we still need sales reps for technology at this point? Is the value of it not plainly aware to the end user? Retail middle men made sense in an era of vastly different solutions to logistics problems. The USs problem is individuals are better at individual decision making but we have all these lifelong sales reps, wannabe thought leaders, and politically correct economic of a bygone era to validate. Best Buy, for example, is a car dealership; a land owning rent seeker not inventing anything.

tjsix 4y ago

"How is preventing your competitors from undercutting your price not anti-competitive? It's preventing the one thing that causes competition to lower prices." Because Minimum Advertised Price (MAP) policies are one of the most common practices used by the large majority of consumer goods manufacturers and brands, especially in the electronics or higher end goods space. Every retailer who is an authorized seller of a brand that employs a MAP policy has agreed to advertise/list/publish the product at a price no lower than MAP, or risk losing their reseller status. Note that I did not say they can't sell for a lower price, just that they cannot show a lower price to the general public to elicit a sale. MAP is not just beneficial for the brand though, who's products remain priced accordingly to limits the brand has set; it's beneficial to the retailer who can count on a minimum set margin and not have to worry about being undercut by another retailer. It also benefits the end consumer by ensuring the retailer and brand retain enough margin on the sale to facilitate after-sale support and service as well provide the means to stay in business along with the benefit of helping to protect resale values (for applicable products). MAP policies themselves are fully legal under current anti-trust laws (in the US).