U.S.A. v. Apple: DOJ’s last best chance in e-book case has passed

“The Department of Justice spent a little over three hours Thursday cross-examining Apple senior vice president Eddy Cue — the alleged “ringmaster” of an illegal conspiracy to raise the price of e-books — and when it was over it wasn’t clear whether they’d let their last best chance slip through their fingers or whether they never had a chance at all,” Philip Elmer-DeWitt reports for Fortune.

“Part of the problem was that Cue established himself early on as an unusually credible witness. He was calm and unhesitant when he disagreed with the government’s assumptions,” P.E.D. reports. “He made no apology for telling the publishers in late December 2009 that for Apple to enter the e-book market all retailers — including Amazon — would have to switch from the ‘wholesale’ model (where Amazon set the prices), to the so-called ‘agency’ model (where the publishers set them). That was his plan for about two weeks until he realized in early January that it wouldn’t work.”

P.E.D. reports, “That last point may be critical.”

Tons more in the full article here.

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23 Comments

    1. I won’t argue whether its a good or bad idea to give weapons to rebels in Syria or not. I will however take issue with you calling them Al Qiada backed. It’s undoubtedly true Al Qiada did help the rebels as they have been involved with many Arab rebellions, however just because Al Qiada did back them does not suddenly change the rebels there into an arm of Al Qiada.

      Its just more complex than that.

      1. get real and wake up…an interesting aside to Obama Messiah’s head lie writer, Ben Rhodes…his brother, David, is the current president of CBS News. This is the part where we sing “It’s Small World After All.”

  1. This is a pure case of persecution and not prosecution in an ongoing multi-pronged effort to try and derail Apple Corporation.

    I applaud Apple’s efforts in combatting these attempts to make it look bad. “Thinking different” seems to be a way today to act on principle and being a white knight against tyranny.

  2. The DOJ is trying to argue that customers were harmed as a result of Apple + publishers’ collusion to fix e-book prices above the equilibrium level (the price that would be determined in a competitive market). Consumer harm would mean consumers paid more money than they should have, or bought fewer books than they would have. The DOJ says this was achieved by Apple “forcing” publishers to switch Amazon contract terms from the wholesale model (in which Amazon bought e-books outright from publishers and could therefore resell them to customers at any price Amazon wished, even at levels that may harm the publishers’ print books business and even below Amazon’s purchase cost), to the agency model (in which publishers retained the legal right to price their products to customers and Amazon was simply an agent of the seller that collected a commission upon sale).

    But the DOJ position has some shortcomings. First, it is difficult to argue Amazon’s prices represent the equilibrium price level, when Amazon admits these prices were loss leaders, and their intention was to make up losses with sales of Kindles and other e-books, and become an e-publisher. Second, publishers need not have been “forced” by Apple to switch Amazon to the agency model, since it is in publishers’ individual self-interests to protect their existing print-book and publishing business from the predatory pricing decision of Amazon. And since most of Amazon’s business is already handled on an agency basis, their “shocked disbelief” at having to switch to an agency model for e-books appears contrived and self-serving. Third, the DOJ should look at the entire e-book market, not just focus on Amazon’s pricing of publishers’ select “popular and newly-released” titles.

    1. when Amazon admits these prices were loss leaders, and their intention was to make up losses with sales of Kindles and other e-books, and become an e-publisher

      Cross out sales of Kindle Fires. They’re priced below cost as well. But I’ve certainly been noticing JACKED UP prices on e-books to the point of being ridiculous. I’d strongly expect that is their highest profit stream. I’m seeing paper and even hardback prices for the same books at drastically lower prices. That’s the opposite of what should be happening. An e-book is just a data file. No material costs are incurred. IOW: Ripoff.

      Why the DOJ stuck their nose into what is entirely a subject of business strategy, having nothing to do with monopolies or price fixing, is beyond comprehension. My government in FAIL mode. 😛

      1. Hi Derek:

        No, an eBook isn’t just a data file you idiot with no material costs, or rather direct costs.

        A BOOK is simply intellectual property. You’re paying for someone’s IP, just like you do when you rent a movie.

        The direct costs in eBooks are bandwidth, customer support, engineering to maintain systems, QA, and author relations.

        Did you know Amazon charges self publishers 15 cents per 1 MB for their eBooks? So if you sell a 5 MB eBook on Amazon, each sale will deduct 90 cents in bandwidth charges.

        In other words, you’re just an idiot fanboy who’s talking out of his ass oversimplifying things in the context of a person who lacks skill and experience to discuss this shit.

        So kindly shut up.

  3. The e-books from Apple’s iBook is different than the r-books on Kindle. And the immediate potential of even better interactivity possible on Apple’s e-books trumps all.

    So consumers are basically buying different quality of e-books. Why can’t they be more expensive if given added values?

      1. No!

        “Apple must get the same deal as anyone else.”

        NOT

        “Everyone else must get the same deal as Apple dictate’s”

        Apple does not dictate the price. YOU MORON!

        1. Hey Paul:

          You idiot. You can’t read and interpret what people say. You’re delusion makes you see and hear what you want to see and hear. But you’re completely detached from reality.

          Shareholder said:

          “Why can’t they be MORE EXPENSIVE if given added values?”

          I said they can’t be more expensive the way Apple had it because nobody could sell it for any less.

          You got that you honky tonk fanboy idiot?

  4. This reminds me of the housing market. To quote Thomas Sowell
    “What was lacking in the housing market, they say, was government regulation of the market’s “greed.” That makes great moral melodrama, but it turns the facts upside down.
    It was precisely government intervention which turned a thriving industry into a basket case.”

  5. The DoJ is Amazon’s poodle. This poodle’s bark is worse than its bite because it cannot take action against the “too big to fail” Wall Street’s bankers, whose evil machinations have caused great harm to savers who got next-to-nothing interests for their money; breadwinners who lost their jobs; city’s municipalities which became bankrupt on Wall Street’s bad advice and guidance; home owners who were goaded into greed; industries which took Wall Street’s wisdom to pile on debts; the US economy and also the world’s economy which became obsessed with Wall Street’s supposed “ability” to pave streets with gold.

    While Wall Street’s bankers were doing all these evils, the DoJ had been happily dozing. The DoJ should apologize to all American for the abdication of its duty where it matters.

  6. Shareholder: Great point! My daughter bought Rachael Ray’s cookbooks from both Amazon and Apple, what a difference! All the pictures and diagrams are missing on the Amazon e-book. I think Apple should at least acknowledge this for the judge.

    1. Try cutting a quote from an Amazon book, not going to happen. Try it with an Apple bookstore purchase. System-wide cut and paste. Apple expects you to act like an adult. Amazon treats the customer like an unruly child.

  7. Which reign of error are you referring to? Bush the first and Reagan training and arming the afghanis that became al queda?

    Or maybe you meant when bush and Reagan armed and backed saddam Hussein?

    So many idiotic GOP training and arming of terrorists to choose from…

    1. Yawn- I think the topic of conversation is the DOJ going after Apple on pretty vague grounds but political trolling seems to be the game of the day.

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