19 ms·

Dear DoJ: You Need To Sue Apple Again

24 points by mikecane 15y ago

salem 15y ago
This is the real issue with the Agency model and Apple, it may or may not have prevented an Amazon monopoly on ebooks, but it did guarentee that nobody but Apple could make money selling ebooks via iPhone apps.
megaman821 15y ago
The real question is, has Apple sold enough tablets to be considered a monopoly in the marketplace. Even if it is a monopoly, it definitely isn't in phone (even smart-phone) marketplace, so it is unclear what exactly the DoJ could do to influence the iPhone's in-app purchase fees.
- gte910h 15y ago
  I think once a lawsuit counts the number of iPod Touches and iPads or the total in app purchasing revenue, or total purchasing revenu of the iOS vs Android platforms, they may still try. It's unfortunately still very lopsided.
  - rbarooah 15y ago
    A monopoly is more than just having the largest market share. There has to be no viable competition. With Google and Amazon in the game that's clearly untenable.
    - gte910h 15y ago
      It's not just straight away monopolies as defined by economics that the government sues under the anti-trust act. It is a company or series of interlocked companies such that "they materially reduced competition or tended to create a monopoly in trade" So if they make an add network targeting say, shopping on their devices, they may get targeted for anti-trust suits since they have the far and away majority of control of mobile shoppers: http://gigaom.com/apple/study-apples-iphone-ipad-account-for-90-percent-of-mobile-purchases/ http://gigaom.com/apple/study-apples-iphone-ipad-account-for... The fact that iPad and iPhone apps store sales are considerably larger than Android sales is inching closer to the point where the govt can sue about that: http://www.wired.com/gadgetlab/2011/12/ios-revenues-vs-android/ http://www.wired.com/gadgetlab/2011/12/ios-revenues-vs-andro... If there is a dip in android sales for a given year (say, due to maleware problems, version upgrades, etc), then you're quite close to the level where they could get a court to not throw the case out at the summary judgement point. Once you can get a case past there, many people will settle to avoid the costs of a case or the dangers of actually losing (which could be braking up the company). I think that the figures are still too far off on percentage of app store revenue, but don't be mistaken: Just because there is not an actual monopoly doesn't mean the gov't has no teeth to do anything to apple.
pwthornton 15y ago
This is like arguing that Walmart shouldn't get a cut of book sales. It's Apple's store. Apple still allows iOS users to purchase and use books from other stores on their devices. What's the point of operating a store if you don't get a cut of the sales? But if you just get rid of the agency model, which the DOJ is trying to do, this naturally goes away. With a wholesale model, Apple, Amazon and the publishing companies can all make money on an ebook sale. The agency model doesn't leave room for two middlemen.
- ajross 15y ago
  The analogy is flawed. Consumers don't get locked into a 2-year contract forcing them to shop at Walmart exclusively. If they did, and Walmart required, say, a cut of all DVDs purchased for play on a Walmart-sold TV, I think that certainly would qualify for restraint of trade. Target could push their DVD prices all the way to zero and shoppers would still be stuck with their Walmart contracts. (edit for those not reading carefully: Saying that the contract is willful has nothing to do with the argument. Consumers do not sign contracts with retailers. So applying logic about retail sales is a flawed analysis. Doing things like leveraging the illiquidity of platform choice to increase prices in a way that would be legal for a retailer is not, necessarily, legal for a platform vendor. Apple has control over the market that Walmart does not. That's what the whole idea of "restraint of trade" is about.)
  - danielsoneg 15y ago
    Nobody gets forced into anything. You agree to a 2-year contract when you decide to get a phone for ~$400 below market price.
  - rbarooah 15y ago
    Nobody gets locked into a 2 year contract forcing them to do anything with Apple. iPads are not sold on contract. iPhones come with a contract, but the contract doesn't force you to keep using the device - just the wireless service. You can sell the phone and buy a different one to use with the same contract if you don't like it.
rbarooah 15y ago
Apple is quickly enjoying a dominant position in mobile devices that Microsoft once enjoyed with desktop computers. This can't be true while Android is the dominant mobile OS, and Amazon is the dominant eBook reader.
- gte910h 15y ago
  Android is only dominent looking solely at phones (in the US). iOS is on more iPads, iPod Touches (and there are HUGE numbers of these), and iPhones than Android is on phones and tablets (in the US).
rbarooah 15y ago
This blog has a strangely contradictory nature. The tagline is "Nature does not like or grant monopolies. Monopolies Fail", and yet the piece is all about how government needs to intervene.
- davidngo 15y ago
  Absolutely agree. If the conditions set forth by Apple don't please you, stop being their customers or developing for their platform. Simple as that.
sosuke 15y ago
"By contrast, all eBook apps from competing eBook stores — such as those from Amazon, Kobo, Barnes & Noble, and others — cannot offer an identical shopping experience. They are disallowed by Apple. Apple has demanded from each of its iBookstore competitors a 30% cut of any purchases made using Apple APIs for what is called “in-app purchasing.”" Saying that Apple doesn't allow those publishers to sell books at all and then in the next sentence saying they do allow it doesn't help your argument.
davidngo 15y ago
Am I missing something? Nobody is forced to purchase an Apple device. Nobody is forced to earn all of their revenue through Apple's devices. Nobody is forced to use their iBooks app either. How is this a monopoly? If you don't like their conditions, don't start your business or purchase books on their platform.
- huggyface 15y ago
  Nobody is forced to purchase an Apple device. Actually a lot of people are forced to buy Apple devices. See Apple's educational efforts as a good example of that. Am I missing something? Yes, you are -- Apple is big enough, and dominant enough, that even without a monopoly they can exert significant control over the rest of the market. How often do we hear on here -- strangely by people gloating on Apple's behalf -- that they have locked up complete supply chains, starving competitors? When Apple forced their book pricing model, it forced prices up at Amazon as well. When Apple limits or taxes competitors on the iOS platform, users who usually have no idea of this behavior will naturally migrate to Apple's solution because it provides just that much easier usability (geez why can't I buy that book I want in the Kindle app...oh well, here it is in the App Store). They are using their influence and control of that high-margin device that you paid for to build dominance in their other products. Not illegal or even immoral, but it eventually impacts everyone.
  - davidngo 15y ago
    I'm honestly curious what instances you're referring to where people were FORCED to buy Apple devices. So if they didn't buy these apple devices what would happen? They would be put in jail? Also, exerting significant control over the rest of the market of smartphones still doesn't mean Apple has forced you to buy their products. Just means they are the leader in their particular market. you don't have to buy ANY smartphone or start a business based upon smartphones. Not sure how this is a violation of anybody's rights.
VengefulCynic 15y ago
Anti-competitive behavior doesn't become a violation of US law until it involves the abuse of a monopoly position, involves market collusion, or breaks some other law. While anti-competitive, Apple doesn't currently exercise a meaningful monopoly in mobile device operating systems: either one looks at handsets where they are actually not even the market leader or one looks at tablets which is hardly a developed market. Apple's actions with regard to the Agency Model aren't prosecutable because of any Apple monopoly but because it involves market collusion. Now, if Google and Apple colluded to prevent eBooks from being sold on mobile OS marketplaces without a 30% cut, THAT would be prosecutable.
- davidngo 15y ago
  Exactly. Thanks for explaining this.

