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Books The Almighty Buck The Courts Apple

Apple Agrees To $450 Million Ebook Antitrust Settlement 91

Posted by Soulskill
from the throwing-the-ebook-at-them dept.
An anonymous reader writes: Last year, a U.S. District Judge ruled that Apple conspired with publishers to control ebook prices in violation of antitrust laws. Apple launched an appeal which has yet to conclude, but they've now agreed to a settlement. If the appeal verdict goes against Apple, they will be on the hook for $450 million, most of which will go to consumers. If they win the appeal, they'll still have to pay $70 million. $450 million is much more than the other publishers had to pay, but much less than the expected penalty from a damages trial set for August (and still only about one percent of Apple's annual profit).
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Apple Agrees To $450 Million Ebook Antitrust Settlement

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  • Best partners in crime since Genesis and Original Sin
  • by Anonymous Coward on Wednesday July 16, 2014 @04:41PM (#47470111)

    For a company which makes billions (and has probably made enough profit from this endeavour to justify the fine) fines like this mean nothing. Until people start getting jailed like normal people would do things like this will continue to happen. You can bet your ass if a CEO got 5 years in jail that company wouldn't set a single foot wrong after that for fear of it happening again.

    • You can bet your ass if a CEO got 5 years in jail that company wouldn't set a single foot wrong after that for fear of it happening again.

      Many murderers spend less than 5 years in jail. If we start jailing managers for bad decisions, you would hear a giant sucking sound as company HQs headed overseas, taking all the management and administrative jobs with them. There is always someone advocating the "iron fist" version of justice, but history shows that it really doesn't work well. We used to execute people for stealing bread, but people still stole bread. Punishment should be fair and proportionate.

      • by PopeRatzo (965947)

        Many murderers spend less than 5 years in jail.

        I'm going to have to go ahead and ask for a citation on that one, bro.

        • by ShanghaiBill (739463) on Wednesday July 16, 2014 @06:50PM (#47471099)

          Many murderers spend less than 5 years in jail.

          I'm going to have to go ahead and ask for a citation on that one, bro.

          In 1987, the average time-served for 2nd degree murder in Florida was 6.8 years [state.fl.us]. That is more than five, but that is the average, so many murders served less time. Sentences are much more than that, but "time served" is, on average, only 60% of the original sentence, and in many cases, less than half. Plenty of other states have a reputation for more lenient sentencing than Florida, and more lenient parole boards.

          • by PopeRatzo (965947) on Wednesday July 16, 2014 @08:42PM (#47471723) Homepage Journal

            In 1987, the average time-served for 2nd degree murder in Florida was 6.8 years [state.fl.us]. That is more than five, but that is the average, so many murders served less time.

            Do you know how to read a graph?

            If you look at the page you link to, you will see that the 6,8 year average for second degree murder was twenty years ago. The average by 2003 climbed to 21,6 years and the average murderer close to 27 years.

            Now, since your original statement was in the present tense I'm still going to have to go ahead and call bullshit. The average SECOND DEGREE murder convictee will spend 21.6 years in the joint as of 2003, and the sentences were on the rise at that time. With all the mandatory sentencing laws going around, I will bet you that the average is higher today, ten years later.

            Also, remember we're talking about Florida. If you're white and you kill a black guy in Florida, and you pay a $25 fine and get two tickets to a Marlins game and a coupon for more ammo.

            So, there's still no indication that "many murderer spend less than 5 years in jail". You wanna hit up the Google and take another shot at it? I've got nothing to do tonight.

    • Companies don't pay fines until their less than the profit made from the behavior. It's scary to think how much money Apple must have made off fixing the markets.
    • the idea from Prizzi's Honor, where you take what they find most valuable....

      throw the CEO in jail, another one pops up in their place...

      However, reduce the entire board of director's salaries to $100K a year for 5 years.....

      Now they will think twice......

      Also, the difference in their current salary and $100K does NOT stay in the company, it is divided up equally to all schools or something of that nature...
  • LMAO (Score:1, Insightful)

    by Pope (17780)

    Yeah, much better to let Amazon to run all the book publishers out of business. :rolleyes:

    • Re:LMAO (Score:5, Insightful)

      by whoever57 (658626) on Wednesday July 16, 2014 @04:54PM (#47470243) Journal

      Yeah, much better to let Amazon to run all the book publishers out of business. :rolleyes:

      Yes, the DOJ should totally prosecute the theoretical future anti-trust actions by Amazon, while ignoring the actual increase in prices brought about by market manipulation of Apple. :rolleyes.

      • Yeah, much better to let Amazon to run all the book publishers out of business. :rolleyes:

        Yes, the DOJ should totally prosecute the theoretical future anti-trust actions by Amazon, while ignoring the actual increase in prices brought about by market manipulation of Apple. :rolleyes.

