According to coverage in the Australian Financial Review, Australia’s competition authority, the Australian Competition and Consumer Commission, is taking a hands-off attitude to Apple’s e-book pricing practices past and present, despite pressure from some quarters to act in a similar fashion to the U.S. Department of Justice Antitrust Division and bring a price-fixing case. Independent Senator for South Australia Nick Xenophon, one of the more outspoken and vocal advocates of consumer rights in Australia, issued a release earlier in July entitled “Rotten Apple?” calling on “the ACCC to initiate an urgent investigation into Apple, following the damning US Court decision. However, according to the reports, the ACCC has now decided not to act.
“Senator Xenophon pointed to changes to consumer laws that made cartel behaviour a criminal offence in Australia in 2009, with sweeping powers for regulators to investigate claims,” Xenophon’s release continued. “The ACCC has had these powers for four years now, and this is an ideal opportunity to test them.” Additionally, “Senator Xenophon called on Apple management in Australia to assure the public that Australian consumers were not also ripped off.”
However, according to the report in the AFR, the ACCC stated: “the conduct of concern occurred in the US and we note that conduct is being sanctioned by the regulator in the US … the ACCC will continue to follow developments to assess whether further follow-up is required in Australia.” As of now, the ACCC has made no formal statement on its website about the case.
Unsurprisingly, the reports also included the by-now inevitable comparison to Amazon and its influence on the ebook market. One former president of the Australian Booksellers Association, Jon Page, was quoted as defending the agency model, which still exerts a strong influence in Australia, and condemning Amazon for “predatory pricing.”
Interestingly, Page also called on Australian publishers to take action against Amazon – though I don’t see quite how this has any bearing on the activities of U.S. publishers in the Apple price-fixing case. Page also warned about potential Amazon dominance of the ebook market in Australia – though once again, I don’t see Australian publishers moving to take any concerted action to keep Amazon at bay Down Under.
Bravo Aussies! They’re showing good sense. Leave the ebook market alone, and the pricing will find its proper level. With ebooks, it’s particularly silly to assume that the Big Six publishers can exert much control over pricing. Most of the factors they’ve used to dominate print publishing in the past, such as volume printing, marketing and distribution, apply little if at all to digital publishing.
It’s ridiculous to call the Apple plus the Big Six a cartel that conspired to hinder trade and keep prices high. Apple wants low ebook prices and the major publishers are too competitive to agree on much for very long. They’re no more likely to form a cartel than cats are to be herded.
Being obsessed with cartels misses the point that cartels require competitors. One company doesn’t–and indeed can’t–conspire with itself, but it can wreck a market by destroying competitors. And that’s precisely what Amazon was doing during the time period when Apple et al were allegedly behaving criminally. It was even using the classic monopolist technique of selling below cost.
I go back and forth on this behavior by the DOJ. Are they sincere but stupid? That’s a possibility, but it’s difficult to imagine someone so stupid they think Apple could be up to no good with 0% of the ebook market at the time of its alleged crimes or how Apple expected to grow that zero share by selling ebooks at a greater cost than Amazon, particularly since there’s a Kindle app for iPads.
And there’s the bizarreness of Amazon, with a 90% market share at the time not only being left unhindered and not investigated, but being allowed to grab up potential competitors such as Audible (audio books) and The Book Depository (online sales).
Years ago, I did research into the papers of Margaret Sanger, founder of Planned Parenthood, mostly in her letters. In the late 1930s, her husband got into trouble for tax evasion. Normally, their conversation would have been private, but at this point in time long-distance phone calls were so expensive, even the rich rarely made them. Also, Sanger was in a New York hospital recovering from surgery while her husband was staying in Phoenix because his lawyers were advising him to claim health reasons and avoid New York state where the investigation was being conducted. The result were some most revealing letters than ended up in her microfilmed papers.
The most interesting part of their exchange was some advice they’d been given. Give an envelope filled with cash to the right person in FDR’s Treasury Department and the case would go away. I don’t know if that was done–their separation ended and the letters stopped–but the IRS investigation was halted.
Stupidity, corruption and perhaps politicized grandstanding–those seem to the options, although the political benefit of this seems to be small if at all. Bashing capitalism only appeals to those who vote Democratic anyway.
Judges matter too. In 2002 I was engaged in a copyright dispute and soon realized that my opponents arguments were so weak and dependent on their ability to bully, that I’d only lose if the judge was stupid. I was fortunate to have a very smart judge, one who eventually dismissed their lawsuit “with prejudice.”
As with Samsung, in this dispute with the DOJ, Apple seems to have had bad luck in their judges. With Samsung, the judge failed in her most basic task: properly instructing the jury. In this dispute, the judge seems to have been so clueless, she virtually announced her decision before the trial even began and rambled on about the case through the trial. Wiser judges stay mute. Apple could win this one on appeal.
Michael: You read my mind.