I haven’t paid too much attention to this Apple anti-trust suit, but on its face it makes no sense. Just more knee-jerk, anti-free market nonsense. The New York Times reports:
As punishment for engaging in an e-book price-fixing conspiracy, Apple will be forced to abide by new restrictions on its agreements with publishers….
The government accused Apple, along with five major book publishers, of illegally colluding to raise the price of e-books and of trying to curb Amazon’s influence in the publishing industry as Apple prepared to introduce its iPad in 2010.
Okay, stop right there. If Apple wants to “curb Amazon’s influence in the publishing industry”, how does colluding with publishers to increase the prices for e-books help them out? The reason Amazon has such enormous influence is because Kindle books are available so cheaply. If Apple wants to compete with Amazon, it needs to be able to offer e-books for competitive prices. How would “conspiring” with publishers to raise prices help Apple do that? Well, it wouldn’t. This is idiotic.
It looks even more idiotic when you click the link the Times provides to key excerpts from the court’s ruling. Here’s an excerpt where the government describes what went down at one of the meetings in this “conspiracy”:
The parties exchanged thoughts about a workable business model in these meetings. Apple learned that current wholesale prices for e-books typically fell in the range of $13 to $15, and some were even sold at prices as high as $17.50. Cue told Publishers that they would need to lower their wholesale prices for Apple if Apple were to enter the business. In order for Apple to compete with Amazon it needed to be able to price ebooks as cheaply as Amazon did, and it was not willing to pursue a strategy of loss leaders. As Reidy recorded, Apple expressed that it “cannot tolerate a market where the product is sold significantly more cheaply elsewhere.”
Um… Not exactly clear how this is supposed to bolster the government’s case. If anything, this is obviously a “conspiracy” to lower prices to be able to compete with Amazon’s $9.99 price point for Kindle books.
Being unable to match Amazon’s low prices, Apple sought to compete on the quality of the reading device itself:
Apple was confident that the iPad would be a revolutionary and wildly popular device. It was happy to compete with Amazon on that playing field, where it believed its strength resided. It would match its device – the iPad – against the Kindle.
Thus, Apple wanting to compete on quality because it isn’t able to match Amazon’s low prices is regarded by idiotic government bureaucrats as some kind of crime.