Ibooks iconSeventeen more states have joined the antitrust lawsuit against Apple and several book publishing houses over the pricing of ebooks. Perhaps more interesting are certain details released in the latest filing that were previously redacted, including one from Steve Jobs. Portions of this email have been seen before, but this is the first chance the public has had to see a major negotiation written by the former CEO.

As reported by PaidContent, Steve Jobs became directly involved in the pricing negotiations after Apple executive "Eddy Cue could not secure one of the Conspiring Publisher’s commitment directly from an executive." Jobs "wrote to an executive at the parent company, in part":

As I see it, [Conspiring Publisher] has the following choices:

1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.

2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.

3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.

Maybe I’m missing something, but I don’t see any other alternatives. Do you?

The complaint goes on to claim that the publishers and Apple "worked together to force" Random House -- the one publishing company to turn down the agency pricing model favored by Apple -- to adopt it as well. The claim goes so far as to claim that publishing companies tried to convince Barnes & Noble to not feature Random House books in any of its advertising, something that B&N apparently did.

Regarding the case, Apple has publicly defended itself and also said it wants to defend itself in a jury trial, saying that allegations against the company were "simply not true."

Top Rated Comments

Penooker Avatar
131 months ago
I'm missing something here. Jobs gives an alternative to publishers to break the monopoly Amazon had on the market and now he's a criminal? Isn't that called competition?

Yes, you are missing lots. You misunderstand the situation in at least 3 ways:
1) Apple is in trouble for competing against Amazon.
2) Assuming that Amazon had a monopoly, that Amazon was bad because of it.
3) More competitors is good.


1)
The law is about preserving or allowing competition, not competitors. The end goal is about letting the regulated market generate benefit for consumers. Apple did become a new competitor, but DOJ asserts that Apple eliminated / prevented price competition. There are other companies trying to jump into the ebook market as well, but only Apple tried preventing competition on price. This is what they are in trouble for.

2)
The laws are not anti-monopoly. Monopolies are seen as a reward, in legal and economic fields, as a reward for doing well in the competition -- which Amazon did in this case. The reason why monopolies are the ones that run afoul of anti-trust laws, is because you need a big enough market power in order to succeed with unfair market practices. There's no fear, in a market with lots of small competitors, for one of them to unfairly limit competition or competitors.

Amazon, even if they had a monopoly, was winning the market fair and square. It kept driving down prices to a point that was still profitable for them but others couldn't keep up. Consumers kept benefiting from the low prices, and given Amazon's success, it meant that's what consumers wanted. And this, making the market generate value for the consumer, is the goal of competition law.

3)
Apple, on the other hand, killed off price competition in the market (if the DOJ is correct). They forced competition to be on a narrower set of product attributes. What Apple did was not to compete better, but to prevent competition in the product attribute they couldn't. Rather than let consumers choose between Kindle and a lower price vs iBooks and a higher price -- Apple made it so you had to choose between Kindle vs iBooks at the same higher price.

Given that Amazon was winning the ebooks market, and Apple's own memo, it means that consumers care about price more than other product qualities. Because of Apple, consumers can't benefit from price competition. 1 competitor, or 300 competitor, you will always get the same price. No matter how many competitors, there is no competition on the thing customers cared the most about -- price. So then what's the point of having these competitors?

Anyhow, this whole thing is called price fixing. A fundamental element behind it is that there are multiple "competitors" who don't compete on price. (If there weren't multiple "competitors" then you wouldn't need to "fix" the price.)



P.S. For those who actually understand this case, I know I made quite a few shortcuts. I apologize.
Score: 11 Votes (Like | Disagree)
rmwebs Avatar
131 months ago
I'm curious to see how this will all pan out.

The same way it always turns out. A big fat payoff for lawyers and next to no change for the consumer ;)
Score: 6 Votes (Like | Disagree)
cmwade77 Avatar
131 months ago
I'm missing something here. Jobs gives an alternative to publishers to break the monopoly Amazon had on the market and now he's a criminal? Isn't that called competition?
If it allowed them to continue to sell on Amazon for $9.99, while selling on Apple for $12.99, then yes, that would be competition; however, Apple said that a publisher cannot sell their books cheaper anywhere else if they want to sell on iBooks. This is the part that is price fixing and is illegal.
Score: 4 Votes (Like | Disagree)
IJ Reilly Avatar
131 months ago
I see nothing wrong with Steve Jobs' email. He simply pointed out the reality of the current marketplace and confronted the fact that Amazon was controlling their pricing. This is competition. Specifically, what Steve Jobs was doing was bringing out competition in an emerging market before piracy simply destroyed it.

He was right.

No where in that email does he say "Do this or else," or "do this or we will hurt you." Nor does he say, "Do this at the exclusion of our competitors."

