US District Court Judge Denise Cotes has finally come back with her recommendations for Apple’s consequences in the eBook Price Fixing case. Her recommendations have met with mixed feelings from both sides (even those that feel that Apple was guilty). Most Apple fans seem to feel that this is far too harsh a punishment and that Apple did nothing wrong by brokering contracts that changed the pricing model for the entire eBook industry. Those that agree with the guilty verdict feel that the recommendations do not go far enough to change Apple’s behavior.
The business world in the US is a funny thing especially when it comes to legal matters. There is an unwritten rule that seems to be in use when companies break the law. This rule is all about making sure not to hurt the business regardless of the damage a company does to consumers or anything else really. We are seeing a great example of this with the Apple eBook price fixing trial. Although Apple was found to have conspired to fix prices at a much higher point that the market standard (by forcing an agency model) they still feel they should not have any consequences for this action.
For a number of years we have talked about the way the copyright industry (and the laws they have fostered) have been the number one source of the growth of piracy. These groups, designed to “protect” rights holders are so blind in their efforts to maintain a high (and growing) revenue stream that they often forget the impact on legitimate users. When these impacts and restrictions become too great these legitimate users will turn to alternative means to get the items they want. One very widely published incident was with EA and their DRM (Digital Rights Management) software on the popular game Spore. The DRM was limited to three installs and often locked people out during their first installation. Because this DRM was so restrictive people that legally purchased the game went out and downloaded copies just so they could install it when they wanted.
As expected US District Judge Denise Cote found that Apple did collude with five publishers to fix eBook prices in 2010. Although it appeared to come as a shock to some it was something that many analysts saw as inevitable. Apple faced a mountain of evidence that showed Apple acting to push the new “agency” model and then establish price guides for new books. These caps on eBook prices (along with the most favored nation clause) are what allowed Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster to move away from the $9.99 that Amazon was setting to $12.99 and $14.99.
We have been following the Apple price fixing trial over the last few weeks and have been very interested in some of the coverage that has been coming out. One of the biggest things that we have noticed is a tendency from nay press outlets to try and skirt over the issues. In particular many news sites are more than willing to completely absolve Apple of all guilt simply because the most damning emails the DoJ is using were draft emails from Steve Jobs. What is unusual about this is that many of these same sites were not willing to do the same During the Samsung V Apple trial (and also the Intel Anti-Trust case). It begs the question; why does Apple get the free pass? Still press bias or bad reporting aside the fact that these emails are drafts is really irrelevant. They show knowledge or and/or intent to set prices and force them onto a competitor.
Apple has been having a rough time during the first few months of 2013. So far they have been taken to court over their eBook pricing efforts, their tax plans and have even had some older models of their iPhone and iPad banned from import into the US. This all happened to a company that was set to hit $1,000 a share in the latter half of 2012. Sadly for Apple many things have changed since then including their campaign to stomp out competition through the use of patents instead of innovation. Apple’s image and mythology has taken a huge blow while rival companies like Samsung, LG and even HTC and Motorola are working to push new technologies into their products (even if they might not make sense).
For those of you out there that might be laboring under the illusion that Apple products are safe and secure we have some bad news for you. Someone has developed a method of poisoning iPhones, iPads, iPods, well basically anything running iOS, through the use of their charging systems. This means that someone could sell you a compromised charger and take over your phone. This type of attack is hardware based and is almost impossible to get rid of; simply resetting the phone is not going to do it. This is also not the first time that someone has used Apple hardware to create a persistent infection. Not all that long ago someone showed how easy it was to infect the batteries on the MacBook and MacBook Pro. Even the Apple Bluetooth keyboard has been used to slip malware into Apple products.
Apple is not having a good run of luck lately. They are sagging behind their rival and manufacturing partner Samsung by almost 2 to 1 in terms of unit sales which is hurting consumer confidence in their phone and tablet products. Apple is also probably going to lose their suit with the Department of Justice over eBook Price fixing which will impact the pile of cash they have an investor confidence. To further add insult to injury they are under investigation for their tax policies in the US an overseas. The Apple mythology is crumbling faster and faster while others jump in to pick up the pieces. Apple may even be delaying the launch of new products which is not doing them helping their situation considering Samsung and others have much faster refresh times than Apple can maintain.
Earlier today we published an article showing how Apple is trying to get out of the price-fixing jam they are in with the US DoJ. Their new tactic is to try and show that they did nothing wrong or that the publishers that they dealt with had not already intended to do. Looking over the evidence and Apple’s pattern in dealing with partners actually looks more like Apple was behind things and used their knowledge of the situation to bring the others onboard. Now we are finding out that the DoI feels this way too and that they also have some evidence to back it up in the form of testimony from the 5 publishers in the original suit.
Apple just will not give up in trying to get out of the pickle they are in over price fixing eBooks. Despite some pretty convincing evidence that Steve Jobs put together a new agency model with Apple at the head they are still claiming that Apple did nothing wrong. They are now trying to claim that the price of eBooks went down after their agreements with five publishers. They are also trying to throw the original publishers under the bus claiming they were already trying to hurt eBook sales long before Apple got involved.