        The future is here: http://www.slate.com/articles/... [slate.com]

        • by Anonymous Coward

          Right? So what side are you on again? Amazon is selling books at 'full list price'...hmm, seems to me that Hatchet/publishers have an option, reduce the 'full list price' of the books Amazon is selling. Presumably it's within Amazon's contract rights to sell books up to the price (but no higher) that the publisher tells others they have to charge, why should Amazon charge less than that? Why does Amazon have to take 'pre-orders'? Why does Amazon have to promote a book at all? The only thing that struck me a

          • Hatchet's contract with Amazon expired in March. Amazon tried to open negotiations with Hatchet in January for a renewal, but Hatchet declined to respond. Hatchet have continued to drag their feet on a new contract ever since. I understand that some of the issues with delayed shipments is because there is no contract and Amazon do not therefore stock Hatchet books until there is an order and so they have to rely on their supply chain to supply the title - i.e. Hatchet and wholesalers. This also explains why
      • Re:LMAO (Score:4, Informative)

        by Anubis IV (1279820) on Wednesday July 16, 2014 @06:05PM (#47470811)

        Setting aside Apple for the moment, there's nothing "theoretical" about Amazon engaging in actions of this sort. They've been doing it as long as Apple has, at least.

        Using most favored nation clauses and the agency model, which is exactly what got Apple in trouble: http://www.selfpublishingrevie... [selfpublishingreview.com]
        Leveraging their near-monopsony to try and gouge the publishers: http://www.teleread.com/ebooks... [teleread.com]
        Making hard-to-implement immediate demands when the publishers pushed back: http://www.thepassivevoice.com... [thepassivevoice.com]
        Delisting multiple publishers during re-negotiations: http://time.com/110412/amazon-... [time.com]
        Jacking shipping times from a few days to 3-5 weeks: http://www.washingtonpost.com/... [washingtonpost.com]
        The author's guild is outright accusing Amazon of violating the Sherman Antitrust Act: http://bits.blogs.nytimes.com/... [nytimes.com]

        Spend 30 seconds Googling around. You'll be shocked at what all Amazon has already done when it comes to this industry, and it's only been getting worse in recent years. It's like looking inside the door at a sausage factory: you'd have wished you never looked.

        • Re:LMAO (Score:5, Insightful)

          by whoever57 (658626) on Wednesday July 16, 2014 @07:29PM (#47471371) Journal
          With the exception of the smashwords issue, all of those articles relate to Amazon fighting with publishers. Not one of those articles alleges (apart from the smashwords issue) that Amazon is forcing up the prices at other retailers.What does Wallmart do every day: negotiate with suppliers to get the best deal for itself. What is Amazon doing here?

          Yes, there is a risk that Amazon may be so dominant that it can push up prices, but that is mostly a theoretical risk (smashwords excepted).

          So, perhaps an investigation is warranted, but, in no way does that mean the Apple should not be fined for its actions.
          • By no means was I suggesting Amazon's actions absolve Apple of anything.

            That said, you're only considering the one side of the market (i.e. whether they are abusing their near-monopoly), whereas I was addressing the other side of the market (i.e. whether they are abusing their near-monopsony). Just as it's illegal for a company to abuse their dominant position to force prices up since people lack alternative choices to purchase, so too is it illegal for a company to abuse their dominant position to force do

      • by mbourgon (186257)

        Technically, anti-trust cases ARE usually retroactive. And if they can compete with higher prices, more power to them. But I'm willing to bet right now Hachette would much rather have competition than be bent over by Amazon. The fact that Hachette did it to themselves (via their insistence on DRM) just makes the schadenfreude pie even more delicious.

    • When I got into a discussion including an author, I realized something.

      There are no good guys in these disputes. The publishers do their best to rip off the authors. Amazon is trying to beat the publishers into submission so it can control the eBook industry. Apple et al. tried to set themselves up to not have to compete and thereby make lots of money.

      Now, I do sympathize with the authors. They aren't in this fight. I don't sympathize with publishers, Amazon, or Apple on this.

  • by dirk (87083) <dirk@one.net> on Wednesday July 16, 2014 @04:43PM (#47470131) Homepage

    The thing I haven't seen addressed (and probably never will) is exactly how much money Apple was able to make from this. My guess is that they benefited far more than 450 million dollars from this. So if that is the case, why would they not do the same thing again since they came out ahead in the long run? You can't make the penalty less than what the company made by breaking the law, as it just becomes a cost of doing business at that point. If they don't get caught they make a boatload of money and if they do get caught they just make less money (but still make money).

    • Opportunity cost (Score:4, Insightful)

      by KamikazeSquid (3611985) on Wednesday July 16, 2014 @04:51PM (#47470199)
      You don't have to eliminate all possibility of profit for the fines to be an effective disincentive ... you just have to reduce profit to the point where engaging in different kinds of business or modifying business practices becomes more profitable than the alternative.
    • by Anonymous Coward

      Your assumption is that Apple purposely "broke the law" in order to earn a defined profit. If you look objectively at what they did you could reasonably conclude they were just trying to enter a new market and take on a formidable competitor (Amazon) in a meaningful way. Maybe they did technically break a law (the judges think so) - but what they did was certainly not price fixing in the traditional sense. They happened to be negotiation a bunch of contracts regarding pricing at the same time because it wa

      • by 0123456 (636235)

        Dude, you might want to actually learn something about the case.

