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The Justice Department vs. Apple vs. Amazon vs. Book Publishers

April 13, 2012
Seal of the United States Department of Justice

If the Justice Department says somebody did something, then whether or not you believe them often depends on your political affiliation. (Photo credit: Wikipedia)

Competitors have been trying for years to find a way to defeat Amazon, and now the public is finally hearing about it.  The competitor’s strategy may have been… collusion. 

According to the Justice Department, book publishers worked with Apple to raise the prices of their new e-books so that Amazon would have to raise its prices too if it wanted to sell the same e-books. These high prices would give publishers more money and Apple a chance to get into the e-reader business with its iPads. 

It’s all pretty complicated for a guy like me who just wants to read and write low brow schlock.  So I’ve tried to break down this legal conflict into terms most people can understand. 

JUSTICE DEPARTMENT vs. APPLE 

The Justice Department claims that the collusion scheme was concocted by Steve Jobs himself.  Steve Jobs?  If Steve Jobs came up with this collaboration between Apple and book publishers, then it must have been a great idea.  Steve Jobs may have been an evil genius, but at least he was a genius.  If only he were alive today, he would crush the Justice Department like the bureaucratic lapdogs they are! 

Unfortunately, for a brilliant Steve Jobs idea to be executed, you need Steve Jobs.  

Even without Steve Jobs, Apple has plenty of geniuses.  The Justice Department is usually lucky to achieve competence.  The Justice Department, however, has power on its side. Without Steve Jobs, I give the edge to the Justice Department. 

APPLE vs. AMAZON 

Apple makes a bunch of cool stuff and sells it for as high a price as it can.  Amazon sells a lot of cool stuff, and sometimes lowers prices way too much to attract customers. 

Apple (may have) worked with the book publishers on the “agency model” to increase prices of e-books.  Therefore, Apple has the book publishers on its side.  Amazon has the United States Justice Department on its side.  Therefore, Amazon has the clear advantage. 

AMAZON vs. BOOK PUBLISHERS 

The book publishers want to keep e-book prices high in order to make more money.  Amazon wants to keep e-book prices low to attract more customers and over the long term make more money.  Amazon has destroyed huge book stores who at one time had destroyed smaller book stores.  The only thing the book publishers have destroyed are the hopes and dreams of millions of aspiring (and probably really bad) writers who can’t get their books published (I’m one of them, so I’m allowed to insult myself). 

Without the Justice Department, I’d take the book publishers.  But the Justice Department is a game changer. 

Once again, Amazon has the edge. 

BOOK PUBLISHERS vs. JUSTICE DEPARTMENT 

Are you kidding?  If Apple can’t take on the Justice Department, then book publishers have no chance. 

WHO WILL WIN? 

There are a few factors that make predicting a verdict difficult. The first is the law.  Only a few people understand anti-trust laws, and I’m not one of them.  If you’re reading this, you’re probably not one of them either.  That’s okay; that means there isn’t any pressure on us to pretend to know what we’re talking about. 

The second factor is the facts of the case.  We only know the Justice Department’s version and a few quotes from book publishers denying everything.  That’s not enough to form a valid opinion. 

The third factor is the judge(s) who will preside over this case.  The judge’s political opinions (liberal vs. conservative) will probably matter more than the law or the facts.  

Since we don’t know the law, the facts, or the judge’(s)’ political beliefs, any speculation about a verdict is pretty useless.   At least now I know who to blame for those $16.99 ebooks.

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From → Dysfunctileaks

4 Comments
  1. I was wondering if you were going to blog on this topic. :) It seemed just up your alley. My vote goes to the Justice Department, but I am interested in the fact that Apple claims that it did not collude. I’m sure they have retained their high priced lawyers that charge about $500 an hour to come up with an argument about why (a) the facts alleged in the complaint did not occur; (b) even if the facts occurred as alleged, it does not fit the legal definition of collusion or (c) some other affirmative defense.

    The complaint filed by the US DOJ seems pretty compelling (if it is all true).

    This post makes much more sense than

  2. Oops, I hit “post” too soon. I was saying that I read an article on InformationWeek.com that made very little sense on this same topic.

    • I think I read the same article and had the same reaction as you (except you probably understand it better than I do). One of the articles had a link to a Justice Department document that made more sense than the article, but the Justice Department document was kind of one-sided.

      • Yes, it looks like you found your way to the DOJ’s complaint, too. I thought it was laid out pretty clearly. The Complaint would be one-sided because it sets forth the DOJ’s prima facie case for conspiracy and entering into unlawful contracts to inhibit competition. They’ll have to prove all that to prevail.

        No, I read an article, whose author who argued that while high prices for customers were bad, really low prices were bad too. He objected to the fact that Amazon was glutting the e-book market with 99 cent books.

        Here is the article: http://www.informationweek.com/byte/news/personal-tech/digital-content/232900176?queryText=apple.

        If you happen to read it, maybe you can unravel his logic. :)

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