A bit of context might help, like reading the linked article instead of just the excerpt on MR. The allegation is that Apple and several of the publishers ganged up on Random House to force them to go along, an allegation that seems to be supported by the chat between Apple and the publishers. This is serious stuff, and the fact that 31 state Attorneys General are already on board spells real trouble for Apple.
Score: 4 Votes (Like | Disagree)
j_maddison Avatar
131 months ago
I'm missing something here. Jobs gives an alternative to publishers to break the monopoly Amazon had on the market and now he's a criminal? Isn't that called competition?
Score: 4 Votes (Like | Disagree)
iansilv Avatar
131 months ago
I see nothing wrong with Steve Jobs' email. He simply pointed out the reality of the current marketplace and confronted the fact that Amazon was controlling their pricing. This is competition. Specifically, what Steve Jobs was doing was bringing out competition in an emerging market before piracy simply destroyed it.

He was right.

No where in that email does he say "Do this or else," or "do this or we will hurt you." Nor does he say, "Do this at the exclusion of our competitors."
Score: 3 Votes (Like | Disagree)

Popular Stories

iPhone 14 Pro Purple Front and Back MacRumors Exclusive

iPhone 14 Pro Renders Highlight Multiple Design Changes

Wednesday May 25, 2022 8:56 am PDT by
Leaker Jon Prosser today shared ostensibly accurate renders of the iPhone 14 Pro, providing the most accurate look yet at what the device could look like when it launches later this year. In the latest video on YouTube channel Front Page Tech, Prosser revealed renders of the iPhone 14 Pro made by Apple concept graphic designer Ian Zelbo, highlighting a range of specific design changes...
iPad Pro USB C Feature Coral

Deals: Apple's iPad Pro Reaches Up to $449 Off in Amazon's Latest Sales

Wednesday May 25, 2022 10:09 am PDT by
Amazon is marking down a wide variety of 11-inch and 12.9-inch iPad Pro models this week, with prices starting as low as $749.00 for the 11-inch tablet. You'll find the full list of sales below, all of which can be found on Amazon. Note: MacRumors is an affiliate partner with some of these vendors. When you click a link and make a purchase, we may receive a small payment, which helps us keep...
apple account card

Wallet App Now Supports Apple Account Cards on iOS 15.5

Wednesday May 25, 2022 5:01 pm PDT by
Apple appears to have recently updated the Wallet app to allow users to add an Apple Account Card, which displays the Apple credit balance associated with an Apple ID. If you receive an App Store or Apple Store gift card, for example, it is added to an Apple Account that was previously visible in the App Store and Apple Store apps. As of today, the Apple Account balance can also be added to...
iphone 13 pro max display bleen

iPhone 14 Max Reportedly Weeks Behind Schedule [Updated]

Thursday May 26, 2022 7:25 am PDT by
The iPhone 14 Max is currently behind schedule by around three weeks, according to Haitong International Securities analyst Jeff Pu. Yesterday, Nikkei Asia reported that at least one iPhone 14 model was three weeks behind schedule due to the impact of lockdowns on Apple's supply chains in China, but it was not clear which iPhone 14 model this related to. Now, Pu has clarified that the model...
iPhone 13 Always On Feature

iPhone 14 Pro Screen Refresh Rate Upgrade Could Allow for Always-On Display

Tuesday May 24, 2022 7:23 am PDT by
Last year's iPhone 13 Pro models were the first of Apple's smartphones to come with 120Hz ProMotion displays, and while the two iPhone 14 Pro models will continue to feature the technology, their screens could well boast expanded refresh rate variability this time round. To bring ProMotion displays to the ‌iPhone 13 Pro models‌, Apple adopted LTPO panel technology with variable refresh...
Apple Tap to Pay iPhone

Apple Stores Rolling Out iPhone-to-iPhone Contactless Payments Starting Today

Wednesday May 25, 2022 6:54 am PDT by
Apple in February unveiled a new "Tap to Pay on iPhone" feature that will allow compatible iPhones to accept payments via Apple Pay, contactless credit and debit cards, and other digital wallets, with no additional hardware required. Apple began testing the feature at its Apple Park Visitor Center earlier this month, and now Bloomberg's Mark Gurman has tweeted that the feature will begin...
apple tv 4k design green

Apple Releases tvOS 15.5.1 for Apple TV HD and Apple TV 4K

Wednesday May 25, 2022 9:42 am PDT by
Apple today released tvOS 15.5.1, a minor update to the tvOS operating system that first launched in September 2021. tvOS 15.5.1 comes about 10 days after the launch of tvOS 15.5. tvOS 15.5.1 can be downloaded over the air on the Apple TV through the Settings app by going to System > Software Update. ‌‌‌‌‌‌Apple TV‌‌‌‌‌‌ owners who have automatic software updates...