        • He's partially correct. A large part of the issue was that they were accused of colluding in this regard. Another part, however, was that they combined Most Favored Nation clauses and the Agency Model for doing business. Neither of those latter two are considered illegal, in and of themselves, but together with the each other and the collusion that was alleged (e.g. there's a story about the execs from the publishers and Apple all getting together at a boathouse to talk), they were considered a form of pric

    • by Anubis IV (1279820) on Wednesday July 16, 2014 @05:35PM (#47470569)

      My guess is that they benefited far more than 450 million dollars from this.

      The entire eBooks market was only making $3 billion in revenue [digitalbookworld.com] in each of 2012 and 2013. And I think we'll all agree that the market of today is much larger than it was back in 2010, when Apple and the iPad entered the scene with their combination of an Agency Model and Most Favored Nation clauses, which were deemed to be anticompetitive when used together.

        Apple's share of the market in 2010 was somewhere between 10% and 20% [the-digital-reader.com], depending on who you believe (most suggest it was 10%, but let's go with 20% for the sake of argument, since it'd mean they'd have made more money). So, if we use 2012's numbers (which, again, will be larger than 2010's actual numbers), their revenue would have only been $600 million at most during that time. I'll admit that I am not an accountant, so I may be misusing these numbers, but as I understand it, their 30% cut for the agency model would be taken out of the $600 million, meaning they'd receive roughly $180 million in a year.

      To say the least, you'd have a hard time making the case that the $180 million they made was somehow $450 million or more greater than the amount they'd have made had they not engaged in anticompetitive practices. Though, if I recall correctly, treble damages were being pursued, so that may explain a large chunk of the discrepancy. Even so, it is highly doubtful Apple benefitted by anywhere even in the ballpark of the amount they are being fined.

      • Those numbers don't tell the whole story. iBooks doesn't exist to make a profit selling books, it exists to make the iPad seem like a plausible platform for reading books. Similarly, Amazon gets a significant benefit from locking people into the Kindle ecosystem. The $180M in cash that Apple gets is nice, but it's nothing compared to having a load of people who have bought books that will only work on an Apple device.
  • by Kookus (653170) on Wednesday July 16, 2014 @04:51PM (#47470205) Journal

    So what does that come out to?
    They sell something like 800 million books a year:
    http://www.digitalbookworld.co... [digitalbookworld.com]

    Multiple that by 9,000 per infringement:
    http://blogs.wsj.com/law/2012/... [wsj.com]

    A conservative estimate would have them owing:
    7,200,000,000,000

    Or if you don't want to count the 0's: 7.2 trillion dollars.

    I think they should fork over the 7.2 trillion; that'll teach them a lesson.

  • by Tablizer (95088) on Wednesday July 16, 2014 @04:53PM (#47470231) Homepage Journal

    It appears that one key to Apple's rocketing "success" under Jobs was that he knew he was dying soon and burned bridges left and right in order to grab as much early-mover market-share as possible to gain leveraging power for Apple.

    People couldn't blame his bad moves on Apple itself because the dude behind it would be worm-bait when it all came out such that the reputation of the company wouldn't take such a huge hit. He was a voluntary shock-absorber.

    We also have the employee "poaching" situation in addition to this Ebook move. I bet more will come out someday.

    One has to give Jobs credit for using every weapon at his disposal, including death. His slimebaggery was masterful chess (except maybe for ignoring doctors).

    • Jobs was doing drastic things from the time he returned to Apple, including slashing the number of Mac models, introducing the iMac, the iPod, the iPhone, and the iPad. He wasn't close to dying when the iMac came out, or the iPod. I really, really doubt that he timed his dick moves so that he could posthumously take blame off Apple.

      • by Tablizer (95088)

        I didn't say the dying angle was the entire reason for Apple's success, just a notable part of it. Most of his (known) Apple brush-ups with legal issues appear to come after he knew he was dying.

  • Just like people called for with Microsoft a number of years back, Apple should be broken up into a content-providing company and a hardware manufacturer. Their eBook intiatives that are being scrutinized now were a clear attempt to tie up and monopolize the ebook industry. Fair play would dictate that the people calling for Microsoft to be 'broken up' should be calling for the same for Apple.

    Then maybe I could run MacOS on my Acer.

    • Fair play indicates that monopolies should be broken up, not that all companies should be broken up. Note that MacOSX is something of a loss leader for Apple's hardware. Split it off from the hardware and (a) there will be no real interest in maintaining or improving it (OSes are expensive these days), and (b) Apple computers will sell a lot less.

      • If Apple split MacOSX off from the hardware, and opened it up, it would first kill off desktop Linux almost entirely, and then probably go for Microsoft in a big, big way.

        It would also kill Apple's desktop hardware, but they do make some nice laptops that would survive. And if they maintained proper leadership of the MacOSX project, they could end up the head of a huge Open Source desktop market.

        But Apple seems more interested in selling sugar water to kids (shiney consumer stuff) these days.

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