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U.S. district judge Denise Cole declares Apple (AAPL) guilty of conspiring to fix e-book prices,...

U.S. district judge Denise Cole declares Apple (AAPL) guilty of conspiring to fix e-book prices, in violation of antitrust law, and says a damages trial will take place. Apple's publisher partners have already settled with the DOJ. The ruling arguably represents a win for e-book rival Amazon (AMZN), which wants to maintain the right to set its own e-book prices (regained last year following publisher settlements with the DOJ and EU).
Comments (44)
  • Camden
    , contributor
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    I'd say the odds are about 3-to-1 that the Supreme Court reverses this decision.
    10 Jul 2013, 09:37 AM Reply Like
  • rocback
    , contributor
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    The favored nation clause is in every business agreement in this country where the party can put it in. This is not price fixing. The judge made pretrial comments that should have conflicted her out.
    10 Jul 2013, 01:14 PM Reply Like
  • Camden
    , contributor
    Comments (1328) | Send Message
     
    I don't think her pre-trial comments are a problem because this was not a jury trial. That, and she was making the comments based on documents presented by the prosecution – not simply stating a blind opinion or bias.
    10 Jul 2013, 06:52 PM Reply Like
  • Camden
    , contributor
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    After reading much of the judges decision I've changed my mind. The DOJ's case is stronger than I realized. I now think the odds of a reversal are maybe 50/50.
    11 Jul 2013, 09:31 AM Reply Like
  • dgy
    , contributor
    Comments (85) | Send Message
     
    9th circuit in SF? More reversals than any other. We'll see.
    10 Jul 2013, 09:40 AM Reply Like
  • MJ Pragmatist
    , contributor
    Comments (117) | Send Message
     
    All of the solar panels that Apple is installing should help it in the 9th circuit court in SF.
    10 Jul 2013, 09:50 AM Reply Like
  • rickraphael
    , contributor
    Comments (281) | Send Message
     
    The trial was held at the US District court in Manhattan.
    10 Jul 2013, 10:05 AM Reply Like
  • $vix
    , contributor
    Comments (435) | Send Message
     
    Denise Cole must be using a crappy Kindle Fire in lieu of an ipad. While I elected to drop out of law school to pursue capitalism, I imagine this ruling will be overturned on an appeal.
    Amazing that no charges filed against Amazon as I believe there was a case precedent that established that a retailer could sell for less than msrp but was not allowed to advertise pricing lower than the msrp. But, as traders we know that in this bizarro world, Amazon can do no wrong.
    10 Jul 2013, 10:12 AM Reply Like
  • LibertyCampaign
    , contributor
    Comments (506) | Send Message
     
    Time for a replacement to the rationed iPhone technology, meet the new Z10! http://bit.ly/1bnSpAX
    10 Jul 2013, 10:14 AM Reply Like
  • scott trader
    , contributor
    Comments (4679) | Send Message
     
    Exchangeable battery ie as in loose connections was a bugaboo for rimm years past.....constantly rebooting problems...
    10 Jul 2013, 10:56 AM Reply Like
  • MajorDude
    , contributor
    Comments (252) | Send Message
     
    So, Amazon sets a price of $9.99 for EVERY e-book. That's not price fixing.

     

    Amazon sells every title as a loss and hastens the bankruptcy of Borders and Barnes & Noble and ever mom and pop bookstore on the planet. That's not price-fixing.

     

    Apple wants to charge a variety of prices depending on say, the length of the book or the popularity of the author. That's price fixing.

     

    I get it.
    10 Jul 2013, 10:24 AM Reply Like
  • Jugurtha
    , contributor
    Comments (6) | Send Message
     
    Hello,

     

    Price fixing isn't fixing a price for an item. It is making an agreement with other vendors to decide a price of an item (whether it would be increasing, decreasing or any other decision on the price that could be viewed as non-competitive).

     

    Amazon fixing the price of its own items at $9.99 may be viewed as dumping, but not price fixing in my book. Unless Amazon came up with that number after discussions with another competitor, which Apple did, allegedly.
    10 Jul 2013, 11:46 AM Reply Like
  • DianeLee
    , contributor
    Comments (352) | Send Message
     
    $9.99 on "EVERY e-book" not entirely factual. Prices on just-released books often begin higher, lower after initial introduction, often reduced according to "shelf life" and demand. AMZN also lists "offered by" name of publisher in every case that I know of, and agreements with publishers factor into list prices. Important to note, tho, that APPL has already "settled" with DOJ.
    10 Jul 2013, 12:19 PM Reply Like
  • losbronces
    , contributor
    Comments (642) | Send Message
     
    All e-books for $9.99? When is the last time you bought an e-book at Amazon? Your statement is not correct.

