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Justice Department Calls Apple the "Ringmaster" In e-book Price Fixing Case 192

Posted by samzenpus
from the paying-more dept.
An anonymous reader writes "Back in April 2012, the U.S. Justice Department filed an antitrust lawsuit against Apple and a number of publishers for allegedly colluding to raise the price of e-books on the iBookstore. As part of its investigation into Apple's actions, the Justice Department collected evidence which it claims demonstrates that Apple was the 'ringmaster' in a price fixing conspiracy. Specifically, the Justice Department claims that Apple wielded its power in the mobile app market to coerce publishers to agree to Apple's terms for iBookstore pricing."
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Justice Department Calls Apple the "Ringmaster" In e-book Price Fixing Case

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  • Interesting (Score:4, Insightful)

    by war4peace (1628283) on Wednesday May 15, 2013 @07:54PM (#43736565)

    Such activities involve a pretty large number of people. It's interesting how they collectively can keep it a secret for a pretty long time.

    • Such activities involve a pretty large number of people. It's interesting how they collectively can keep it a secret for a pretty long time.

      It is was published in his biography. This has been going on for forever.

    • Re:Interesting (Score:4, Insightful)

      by Shavano (2541114) on Wednesday May 15, 2013 @09:27PM (#43737157)

      Such activities involve a pretty large number of people. It's interesting how they collectively can keep it a secret for a pretty long time.

      It wasn't a secret so much as thinking the government wouldn't come after them for it. Everybody knew about it.

    • Re:Interesting (Score:5, Interesting)

      by hairyfeet (841228) <bassbeast1968@NOspaM.gmail.com> on Wednesday May 15, 2013 @10:45PM (#43737637) Journal

      Because it really only takes a couple of people at the top level, everybody else will just follow orders. See the price fixing on DRAM and LCDs to see how you had price fixing covering companies halfway across the world from each other but it really only took a handful of high level board members to get it set up.

      This is why I've been saying that while its great we're not seeing "site requires IE" anymore we have to be vigilant so we don't replace one master with another. Just look at how Apple is trying to ram through DRM into HTML V5 after killing an open codec minimum for HTML V5 for patent trolls MPEG-LA (which of course doesn't hurt them as they can pay the license fees) and how everybody tripped over themselves to kiss the ring of St Steve and cheering the death of Flash...when in reality it was simply Apple making sure nothing ran on Apple hardware that they didn't get a cut.

      So we really have to watch it, because unlike MSFT whose efforts are hamfisted and so obvious Stevie Wonder could spot them the marketing team at Apple is fucking brilliant and can sell AC units to Eskimos and as we saw with IE once you let a company get too powerful it takes ages to undo the damage.

      • when in reality it was simply Apple making sure nothing ran on Apple hardware that they didn't get a cut.

        Yeah, it totally sucks that I can't run Flash and Silverlight on my Mac. Oh wait, I can install both with zero restrictions outside of Adobe and Microsoft's license agreements. Apple sells more than the iOS devices.

        Regardless, Flash is still a huge piece of shit, and everyone should be happy with it's demise. It's a zero-sum change moving from DRM in Flash / Silverlight to DRM in HTML5, except that it

    • by mjwx (966435)

      Such activities involve a pretty large number of people. It's interesting how they collectively can keep it a secret for a pretty long time.

      Actually, such conspiracies involve a surprisingly small number of people. 1 from each company and maybe their aide.

      A large number of people may be involved in the activity, but not the conspiracy so they wont know what is going on, sometimes even the companies CEO doesn't know whats going on.

      But this is for traditional price fixing, Apple's been quite open about setting a minimum price for e-books for some time. You may remember a few years back they threatened publishers with banishment if they sold

  • by tuppe666 (904118) on Wednesday May 15, 2013 @07:56PM (#43736573)

    ...and customers get bent over; thank Apple

    And the rest of us have to pay a premium for its Monopolistic abuse. Call me a hater.

    What is missing from the article is this is saint Jobs corrupt to the core.

    "Jobs explained to his biographer that he told the publishers, "We’ll go to the agency model, where you set the price, and we get our 30 percent, and yes, the customer pays a little more, but that’s what you want anyway.” http://thehill.com/blogs/hillicon-valley/technology/299875-doj-accuses-steve-jobs-of-being-ringmaster-in-price-fixing-scheme [thehill.com].

    Thankfully Microsoft is slowly catching up so we will be back with that evil duopoly again.

    • by Nerdfest (867930)

      Using a 'favoured nation' policy to force suppliers to charge Apple's cut to non-Apple customers or eat the cost is an abuse of their market position (more-so at the time than now) and should be very illegal.

