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Is Apple colluding to set E-book prices?

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    Mary Kissel on the rationale of the Department of Justice's lawsuit against Apple

  • Duration 6:05
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We're talking last week about the apple e-book antitrust issue what is happening is apple China like fixed prices.

-- -- -- that makes me which is why Mary castles here with us while -- journal editorial board.

-- if we if you could take a step back and let's tell everyone what happened.

OK so the Department of Justice filed a case last -- five publishers and apple and they said that these guys all got together and colluded.

To set e-book prices now -- this is the first time in history I think.

That the Department of Justice has ever sued a group of companies -- that have voluntarily.

Lost money to break a monopoly in increased competition.

In an industry then he's more competition and now has it thanks to what apple did -- -- -- absolutely ludicrous case.

And I think the that they're gonna have very hard time my improving the government -- their -- -- -- the disbarment -- you're saying is there were five publishers.

Right app well -- it harpercollins Simon -- -- my missing.

-- MacMillan penguins Simon and Shuster harpercollins and -- who have missed OK so.

These guys and did it -- -- did they all get together and say let's charges certain price OK -- -- the part of justice seems to be concerned about two things and they don't have any smoking -- there's no document that are out there that says.

We're gonna set prices here there anywhere.

And they seem concerned that the price changes all happened at one time.

-- -- five publishers and go with apple when the iPad launch in January 2010 right and set retail prices starting then because they switched.

Another model of pricing.

I -- is so they seem concerned about the timing and then the number of publishers that -- there look at their business explanations for this.

Apple came to these publishers because apple knew they Amazon had a monopoly in the market or emerging monopoly in the market and said look.

If you don't want -- to be able to set e-book prices and want you come with us what's the -- exact argument -- they used in terms of -- -- went to the music industry.

I'm so these guys -- -- sure they some what you wanna do you what you have to do it in terms of the timing for the launch.

So the timing issues is he's really a a business decision.

Content in simply look real house wasn't even included in this suit -- is one of the biggest publishers -- the nation.

-- -- -- if -- statistics here but I guess on 63%.

Market share.

Barnes & Noble 18% apple -- book -- seven per -- I'm sorry.

You think apple -- -- 7% market share is colluding to set prices in the e-book market.

I think it's a very very hard case some -- and that -- very instinct stats have been what.

What's the rationale for their just coming down on apple -- if you're conspiracy -- -- yeah okay.

Apple is a big target number one.

Number two Amazon has a very big lobbying.

Or in -- job and guess what three of these publishers settled.

And when they settled what happens the government says if you settle with us you more allowed to break your contract with apple.

Which said that you you basically can't lower your price on any other platform.

You're allowed to break that.

And go to another platform like Barnes & Noble and Amazon at which point you'll be allowed to discount again.

So Amazon can go right back to its old model.

Of under pricing its competitors to gain more market share again.

From that 63%.

Space -- government intervening on behalf of -- one big company.

But yes I'm not an art -- -- like it's it's really Amazon vs apple.

It's not there and they're very -- barriers to entry in this market yes yes there are some big players there's Amazon and Barnes.

Who thought Barnes & Noble what have you homeowner with a not can be and I now -- right and again what the beauty of what apple did it is it's.

It's it's convincing people to participate.

In the formal marketplace and to pay for creative products.

And it's encouraging competition.

In terms of of standing up to Amazon this isn't new we should be cheering not prosecuting this company for.

So then.

The Department of Justice just is nothing better to -- them for a look there's class action lawsuits out there you had state attorney generals like Texas come onboard.

It's great for the attorney general to stand up and say you know what.

Where intervening in the market so that you can have more access to.

It's government stepping into -- private market on behalf of a couple big companies.

And that will only reduce competition and ultimately limit limit choice for consumers it's a terrible it's those -- do you think this goes to track.

Yeah I think you will of the trial I mean look the MacMillan CEO okay now some very strong statement said it was lonely -- decision -- never made.

He didn't -- he did nothing against the law and the other companies and we should harpercollins which is of course part of the News Corp.

-- yet business.

Denied any wrongdoing and they -- said that they settled because it didn't want to legal liabilities stretching out into infinity.

So they basically said.

We knew anything wrong we just want to get to -- the tables on the on behalf of our shareholders do you see the end of the day.

People get cheaper ebooks are more expensive not whenever government interferes in the market -- place about half of a company.

To effectively tried to set prices -- government is coming here because some bureaucrats sharpen our pencils and said.

-- -- -- -- -- Well -- you trade looks might cost fifteen dollars or thirty dollars -- you know what.

The latest Harry Potter book may command a fifteen dollar premium -- the latest romance novel that they're struggling to sell.

Mean you don't put out of for a -- there's no rule in the sand and says it ebooks have to cost a certain amount of money.

Fabio consignment.

With not very -- so you are also mostly generated -- bulletin.

Sure you read the opinion page and read their stuff.

And you -- on what time.

I am on Wednesdays at 5 o'clock -- -- -- -- -- make sure you tune in thank you so much as.

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