Just how big a part did Apple play in the alleged e-book pricing conspiracy that anti-trust investigators are looking into, and the class-action suits that have been filed? Jeff Roberts at PaidContent takes a look at the allegations. Effectively, class-action lawyers claim Apple wanted to cut Amazon off from competing with its own mobile platforms for distributing media.
However, Roberts points out, this may be putting too great an emphasis on the importance of e-books in the market. Unlike Amazon, Apple makes its money from its high-margin hardware, and the content is largely just a reason for people to buy that hardware. The only way the lawyers’ claims make sense would have been if Apple was trying to cut Amazon out of the tablet market all the way back in early 2010—when Jeff Bezos was still saying there was no possibility of a color Kindle device any time soon.
At any rate, there are so many lawsuits and investigations going on that it could take time just to decide how they will be handled in court. It will be interesting to see what comes of all this legal wrangling.
Apple has never blocked Amazon from having it’s own Kindle app on the iPad or iPhone you just could not sell your content through your app and bypass Apple getting a cut and yet Amazon blocked anyone else from being on their Kindle.
Good luck showing how Apple intended to cut Amazon off from competing.
I found that Jeff Roberts piece surprisingly lacking. Steve Jobs explained to Walter Isaacson exactly why they dreamed up agency pricing — to break into the ebook business which Amazon was dominating at the time. It had nothing to do with Amazon’s tablet entry. It was all about iTunes vs Amazon competing as the top sellers of digital goods like music, movies and ebooks.
But the legal case has nothing to do with Amazon. Price fixing is about consumer harm. Ebook prices at all vendors rose after what appeared to be a coordinated effort by major publishers to impose agency pricing on all ebook sellers. The legal case will come to down to whether consumers were harmed and whether the big publishers coordinated their actions (perhaps using Apple as an intermediary) to a degree beyond what the law allows.
Aaron: “Price fixing is about consumer harm” is a quaint notion, but that’s not how the law perceives it. The issue is not about whether consumers are harmed — an e-book isn’t a necessity of life, so calling it “harm” is being overly dramatic anyway. The issue is about whether *competition* is harmed.
And here’s the thing. Over the past few decades, the US Federal courts have very much swung to the notion that the big concern is about the competition among the producers, not among the retailers. Agency pricing allows each publisher to establish its own prices in competition with the other publishers, and that’s the legalistic bottom line. I’m not saying I agree with it, but that’s what the situation is.
Furthermore, the relatively even pricing for various types of e-books among the publishers is considered by free-market economists to be an indication that competition is present: that those represent the best prices each publisher can afford to offer. Here, one can wave one’s hands at how a James Patterson e-book isn’t interchangeable with a Janet Evanovich e-book, but my guess is that the courts aren’t going to be greatly concerned about that. I could be wrong (it’s been known to happen).
The question before the courts is whether there was collusion between the publishers, mediated by Apple. Another question is whether Amazon was engaging in predatory practices by selling e-books below cost, although I suspect that’s not going to get much play; Amazon was named in only one of the class-action suits, and I don’t think the complaint was about predatory practices. Again, I could be wrong.