24 points by mikecane 15y ago

salem 15y ago

This is the real issue with the Agency model and Apple, it may or may not have prevented an Amazon monopoly on ebooks, but it did guarentee that nobody but Apple could make money selling ebooks via iPhone apps.

megaman821 15y ago

The real question is, has Apple sold enough tablets to be considered a monopoly in the marketplace. Even if it is a monopoly, it definitely isn't in phone (even smart-phone) marketplace, so it is unclear what exactly the DoJ could do to influence the iPhone's in-app purchase fees.

gte910h 15y ago
I think once a lawsuit counts the number of iPod Touches and iPads or the total in app purchasing revenue, or total purchasing revenu of the iOS vs Android platforms, they may still try. It's unfortunately still very lopsided.
- rbarooah 15y ago
  A monopoly is more than just having the largest market share. There has to be no viable competition. With Google and Amazon in the game that's clearly untenable.
  - gte910h 15y ago
    It's not just straight away monopolies as defined by economics that the government sues under the anti-trust act. It is a company or series of interlocked companies such that "they materially reduced competition or tended to create a monopoly in trade" So if they make an add network targeting say, shopping on their devices, they may get targeted for anti-trust suits since they have the far and away majority of control of mobile shoppers: http://gigaom.com/apple/study-apples-iphone-ipad-account-for-90-percent-of-mobile-purchases/ http://gigaom.com/apple/study-apples-iphone-ipad-account-for... The fact that iPad and iPhone apps store sales are considerably larger than Android sales is inching closer to the point where the govt can sue about that: http://www.wired.com/gadgetlab/2011/12/ios-revenues-vs-android/ http://www.wired.com/gadgetlab/2011/12/ios-revenues-vs-andro... If there is a dip in android sales for a given year (say, due to maleware problems, version upgrades, etc), then you're quite close to the level where they could get a court to not throw the case out at the summary judgement point. Once you can get a case past there, many people will settle to avoid the costs of a case or the dangers of actually losing (which could be braking up the company). I think that the figures are still too far off on percentage of app store revenue, but don't be mistaken: Just because there is not an actual monopoly doesn't mean the gov't has no teeth to do anything to apple.