     

    Prices for my last ten e-book purchases (before sales tax, which was charged): 12.74, 3.99, 10.99, 1.99, 4.27, 1.99, 9.99 (there is one), 12.99, 8.99 and 1.99.
    10 Jul 2013, 02:35 PM Reply Like
  • DianeLee
    , contributor
    Comments (352) | Send Message
     
    Love it when a poster presents facts. Average out to benefit the reader, plus deals are common. I also went back to check my Kindle lists and found that most 9.95 prices were "offered by" Random House Digital as the publisher. just an fyi. Sometimes I do think the "cult" of Apple still accounts for most complaints of AMZN. To be competitive, don't complain about the competition; increase the value of product and price competitively. Hmm. The same should go for Govt. (and to anyone who might wonder...yes, I'm long AMZN, on fundamentals)
    10 Jul 2013, 03:18 PM Reply Like
  • jeezuz30
    , contributor
    Comments (305) | Send Message
     
    Nope apple wants to charge higher than market rates for books so they can get their thirty percent cut out of every sale. That's price fixing
    10 Jul 2013, 10:41 AM Reply Like
  • Ninja Trader
    , contributor
    Comments (681) | Send Message
     
    No, that's capitalism.
    10 Jul 2013, 11:51 AM Reply Like
  • DianeLee
    , contributor
    Comments (352) | Send Message
     
    True, Ninja. Prices based on whatever the public will pay, and APPL has a long track record of finding that limit.
    10 Jul 2013, 12:21 PM Reply Like
  • Camden
    , contributor
    Comments (1328) | Send Message
     
    jeezuz30,
    Higher than market rates? Apple did not care what the price was that the publisher set. They simply wanted to be sure they could take 30% and that they be allowed to sell at the same price as any other market participant.
    10 Jul 2013, 07:26 PM Reply Like
  • pocohonta
    , contributor
    Comments (561) | Send Message
     
    hmm, I wonder why Apple stock when slightly up instead of down this morning? Oh yeah, it falls on good news and rise on bad news.
    10 Jul 2013, 10:42 AM Reply Like
  • imac007
    , contributor
    Comments (468) | Send Message
     
    I find it ludicrous that this judge was even allowed to hear the case after comments she made pre-trial.

     

    http://bit.ly/12r31Hs

     

    The issue behind the issue.
    Is Amazon essentially a monopoly?
    The answer is NO.
    Is Amazon essentially an ebook monopoly?
    The answer is YES.

     

    No evidence is more damning than the problems at Barnes & Noble. The CEO has resigned due to their inability to make inroads against Amazon's monopoly position.

     

    In recent times Amazon has adopted two strategies.
    1) offer kindles for cost (selling the customer the shopping cart)
    2) aggressively selling selected ebooks at $9.99 to undercut competitors and drive more kindle sales.

     

    Their margins reflect the impact. The strategy is monopolistic in nature; establish an ecosystem and grow it as fast as you can. Once the pipeline is in place you can put any product in it. Amway have a similar model.

     

    To break the monopoly, the publishers had to act as a united group. Their strategy was to use the only ecosystem that was big enough to compete, Apple's, to regain leverage. They could treat Amazon like the secondary movie business and Apple like the first run movie theatre. An iBook exclusives and special promotions threat, should loosen Amazon's dictatorial role in pricing. Looks good on paper, but enter the Federal government, after Amazon is allowed to define the situation as "collusion", rather than "defensive".

     

    Apple's case should be: Just because the publishers chose to use our ecosystem to be a place to do battle, doesn't make us part of a "conspiracy", as the publishers have "admitted".

     

    This is akin to blaming Little Big Horn of being guilty of conspiring to massacre Custer and company.

     

    Apple get a flat percentage of all sales. Higher prices pay them more. While true, numbers matter, and if higher prices negatively impact sales volume, due to uncompetitive pricing, it can hurt revenue.

     

    Apple's claim is that they do not set prices, developers and authors do.
    Amazon would claim that as a retail entity, they have the right to set their retail prices, and to aggressively pursue the lowest wholesale price for acquiring products.

     

    Apple's difficulty is the publishers caved. They needed to make their case about Amazon's monopolistic position of leverage its position, in the marketplace, to force pricing. Competition was no longer the determinant of price, as a free market, would provide. The publishers needed to assert their rights to the same standard as Amazon claims, the right to set their price.

     

    Amazon saw the writing on the wall early and now have books priced above $9.99 with a note saying the publisher has set the pricing.

     

    The publishers plead guilty. Technically, they conspired, but they actually won. Amazon didn't like the spotlight. Publishers sales in the iBook store were insignificant in the bigger picture. Fines will simply return profits they wouldn't have received if sold at Amazon.