    • by Shavano (2541114) on Wednesday May 15, 2013 @09:36PM (#43737219)
      Proposed penalty: 1. Refund customers 30% for every bit of electronic media they sold since they started this corrupt practice. 2. 2-year ban on Apple selling electronic media -- e-books, music and video.
      • by steelfood (895457)

        Proposed penalty: Full access to Apple's internal iOS APIs. App store unlock. Apple cannot develop software that other companies cannot develop.

        That's how Microsoft has to operate with their monopoly in the OS market. The guys working on Office cannot use an API call that the guys working on Windows has not disclosed.

  • Not defending Apple's pricing, in fact I think that they are in many ways douchebags, but why is this an antitrust situation? They are negotiating with vendors to reach the price point they desire. They are just reaching for a higher price point, instead of a lower one. They can't set their prices to what their customers will bear? I'm not about to click all of the links in the article, which isn't much of an article, but unless they were colluding with these publishers to charge higher prices everywhere
    • It's acceptable to grammar nazi myself, isn't it? :-)
    • Re:Laissie Faire?? (Score:4, Informative)

      by kris2112 (136712) on Wednesday May 15, 2013 @08:10PM (#43736665)

      The DoJ's case alleges that the agency pricing model had a clause where the publisher wouldn't sell their books in other stores for less than they were charging in the iBookstore. If true, this is Collusion, and falls under anti-trust laws. http://definitions.uslegal.com/c/collusion/ [uslegal.com]

      • Thanks. I don't use iTunes, or iAnything, but the reported prices in the article ($12.99 to $14.99) are equal to or less than typical prices on Amazon and B it's dawning on me now that if Apple's been strongarming the publishers to achieve this situation, then, yes, that could be antitrust behavior. I was initially thinking they were colluding to fix prices artificially high for themselves, when it seems it was to raise other vendor's prices. Actions like refusing to approve apps for the crap store if the
      • Re:Laissie Faire?? (Score:5, Informative)

        by aaarrrgggh (9205) on Wednesday May 15, 2013 @08:49PM (#43736911)

        It is all in how you say it; if you say that if the publisher offers a better price to another outlet, they must match that price for Apple, then it is ok. The tricky part is that if Apple's clause says that Apple can match any other retailer's price and give the publisher 30%, but that would seem like it still isn't collusion; it creates a situation where selling to Amazon at wholesale is better than selling to Apple at an Agency model. Hence the publisher's collusion amongst themselves to force Amazon to the agency model.

        What I understand of the agreement seems pretty clean from Apple's perspective, but not as much for the publishers.

        • by Xest (935314)

          "What I understand of the agreement seems pretty clean from Apple's perspective, but not as much for the publishers."

          Which is of course why they've been accused of being the ringmasters, because it's clean from Apple's perspective.

          Still, it's not as if the people who called Apple the ringmasters in this case are legal professionals or anything is it. At least we have a random Joe on Slashdot to clarify the situation who obviously knows the law better.

      • by goombah99 (560566)

        The DoJ's case alleges that the agency pricing model had a clause where the publisher wouldn't sell their books in other stores for less than they were charging in the iBookstore. If true, this is Collusion, and falls under anti-trust laws. http://definitions.uslegal.com/c/collusion/ [uslegal.com]

        No it's not. Almost every major retailer insists on the lowest price. Walmart does, Amazon does.

      • Hmmm... You know that's exactly what is in all government contracts too, right? You can't charge anyone less than what you charge the government for the same thing. Sounds kind of similar.

      • by node 3 (115640)

        The DoJ's case alleges that the agency pricing model had a clause where the publisher wouldn't sell their books in other stores for less than they were charging in the iBookstore. If true, this is Collusion, and falls under anti-trust laws. http://definitions.uslegal.com/c/collusion/ [uslegal.com]

        The definition isn't that long. Here it is:

        Collusion occurs when two persons or representatives of an entity or organization make an agreement to deceive or mislead another. Such agreements are usually secretive, and involve fraud or gaining an unfair advantage over a third party, competitors, consumers or others with whom they are negotiating. The collusion, therefore, makes the bargaining process inherently unfair. Collusion can involve price or wage fixing, kickbacks, or misrepresenting the independence

    • by oldhack (1037484)
      This is even messier because it deals with books, mostly copyrighted works. Copyright is a state-granted artificial monopoly - mix in anti-collusion statues and you get one fine convoluted mess.
    • by asmkm22 (1902712)

      From what I understand, apple and publishers basically all wanted to set ebook prices for the range of 12.99 to 14.99. Apple threatened to (and did) block apps for publishers that didn't agree or didn't jump on board right away, as leverage. It's kind of a big deal because Apple was hoping to negotiate things in a way to prevent wholesale outlets, like Amazon, from having a choice in setting ebook pricing by having having deals with all the publishers that released all the ebooks through Apple first (at f

      • Thanks. I did some more research on it, and realized that I misunderstood the problem when I first read (skimmed?) the article. It seems they were using strongarm tactics to coerce the publishers into charging higher prices to their competition. I don't use iAnything, and really have no idea how big Apple's book store is, or how many e-books they sell. My library system has quite a selection of e-books for checkout, and I prefer to do that over buying them, anyway.
      • Re: (Score:2, Troll)

        by BasilBrush (643681)

        It's worth noting that all of the publishers have settled with DoJ without a fight.

