DoJ dismisses pro-Apple arguments in defense of e-book settlement terms
The DoJ's statement dismisses the 789 comments made by various companies and industry players opposing the body's proposed final judgment, writing them off as "self-serving" and instead lauds certain examples individually picked from 70 supportive letters, reports Fortune.
According to Fortune's Philip Elmer-Dewitt, the DoJ "sidesteps the central criticism" that claims the government would be siding with monopoly, in this case represented by Amazon, while not fostering competition in bringing an antitrust suit against Apple and five publishing houses. Three of those publishers, Simon & Schuster, Hachette and HarperCollins, immediately settled out of court.
The Justice Department first filed suit against Apple in April over an investigation alleging the iPad maker's so-called "agency model" agreement with book publishers bordered on price-fixing. Under the agency model a publisher can set the pricing for content under a "most favored natiions" agreement that forbids them from peddling the same property to another reseller at a lower price. The DoJ claims the way in which Apple and its publishing partners entered into the scheme can be considered an act of collusion, one that ultimately hurt consumers by falsely inflating e-book prices.
Chart illustrating purported halt of e-book price drop as result of Apple's "agency model." | Source: DoJ
The first paragraph of Monday's response neatly sums up the DoJ's argument (via PaidContent):
When Apple launched its iBookstore in April of 2010, virtually overnight the retail prices of many bestselling and newly released e-books published in this country jumped 30 to50 percentâaffecting millions of consumers. The United States conducted a lengthyinvestigation into this steep price increase and uncovered significant evidence that theseismic shift in e-book prices was not the result of market forces, but rather came aboutthrough the collusive efforts of Apple and five of the six largest publishers in the country.That conduct, which is detailed in the United Statesâ Complaint against those entities, is per se illegal under the federal antitrust laws.
Apple argues that its entry into the e-book market disrupted a claimed monopoly by Amazon, which allegedly engaged in "predatory practices" and sold content based on a "wholesale model." Under the internet sales giant's pricing scheme, resellers are able to sell digital content purchased from publishers at below-cost prices to drum up sales.
The Justice Department denies Apple's claims and alleges: "despite its conspiritorial efforts, Apple's entry into the e-book market was not immediately successful. It was, in fact, Barnes & Noble's entry - prior to Apple - that took significant share away from Amazon." According to the body, Apple's "touted innovations" in the market were in development before the iPad maker decided to enter the business, though the response falls short of citing a source for the claims.
As Elmer-Dewitt notes, the DoJ's response presents somewhat of a double standard as it uses "highly charged language" to insist Apple's arguments be "stripped of [their] rhetoric."
Google and Microsoft's recently-announced tablets were cited in the response as evidence of a healthy e-book market post-lawsuit, though the claim is questionable at best considering the two companies are not presenting the devices as clear e-book competitors. The Intel-based version of Microsoft's Surface, for example, is set to be a full-featured tablet expected to run a complete version of Windows 8 when it launches later this year. Google has also launched the Nexus 7, a small form-factor tablet meant for multimedia and internet content consumption. While both devices have e-reader capabilities it is unlikely that either will be marketed as such.
Most recently the DoJ's lawsuit saw political opposition from Senator Charles Schumer (D-NY), who warned the case could "wipe out the publishing industry as we know it" by allowing Amazon to regain its dominant market position.
72 Comments
Any way to blame Google? Lobby money?
Yeah, and whom did Amazon pay off? Campaign contributions? Back-room negotiations? Seems awful odd that the DoJ would be so adamant about this considering the implications. Then again, I would expect nothing less from this current Administration. When is Eric Holder going to be disbarred?
Apparently Apple's chances against the DoJ are pretty decent.
[quote name="Quadra 610" url="/t/151458/doj-denies-pro-apple-arguments-in-defense-of-e-book-settlement-terms#post_2152258"]Apparently Apple's chances against the DoJ are pretty decent. [/quote] I have to wonder if it doesn't come down to who is a Windoze person (now called Android person) Apple hater on the deciding panels these days and who isn't.
The DoJ is ignoring that while Barnes and Noble, Borders and Sony all had ebooks they were forced into selling at Amazon's pricing which was potentially predatory and damaging to all parties but Amazon, which had everything else in their stable to make up losses. They set the prices, not market forces. They had and still have favored nation clauses in place to make sure no one under sells them even for one hour. Those promos like the Starbucks give away are included in this and Amazon had made sure they have the right to 'sell' the same titles for free.
Amazon also tried bullying stunts like removing all books in all formats for publishers that were going to go with iBooks.
And lets keep in mind that Amazon could have said no to the publishers about changing terms. Yes they would have lost some ebook titles but they had the right to make that decision.
And then there's the DoJ's proof that Apple was part of the collusion. The key point seems to be this bit about how Apple mandated that a majority of the major publishers had to agree to the terms. But what is unclear is what the result would have been if they had not. Would Apple have ditched the whole idea or just come up with new terms as the lack of agreement would signify that the publishers didn't want to go with the agency system. Also where is the proof that Apple said that the publishers had to demand agency terms from all services.
The DoJ is also making comments about the 'right' price of books and implying they have the right to set that price. There's a bit of a fallacy in that tact as they don't have such rights. This isn't like food or flu shots or such that are vital to folks staying alive. Books are nice but they aren't a life necessity, particularly in electronic format. If folks don't want to pay they aren't going to die over not buying the books. THey can buy paper or even check out either format from the library.
The DoJ is yelling about letting the market decide, competition etc and yet they are strong arming certain companies into giving up their rights because a noisy part of the public doesn't like the new rules and is demanding heads roll. And they are doing it before any wrong doing is actually confirmed in regards to one group of companies and continuing to ignore possible wrong doing by others (or rather another). That they cherry picked a small cut of the comments to pay attention to just shows that they are totally biased in this matter. Perhaps what we need is for the publishers to collude to sue the DoJ over the matter of what suits they have filed, and more important what suit they never did and apparently won't. Might be good to kick it off with a motion to require everyone involved to disclose if they own stock in Amazon etc and dismiss everyone that does to avoid the possibility that their ownership will make them biased