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Australia may join in targeting Apple, e-book publishers

updated 08:05 am EDT, Thu April 12, 2012

ACCC asking for concerns over e-book fairness

The Australia Competition and Consumer Commission is considering taking the same path that the US Department of Justice did in confronting Apple and publishers over e-book pricing. Regulators have been asking Australian retailers whether they thought publishers were rigging pricing in the country. There were "competition concerns" whenever a company wanted to curb the ability to put a product on sale, the agency said.

ACCC officials wouldn't say whether there was a full investigation underway, or whether the agency was inclined to pursue any legal action. It had been kept up to date on the DOJ actions.

Investigations have already been going on outside of the US, including a UK investigation that has also included Amazon. A common thread of concern exists that Apple's emphasis on the agency model, where publishers set the price, and a no-lower-price clause have artificially inflated prices from a typical $10 to $13 or $15.

Apple has denied damaging competition and has argued that the iBookstore ultimately helped balance the market. Amazon had roughly 90 percent of e-book share before the iPad arrived and, along between Apple's tablet and Barnes & Noble's Nook, is now closer to 60 percent. Publishers haven't had as strong an argument, although they have noted that Amazon was regularly selling e-books in the Kindle Store below cost, creating artificial expectations for how much a title should cost. [via Financial Review]



By Electronista Staff
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Comments

  1. beb

    Mac Elite

    Joined: Jan 2002

    -1

    Get out of it...

    Do what the DOJ says, pay the penalty and get out of it. Is more of a nuisance lawsuit than anything else. If the publishers had an issue with Amazon's pricing model, they should have brought it up with Amazon. I'm guessing Steve got suckered into this without knowing the full implications of what it all meant.

  1. Inkling

    Dedicated MacNNer

    Joined: Jul 2006

    -2

    Stupid or What?

    Are these government lawyers stupid or what? At the time these events took place Amazon had 90% of the ebook market here and was selling ebooks below cost to destroy competitors who were clinging to a mere 10% of the market. That's a classic monopolists move.

    In contrast, Apple had 0% of the market and was behind an agency pricing scheme that would make it impossible for it to use its huge financial reserves to sell below the market price.

    And if they're not stupid, then someone from Amazon's been whispering in their ears.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    +2

    Re: Stupid or What?

    Are these government lawyers stupid or what?

    No, but you do have an Apple bias and so are inclined to assume that Apple was right.

    At the time these events took place Amazon had 90% of the ebook market ...

    They had 90% of the ebook market because they had the one device that was actually selling well. It has nothing to do with monopolistic practices as it does with "Well, I have a Kindle, I need to get books from Amazon". You know, the same reason iPod users bought from the ITMS rather than the ZuneStore.

    In contrast, Apple had 0% of the market and was behind an agency pricing scheme that would make it impossible for it to use its huge financial reserves to sell below the market price.

    Or, the way the government looks at it, Apple used it huge device market and pressure to give publishers the 'incentive' to use the Agency model so Apple could bully it's way into the market.

    Geesh, if Microsoft colluded with publishers to change the pricing structure of ebooks to give them an equal foothold, you'd all be crying foul and how they're using their money to force their way in rather than just compete.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    +2

    Re: Stupid or What?

    Oh, by the way, you need to understand the complaint. The DOJ has nothing against "agency" pricing (which is just some new marketing scheme Apple came up with to battle against Amazon, it's not like this pricing model was ever used before). They don't care if prices are up, or the market is more level.

    The biggest concern is the requirement Apple stuck in there (which, I'm sure, the publishers all were behind) that said Apple must get the lowest price on anything. This allowed the publishers to take this contract and Apple's large market share (in devices and people - and don't try to deny they don't have it) as a club to take to Amazon and say "Hey, we've got this contract now from Apple, and we're stuck, because we need to be on iOS devices, the market's too great. So you need to either re-do our contract, or we'll have to stop selling through you".

    So, basically, they all colluded to drive Amazon into raising their prices. And this also keeps any storefront (even little mom-and-pop-ebook-store) from trying any type of promotion. So, it stifles any competition.

    Oh, not to mention it verticalizes the market too much.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    +2

    Re: Stupid or What?

    BTW, Amazon's pricing and business plan was the same as Apple's with the iPod. Sell music at a loss or break even, because you want people to buy your hardware. So how come Amazon gets blasted for that? Oh, right, because they aren't Apple.

    Sort of how Apple is out for the good of the publishers and authors by using the agency model, because it sells at prices the publishers want to sell at, not artificially low prices. But for music, Apple always stated they should set the price, not the publishers. Prices should be 99 cents, because that's just right.

    So, fixed price songs: Good! Fixed price books: BAD!

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