The Department of Justice is looking into the power that cable providers have over how and where consumers can access television content via the Internet. It’s a step that acknowledges the vertical integration of cable as well as their control over the last mile.
Penguin and Macmillan, the two publishers fighting the Department of Justice’s e-book price fixing lawsuit in court, have both filed responses to the DOJ suit. Macmillan’s response is shorter and more fiery; Penguin’s is longer, with more colorful details and explainers.
In the latest court filing in the ongoing Justice Department e-books price-fixing suit, Apple says it did not conspire to fix the prices of digital books to hurt competitors and its business strategy around pricing was “perfectly proper,” according to a Reuters report.
Sen. Al Franken has penned a letter to the FCC and the Department of Justice accusing the agencies of letting Comcast walk all over them when it comes to the conditions they imposed on the cable company when it purchased NBC-Universal.
Book publishers argue that Amazon is a vicious monopoly that has too much power over them and their content. But they need to realize they gave Amazon much of that power themselves when they agreed to shackle all of their books in DRM chains.
Nearly two days after the DOJ filed suit against Apple and publishers for allegedly colluding to fix e-book prices, Apple has released a short statement denying the accusations and criticizing Amazon’s “monopolistic grip.”
The Justice Department is pouncing on statements by Apple like “aikido move” and “trounce Amazon” to prove its case that Apple was the hub of a illegal conspiracy to fix the price of e-books.
While the statements sounds serious, the government’s overall explanation of Apple’s role in the conspiracy is far from convincing.
The “aikido” comments appear in a court filing that coincided with a long-expected announcement that the government is suing Apple and book publishers for antitrust violations.
The filing instead relies on circumstantial evidence like frequent phone calls and lunches between executives, as well as the publishers’ common concern over Amazon’s $9.99 e-book pricing.
While this might or not be evidence of a conspiracy among the publishers, the government’s explanation for why Apple participated is far-fetched at best.
According to Justice:
- “Apple was motivated to ensure that it would not face competition from Amazon’ s low-price retail strategy.”
- “Apple soon concluded, though, that competition from other retailers – especially Amazon – would prevent Apple from earning its desired 30 percent margins on e-book sales.”
- “[The contract] was designed to protect Apple from having to compete on price at all, while still maintaining Apple’ s 30 percent margin.”
In other words, Apple orchestrated the entire conspiracy to make sure Amazon didn’t undercut its e-book profits.
Really? Keep in mind that Apple had $108 billion in sales last year and that the vast amount of those came from devices like the iPhone. Meanwhile, the entire e-book market was reportedly worth $878 million in 2010 according to BookStats (Apple’s marketshare is reportedly 10 percent.)
e-Books are a big deal to publishers but to a company like Apple they are insignificant. Saying that Apple created a conspiracy to protect its e-book margins is like suggesting that it would be worth Ferrari’s time to corner the market for tricycles.
The government’s explanation is half-baked but that doesn’t mean that Apple had no reason to enter a conspiracy. It’s possible, for instance, that Steve Jobs wanted to blunt Amazon’s rise into the tablet market — this is precisely what lawyers in a related class action suit are arguing.
But given the government’s strange argument, it’s not surprising that Apple is digging in for a court fight.
Three publishers have settled the suit while Penguin and Macmillan will push on. State governments are also suing on the grounds that alleged price-fixing cost readers $100 million.
AT&T has proven many times in the last few months that it just can’t let its failed acquisition of T-Mobile go, but on Friday its bitterness turned to vindictiveness, delivering a big “I told you so” to its critics after T-Mobile announced 1,900 layoffs.
The AT&T-Mo saga wasted countless dollars and resources, dominating the attention of regulators and the wireless industry for a year, but AT&T’s failure more than made up for those losses. We now have more fearsome regulation and a greater awareness of the mobile market’s precarious competitive state.
The judge hearing the Department of Justice’s lawsuit against AT&T’s planned takeover of T-Mobile has agreed to give the two parties a month to figure out if they can salvage the $39 billion deal. The court will revisit the case on Jan 18.