     

    Meanwhile this judge wants to prosecute Apple of conspiracy against the Supermarket, when they let producers set up a Farmer's Market, in their parking lot.
    10 Jul 2013, 10:47 AM Reply Like
  • seekasp
    , contributor
    Comments (108) | Send Message
     
    Amazon is doing the consumers the favor. Books are ridiculously overpriced, especially when you compare how they are priced in the Asian market. So what's wrong with selling them lower than the MSRP? After all, it's Manufacturer's _Suggested_ Retail Price. So I see no wrongdoing from Amazon's part.
    10 Jul 2013, 11:18 AM Reply Like
  • DianeLee
    , contributor
    Comments (352) | Send Message
     
    Agree, seekasp. Also, Amazon offers fair pricing on e-books to drive the market TO its e-readers and I believe depends more on volume for profit.
    10 Jul 2013, 12:26 PM Reply Like
  • jpintoctr
    , contributor
    Comments (414) | Send Message
     
    Wait and see what happen when Amazon finish with the competition.
    10 Jul 2013, 10:11 PM Reply Like
  • imac007
    , contributor
    Comments (468) | Send Message
     
    Amazon have changed their pricing since this lawsuit was launched.
    I made 26 purchases from Amazon in 2013. 25 are for books, 21 were ebooks.
    12 of those ebooks were $9.99 or less. 4 were exactly $9.99.
    In 2012 I made 56 purchases. 20 of those were ebooks at $9.99. In 2011 130 purchases with 56 ebooks at $9.99.
    A lot of purchases were under $9.99.
    Prior to the suit the most common single price was $9.99.
    11 Jul 2013, 12:25 PM Reply Like
  • agnesofdog
    , contributor
    Comments (2) | Send Message
     
    when was the last time you got a kindle book for 9.99? most of the time on amazon they cost more than the paperback. I was told that all books would be 9.99 or less, but it aint the case on amazon
    10 Jul 2013, 11:47 AM Reply Like
  • sduris
    , contributor
    Comments (557) | Send Message
     
    Seriously, people? Everyone else named in this settled. Why wouldn't AAPL be found guilty?! If AAPL insists on using the courts as a business strategy (advised by so many others not to, I stopped counting) - the knife cuts both ways - sometimes you win, sometimes you don't.
    10 Jul 2013, 11:54 AM Reply Like
  • Camden
    , contributor
    Comments (1328) | Send Message
     
    sduris,
    Seriously.
    Apple had a separate agreement with each publisher, never knowing that publishers were talking to each other. The agency model is not illegal. In fact, it has been found legal in several cases. Would it have been illegal for Apple to sign such an agreement with a single publisher? Two? Three? If not with one or two, why then not with five? It seems to me Apple is being found guilty of the publisher's wrongdoing – not Apple's.
    10 Jul 2013, 07:48 PM Reply Like
  • sduris
    , contributor
    Comments (557) | Send Message
     
    "never knowing that publishers were talking to each other." I needed a laugh for today - I guess this is it.
    10 Jul 2013, 08:36 PM Reply Like
  • jpintoctr
    , contributor
    Comments (414) | Send Message
     
    I think Apple choose the legal path and not accept such a ridiculous accusation for a principle and to trust the system. The idea that the readers will benefit is in question if Amazon consolidate the status as a quasi monopoly. The Judge and the DOJ have in mind an abstract reader, forgetting dozens of failed independent bookstores. They forgot the creators or authors that are entitle to let the public decide if the pay more for their work.
    Today Amazon is not anymore a cultural industry, it is a super market that mix books with lettuces, detergents and shoes. A black day for culture. We deserve a better justice system
    10 Jul 2013, 10:10 PM Reply Like
  • Camden
    , contributor
    Comments (1328) | Send Message
     
    LOL. Where's your evidence?
    12 Jul 2013, 09:37 AM Reply Like
  • Deja Vu
    , contributor
    Comments (1221) | Send Message
     
    Apparently the apple long investors on this thread have trouble understanding the difference between a retailer setting their own price whatever that is ( Amazon) and a retailer (Apple) conspiring with publishers to compel other retailers (Amazon) to retail at the same inflated price as the conspiring retailer (Apple). In any case, given that Apple admitted to price fixing over the same matter in Europe, I wonder why they bothered to go to trial. Perhaps they hoped the Apple v. Samsung jury would show up in a non jury trial.
    10 Jul 2013, 11:55 AM Reply Like
  • sduris
    , contributor
    Comments (557) | Send Message
     
    I hope that AAPL long (which I am) or fan boy-itis doesn't come into play - I know it does. I'd say the same for the AAPL-haters. And, I would refer all to The Godfather - don't get emotional, it clouds your judgment. Me, I'm objective and rational for the most part, until I see someone like Kutcher trying to play Steve Jobs. :)
    10 Jul 2013, 12:00 PM Reply Like
  • Humble Eagles
    , contributor
    Comments (1566) | Send Message
     
    Well, the fact that the stock hardly reacted may be another sign that AAPL went down $100-$200 too much! Apple is selling at about 60 cents on the dollar compared to the S&P 500 for PETTM. It is insanely cheap. That isn't subtracting the cash, either. Why is WS giving Apple shares away? Obviously, they think Apple won't ever bring a new product out again....
    10 Jul 2013, 12:49 PM Reply Like
  • jpintoctr
    , contributor
    Comments (414) | Send Message
     
    A black day for the cultural industry. To call Apple the "ringleader" to fix the price is beyond real. To lower prices to drive out the competition as Amazon has done with independent bookstores to set their pricing policies is a monopoly. The DOJ was barking at the wrong dog.

