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View Full Version : Apple loses appeal on e-book price-fixing suit



Lifeisabeach
06-30-2015, 10:43 PM
Appeals court says Apple is liable for e-book price fixing | Ars Technica (http://arstechnica.com/tech-policy/2015/06/appeals-court-says-apple-is-liable-for-e-book-price-fixing/)


The Second Court of Appeals has affirmed (PDF) that Apple is liable for engaging in e-book price fixing, holding up the 2013 judgment of a district court that ruled in favor of the Department of Justice (DoJ) and 33 states.

I can't believe this was one of their actual arguments:

...Apple said that it worked with publishers to hit a price point that would help Apple be profitable enough to enter the e-book market.

chas_m
07-01-2015, 02:23 AM
I'm not just taking Apple's side on this because Apple, I'm taking Apple's side on this because they were, in fact, correct -- but they do seem to have trouble explaining this to judges!

Thank goodness at least one judge understood what was going on, and didn't (as the quote you post attests) wholly misunderstand Jobs's very clear, very plain-spoken email that was NOT suggesting a price "that would help Apple be profitable enough to enter the e-book market" -- he was saying that you can go with Amazon and lose your shirt, or you can use the agency model to price books so that you (the publishers) make a profit. Apple's plan was to get 30 percent either way, so it wouldn't have mattered to them at all what price the e-books sold at, they still get 30 percent.

Why such learned judges (not an incompetent like Judge Cote) can't work that out when it is right there in plain English I cannot fathom. And once again, the judges chose to ignore (or go alone with Cote's ignoring) of both the fundamentals of antitrust law (a vertical seller cannot, by definition, participate -- let alone lead -- a horizontal and previously-existing horizontal conspiracy among the publishers), and the exsculpatory evidence that Sony, not Apple, first approached the publishers to urge them to adopt the agency model to prevent Amazon from ruining them. These are facts.

Lifeisabeach
07-01-2015, 11:10 AM
I'm not just taking Apple's side on this because Apple, I'm taking Apple's side on this because they were, in fact, correct -- but they do seem to have trouble explaining this to judges!

3 out of 4 judges surveyed disagree. I don't know what your educational background is, but I'm guessing it's not a law degree, so you'll just have to excuse me if I take the overwhelming majority view of the experts in the field, who I just happen to agree with (I do have a business degree with a couple courses in business law, though that's going way back and my career went a completely different path). It was a form of price fixing by requiring rules guaranteeing no one could compete on price. Now as far as Amazon goes, they may well be abusing their own market position with predatory pricing, and that warrants investigation, but it doesn't excuse Apple's role in what happened here.

Since you like "clear" quotes from Steve Jobs, allow me to throw out a couple.


“We 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’.
“They went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books.’ “
Steve Jobs as J.D.*Rockefeller - Fortune (http://fortune.com/2013/06/02/steve-jobs-as-j-d-rockefeller/)




Asked by the reporter why consumers would pay $14.99 to Apple to purchase an e-book that was selling at Amazon for $9.99, Jobs replied, “Well, that won’t be the case.” The reporter then asked, “You mean you won’t be 14.99 or they won’t be 9.99?” Jobs paused, and “with a knowing nod” responded, “The price will be the same.”
Apple Found Guilty in E-Book Price Fixing Conspiracy Trial | TIME.com (http://business.time.com/2013/07/10/apple-found-guilty-in-e-book-price-fixing-conspiracy-trial/)


Seems pretty clear to me... price fixing.

chas_m
07-02-2015, 03:47 AM
Yes, the price fixing was pretty clear ... among the publishers, who had already agreed (conspired) to push Amazon to adopt the agency model. Not disagreeing with that part.

But antitrust law is very clear on this matter -- a vertical reseller cannot be a part of a pre-existing horizontal conspiracy. Because the publishers settled early, Judge Cote and most of the judges in the appeal ignored the testimony that established that (first) the publishers had already been conspiring to force Amazon to use a sustainable model and (second) that another competitor had already offered the publishers the same deal Apple later did -- months before Apple approached any publisher.

So, IN CONTEXT, we see that Jobs was reporting the current state of affairs, and that Apple did not "lead" a conspiracy, unless it somehow did so months before it even began negotiating with publishers.

Lifeisabeach
07-02-2015, 09:22 AM
Yes, the price fixing was pretty clear ... among the publishers, who had already agreed (conspired) to push Amazon to adopt the agency model. Not disagreeing with that part.

But antitrust law is very clear on this matter -- a vertical reseller cannot be a part of a pre-existing horizontal conspiracy. Because the publishers settled early, Judge Cote and most of the judges in the appeal ignored the testimony that established that (first) the publishers had already been conspiring to force Amazon to use a sustainable model and (second) that another competitor had already offered the publishers the same deal Apple later did -- months before Apple approached any publisher.

^^^^^ citations needed. You aren't a lawyer and I don't take your word on what antitrust law is "clear" about. You sure you aren't getting your countries mixed up?


So, IN CONTEXT, we see that Jobs was reporting the current state of affairs, and that Apple did not "lead" a conspiracy, unless it somehow did so months before it even began negotiating with publishers.

It was Apple who suggested it all and even bullied some of them into it.


In July 2010, Mr. Jobs, Apple’s former chief executive, told the chief executive of Random House, Markus Dohle, that the publisher would suffer a loss of support from Apple if it held out much longer, according to an account of the conversation provided by Mr. Dohle in the filing. Two months later, Apple threatened to block an e-book application by Random House from appearing in Apple’s App Store because it had not agreed to a deal with Apple, the filing said.

After Random House finally agreed to a contract on Jan. 18, 2011, Eddy Cue, the Apple executive in charge of its e-books deals, sent an e-mail to Mr. Jobs attributing the publisher’s capitulation, in part, to “the fact that I prevented an app from Random House from going live in the app store,” the filing reads.

The newly released documents also quote David Shanks, chief executive of Penguin, as saying that Apple was the “facilitator and go-between” for the publishing companies in arranging the agreement.
http://www.nytimes.com/2013/05/15/technology/us-now-paints-apple-as-ringmaster-in-its-lawsuit-on-e-book-price-fixing.html?pagewanted=all&_r=1