pwthornton 15y ago

This is like arguing that Walmart shouldn't get a cut of book sales. It's Apple's store. Apple still allows iOS users to purchase and use books from other stores on their devices. What's the point of operating a store if you don't get a cut of the sales? But if you just get rid of the agency model, which the DOJ is trying to do, this naturally goes away. With a wholesale model, Apple, Amazon and the publishing companies can all make money on an ebook sale. The agency model doesn't leave room for two middlemen.

ajross 15y ago
The analogy is flawed. Consumers don't get locked into a 2-year contract forcing them to shop at Walmart exclusively. If they did, and Walmart required, say, a cut of all DVDs purchased for play on a Walmart-sold TV, I think that certainly would qualify for restraint of trade. Target could push their DVD prices all the way to zero and shoppers would still be stuck with their Walmart contracts. (edit for those not reading carefully: Saying that the contract is willful has nothing to do with the argument. Consumers do not sign contracts with retailers. So applying logic about retail sales is a flawed analysis. Doing things like leveraging the illiquidity of platform choice to increase prices in a way that would be legal for a retailer is not, necessarily, legal for a platform vendor. Apple has control over the market that Walmart does not. That's what the whole idea of "restraint of trade" is about.)
- danielsoneg 15y ago
  Nobody gets forced into anything. You agree to a 2-year contract when you decide to get a phone for ~$400 below market price.
- rbarooah 15y ago
  Nobody gets locked into a 2 year contract forcing them to do anything with Apple. iPads are not sold on contract. iPhones come with a contract, but the contract doesn't force you to keep using the device - just the wireless service. You can sell the phone and buy a different one to use with the same contract if you don't like it.

rbarooah 15y ago

Apple is quickly enjoying a dominant position in mobile devices that Microsoft once enjoyed with desktop computers. This can't be true while Android is the dominant mobile OS, and Amazon is the dominant eBook reader.

gte910h 15y ago
Android is only dominent looking solely at phones (in the US). iOS is on more iPads, iPod Touches (and there are HUGE numbers of these), and iPhones than Android is on phones and tablets (in the US).

rbarooah 15y ago

This blog has a strangely contradictory nature. The tagline is "Nature does not like or grant monopolies. Monopolies Fail", and yet the piece is all about how government needs to intervene.

davidngo 15y ago
Absolutely agree. If the conditions set forth by Apple don't please you, stop being their customers or developing for their platform. Simple as that.

sosuke 15y ago

"By contrast, all eBook apps from competing eBook stores — such as those from Amazon, Kobo, Barnes & Noble, and others — cannot offer an identical shopping experience. They are disallowed by Apple. Apple has demanded from each of its iBookstore competitors a 30% cut of any purchases made using Apple APIs for what is called “in-app purchasing.”" Saying that Apple doesn't allow those publishers to sell books at all and then in the next sentence saying they do allow it doesn't help your argument.

davidngo 15y ago

Am I missing something? Nobody is forced to purchase an Apple device. Nobody is forced to earn all of their revenue through Apple's devices. Nobody is forced to use their iBooks app either. How is this a monopoly? If you don't like their conditions, don't start your business or purchase books on their platform.

huggyface 15y ago
Nobody is forced to purchase an Apple device. Actually a lot of people are forced to buy Apple devices. See Apple's educational efforts as a good example of that. Am I missing something? Yes, you are -- Apple is big enough, and dominant enough, that even without a monopoly they can exert significant control over the rest of the market. How often do we hear on here -- strangely by people gloating on Apple's behalf -- that they have locked up complete supply chains, starving competitors? When Apple forced their book pricing model, it forced prices up at Amazon as well. When Apple limits or taxes competitors on the iOS platform, users who usually have no idea of this behavior will naturally migrate to Apple's solution because it provides just that much easier usability (geez why can't I buy that book I want in the Kindle app...oh well, here it is in the App Store). They are using their influence and control of that high-margin device that you paid for to build dominance in their other products. Not illegal or even immoral, but it eventually impacts everyone.
- davidngo 15y ago
  I'm honestly curious what instances you're referring to where people were FORCED to buy Apple devices. So if they didn't buy these apple devices what would happen? They would be put in jail? Also, exerting significant control over the rest of the market of smartphones still doesn't mean Apple has forced you to buy their products. Just means they are the leader in their particular market. you don't have to buy ANY smartphone or start a business based upon smartphones. Not sure how this is a violation of anybody's rights.

VengefulCynic 15y ago

Anti-competitive behavior doesn't become a violation of US law until it involves the abuse of a monopoly position, involves market collusion, or breaks some other law. While anti-competitive, Apple doesn't currently exercise a meaningful monopoly in mobile device operating systems: either one looks at handsets where they are actually not even the market leader or one looks at tablets which is hardly a developed market. Apple's actions with regard to the Agency Model aren't prosecutable because of any Apple monopoly but because it involves market collusion. Now, if Google and Apple colluded to prevent eBooks from being sold on mobile OS marketplaces without a 30% cut, THAT would be prosecutable.

davidngo 15y ago
Exactly. Thanks for explaining this.