... And Apple arranged for all the big publishers to raise prices which is plain and simple price fixing.
The agency model allows each publisher to pick the price for their book at the seller takes a percentage. I'm still having a hard time wrapping my head around the idea that this is price fixing. It doesn't prevent other sellers from using other models (Amazon, wholesale model), or other sellers from using the agency model with a different 'cut' or for publishers to set different prices for their books.
It the end, I think this action seems to have the unintended consequence of strengthening the control of Amazon rather than encouraging a competitive environment for book sellers.
The case has been argued or reviewed by every level of the Justice system and Apple has lost every time. They simply violated the Sherman act and the result was noticeably higher prices for the customer. Interestingly there are no apparent winners in the case because Apple hasn't had success selling ebooks and the new higher prices resulted in significantly less sales.
Really? I'm pleading ignorance here but, for example, how could Apple's actions be considered collusion with Amazon (by itself a huge part of the market).
They colluded with Amazon's suppliers. To use your soda example: it's as if 7-11 were growing tired of Walmart door-busting with 1-dime sodas. So they collude with Coke and Pepsi and change the contract for all soda retailers to say "you can't sell soda at a price that you (the retailer) wants. You will sell the soda on our behalf at a price we want"
So let's say there's 6 major publishers because I'm too lazy to look up the correct number. If apple had approached one of them individually and offered them the same deal and they had agreed everything would have been fine. But individually it looks pretty bad. The result would be that on Amazon (where 90% of the sales come from) the one publishers books would be available for $12.99 and 5 other publishers books would be available for $9.99 and they wouldn't compete. So individually the publishers would have turned them down. The illegal part comes in where Apple tells the publisher "Don't worry, we have talked to all the other publishers and they've agreed to the same deal so you won't have to worry about competing." Just like it would be illegal for all the CEOs to get together and agree on one price. It's not suddenly legal just because a third party is facilitating the price fixing.
So you have amazon selling at 9.99 and a fragmented group trying to compete. They owned, by their own calculatoions, 70-80% AFTER the ipad launched.
So you have a single supply channel dictating price. Apple exploited it the other way, increasing prices collectively so amazon didnt blacklist phblishers.
Its not black and white. You have a monopoly and the kartel formed to fight it.
It is pretty laughable that they were fined 450m being anticompetitive, when they actually introduced competition.
So both companies were acting in their iwn best interest. I would almost argue thus is pure capitLism because the only way to offset a monopoly is collude or you will get blacklisted. This is gametheory, and while the optimal societal outcome of this situation may have been Apple accepting a lower price, if you garuntee cooperation you get higher value.
Obviously, the optinal societal utility would be many many distributers giving markets the ability to dictate price instead of the opposite,
Given the situation, they had no choice, and frankly society ended up bettet off as eventually more player were able to compete (although the market would be different with many players and it will necer have that )
1. There is nothing illegal about having a monopoly. It is illegal to abuse monopoly status. When Amazon gets around to abusing their monopoly, the DoJ will act. Accusing of future abuse now is just pre-crime.
2. Apple were free to compete by legal means. They got smacked-down because they chose to break laws, not because they were "fighting a monopoly"
It really is in black and white, as affirmed by Apple losing at every court the case was heard.