        It's worth noting that Apple hasn't. You do realise the publishers may have colluded without Apple's involvement.

    • The issue is how much collusion was there between Apple and the publishing companies to set these prices--which, according to the e-mails, was quite a bit. Apple was working to craft an agreement that all the publishers would agree to, not individual agreements with the publishers. That's collusion.

    • by chrismcb (983081)

      Not defending Apple's pricing, in fact I think that they are in many ways douchebags, but why is this an antitrust situation? They are negotiating with vendors to reach the price point they desire. They are just reaching for a higher price point, instead of a lower one. .... If Apple's customers are such zealots that they won't consider other sources for their media, let them pay the prices.

      Well whether you are a zealot or not, you don't have a choice BUT to pay Apple's prices. Even if you want to buy from Amazon. This wasn't about Apple setting a higher price point for Apple, this is about Apple forcing the publishers to set a higher price point for EVERYONE.

  • Vertical price fixing pertains to arrangements between a manufacturer, distributor, supplier or retailer. Horizontal price fixing, which would involve competitors colluding to set prices, remains illegal. Courts have held that vertical maximum price fixing, like the majority of commercial arrangements subject to the antitrust laws, should be evaluated under the rule of reason. Therefore, suppliers of goods and services don't necessarily violate antitrust laws by setting maximum prices their retailers can charge.

    http://definitions.uslegal.com/p/price-fixing/ I don't like Apple, as in refuse to buy their products and services, but this seems like Vertical price fixing which seems fair as this agreement guarantee's Apple prices are fair within the market of that particular eBook.

    • I don't like Apple, as in refuse to buy their products and services, but this seems like Vertical price fixing which seems fair as this agreement guarantee's Apple prices are fair within the market of that particular eBook.

      As a long time and faithful Apple user. this is about a Catel http://en.wikipedia.org/wiki/Cartel [wikipedia.org]
      "A cartel is a formal (explicit) "agreement" among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production.[1] Cartels usually occur in an oligopolistic industry, where the number of sellers is small (usually because barriers to entry, most notably startup costs, are high) and the products being traded are usually homogeneous. Cartel members

      • "agreement" among competing firms.

        But they don't fit the definition of cartel. The agreement is not between Amazon and Apple. It's between Apple and someone selling an eBook.. If Apple and Amazon had an agreement, as in a Horizontal price fix, then it would be a cartel. If I were to have a book on the store, I could prize my book at $20 on Amazon, and if tell apple they can sell it at $25, they have the right to not allow purchases through their store. Im not sure why someone would do that other than the hope people probably blindly buy

    • by tmorehen (2731547)
      Only Apple's arrangement did not set a vertical maximum price. It set a vertical minimum price. No one is allowed to undersell Apple. That's bad for consumers.
  • by HockeyPuck (141947) on Thursday May 16, 2013 @02:16AM (#43738471)

    According to their latest 10-Q filing AAPL has about $140Billion in cash and cash equivalents... and make $70B in gross profit every year...

    Short of breaking them up... there's no monetary punishment you could levy on AAPL.

    While they're not too big to fail, they are too big to punish.

    It's like your grandmother spanking a grown elephant, it won't do any good other than make a bit of noise.

    • by Omestes (471991)

      I don't even care if they hurt Apple. I just want things to be good for consumers again. Force the publishers to have to negotiate again on an individual basis. Thats all I, the customer, care about. Apple can do whatever the hell it wants, as long as it is legal.

       

    • Well, if a man would be sent to prison for 5 years for such an infraction, I presume that the penalty would be 5 x $70B = $350B. What's so difficult about that?

    • If a crime was committed you need to punish the *people* who did it.

      If I had free choice of punishments i'd say chain them up in the stocks for a week or two and let people throw rotten fruit at them. Then send them to do hard labour for a year or so in a remote mining camp with the condition that any attempt to access or borrow against the wealth they have in their life outside punishment will result in permanent confiscation of that wealth. Visits from friends and family would be allowed but at least half

  • Do you imagine the pun was intentional?
  • We can argue all we want about just who colluded with whom, but why not fix the root problem? Digital data are always going to be copied (and copy-able), and the sooner the law recognizes that, the sooner publishers as well as retailers (including Apple and Amazon) will adjust their prices to what people are willing to pay. As a close friend said to me,"Keep finding me free epubs on the net until the store price drops below $5." iTunes, for example, continues to sell a zillion tracks despite the plethora of torrent files available. The same model (i.e. acceptable price point) will work for books.

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