     

    Time will tell. The appeal will show how incompetent the judge was.
    10 Jul 2013, 01:10 PM Reply Like
  • alyoshak
    , contributor
    Comments (2) | Send Message
     
    Case law sites please. If you want to make sweeping statements about how antitrust laws work in the US (both predatory pricing and hub and spoke conspiracies), it would be great if you could site some sources.

     

    If you want to make claims that Amazon destroyed independent bookstores, some economic information would be nice. Or you could note how big box put more pressure on independents than Amazon ever has.

     

    Or you could just make it clear that this is all your opinion based on a complete lack of understanding of law or economic analysis.
    10 Jul 2013, 04:42 PM Reply Like
  • slushhead
    , contributor
    Comments (4) | Send Message
     
    Or you could make an effort to learn the difference between "site" and "cite". Hard to take you seriously...
    10 Jul 2013, 10:03 PM Reply Like
  • seekasp
    , contributor
    Comments (108) | Send Message
     
    No. What difference does it make whether he used cite or site? The bottom line is you understood what alyoshak meant. That's what languages are for, to communicate, and not to show off how good you are at memorizing all the homophones. The nerve of those people that say they can't tolerate these things is even more beyond real..
    11 Jul 2013, 11:12 AM Reply Like
  • MajorDude
    , contributor
    Comments (252) | Send Message
     
    This isn't a law forum.

     

    The fact is that Amazon launched Kindle as a platform selling e-books at below cost with a dictated price. Sellers of physical books at double the $9.99 price or more could not compete - and Borders along with the last remaining indies. That literally was price-fixing...Amazon dictating the selling price of the books regardless of length, author, content or value.

     

    Apple subsequently introduced the iBook market - adding competition, giving publishers a choice of how to market their books in the emerging digital market. They could charge not what Amazon dictated - but what readers were willing to pay. Prices fluctuated - no longer fixed.

     

    The issue isn't just whether it's a "good deal" for readers - but whether it's a fair market for sellers. The whole point of anti-trust laws is to keep monopolies at bay - consumers and businesses are ultimately protected by fair market practices, not just by cheap prices.
    12 Jul 2013, 08:41 AM Reply Like
  • RycheMykol
    , contributor
    Comments (352) | Send Message
     
    When a company increases the price of a product, thats not called "price fixing".
    This judge should get a refund on her Law Degree.

     

    I was going to buy a new PC today, but the prices went up. Maybe the judge can issue a judgement against Dell for price fixing.
    10 Jul 2013, 03:00 PM Reply Like
  • seekasp
    , contributor
    Comments (108) | Send Message
     
    AAPL can charge whatever they want for whatever product they sell. The allegation is that AAPL was engaged in an agreement with other vendors to fix the price (hence price fixing), which is the core issue at hand here.
    10 Jul 2013, 04:30 PM Reply Like
  • Camden
    , contributor
    Comments (1328) | Send Message
     
    seekasp,
    I believe the evidence showed Apple had a separate agreement with each publisher, never knowing that publishers were talking to each other (at least there is no evidence that is not the case). The agency model is not illegal. In fact, it has been found legal in several cases. Would it have been illegal for Apple to sign such an agreement with a single publisher? Two? Three? If not with one or two, why then not with five? It seems to me Apple is being found guilty of the publisher's wrongdoing – not Apple's.
    10 Jul 2013, 07:57 PM Reply Like
  • seekasp
    , contributor
    Comments (108) | Send Message
     
    I don't know the details of that. The point is, whether AAPL is guilty or not, we won't know until we get to the bottom of it.
    Publishers are notorious for driving prices higher, so I would be surprised if it were all AAPL's doing.
    11 Jul 2013, 11:16 AM Reply Like
  • imac007
    , contributor
    Comments (468) | Send Message
     
    Camden
    It's like a day at the races. The publishers are betting on what they believe to be their winners and want to get paid off. The first place horse and last place shouldn't pay off the same.
    Apple are the parimutuel window and each bet is separate.
    The publishers picks the horses and Apple don't care which horse or the size of the bet. They just get paid for the track and handling the collection and payouts.
    The track could care less what side bets are made between the bettors.
    12 Jul 2013, 11:41 AM Reply Like
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