How will the ebook antitrust case affect AAPL, if at all?

  • Posted: 11 April 2012 01:23 PM

    My thought is even if Apple is eventually found “guilty” and penalized, they have billions and billions in cash so it won’t really affect them. No real cause for concern.

    But others may not see it that way, and I can’t help but wonder if this will get people scared and cause the price of AAPL to slow down or drop as the case develops.

    Just feeling around for other people’s input on this. What impact do you think it will have in the short-term? (ie. the duration of the case… in the longrun I’m sure it will be irrelevant.)

    [ Edited: 11 April 2012 01:42 PM by David Nelson ]      
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    Posted: 11 April 2012 02:15 PM #1

    Honestly aren’t there better things to sue over? rolleyes

    Apple makes little from content sales.  This will settle and Apple will be more than fine.

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  • Posted: 11 April 2012 02:29 PM #2

    I agree the financial impact will be insignificant in the big picture.

    But I am slightly troubled by the potential impact on the sentiment of Apple consumers and investors.  Most consumers don’t know that Apple really squeezes its suppliers and partners.  They just believe the products are magical and reasonably priced.  I’ve read the DOJ complaint.  I don’t like how it sheds light on upper management’s internal thoughts, communications and strategies.  I think the complaint tells a compelling story of Apple arguably manipulating the e-book market to its will.  I don’t know if there are any actual antitrust violations.  But we know how stories about how Apple operates tend to proliferate.  If more dirt comes out during protracted litigation, negative perceptions may snowball.  I think Apple has done a great job of dealing with the Foxconn issues so far.  But I don’t want to see the company distracted by one perception crisis after another.

         
  • Posted: 11 April 2012 02:32 PM #3

    Trainspotter - 11 April 2012 05:29 PM

    I agree the financial impact will be insignificant in the big picture.

    But I am slightly troubled by the potential impact on the sentiment of Apple consumers and investors.  Most consumers don’t know that Apple really squeezes its suppliers and partners.  They just believe the products are magical and reasonably priced.  I’ve read the DOJ complaint.  I don’t like how it sheds light on upper management’s internal thoughts, communications and strategies.  I think the complaint tells a compelling story of Apple arguably manipulating the e-book market to its will.  I don’t know if there are any actual antitrust violations.  But we know how stories about how Apple operates tend to proliferate.  If more dirt comes out during protracted litigation, negative perceptions may snowball.  I think Apple has done a great job of dealing with the Foxconn issues so far.  But I don’t want to see the company distracted by one perception crisis after another.

    The way I see it is that Amazon was squeezing publishers and building a distribution monopoly and a book buyer monopsony which is not very good for competition.

         
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    Posted: 11 April 2012 02:35 PM #4

    Hah!  They don’t know?  Apple is the most heartless corporation there is!  Read the NYT!  Listen to Ira Glass!  Dozens of people in a single dorm!

    Look at Foxconn, the most squeezed supplier on…uh, wait…

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  • Posted: 11 April 2012 02:58 PM #5

    If Apple loses, there’s very little revenue at stake today. But Apple can immediately say to the publishers: sorry but the government says you are history. Opening the way to dealing direct with authors, App store fashion.

    I am confident Apple has a plan, whatever the outcome of the legal case.

    As regards Apple throwing its weight about, usually it’s (a) true but (b) actually to the benefit of the endpoints of the supply chain - i.e. the individual reader, and the individual writer.  Apple usually forces participants on both sides to a place they don’t like, but ends up with a new, better total situation. iPhone is the big example.

    [ Edited: 11 April 2012 03:02 PM by sleepygeek ]      
  • Posted: 11 April 2012 02:58 PM #6

    Trainspotter - 11 April 2012 05:29 PM

    I don’t know if there are any actual antitrust violations.  But we know how stories about how Apple operates tend to proliferate.  If more dirt comes out during protracted litigation, negative perceptions may snowball.  I think Apple has done a great job of dealing with the Foxconn issues so far.  But I don’t want to see the company distracted by one perception crisis after another.

    You described it better than I did, but this is exactly my concern. I hate to see too many PR issues too quickly… Foxconn, the Flashback malware (albeit minor), and an antitrust case…

    But then I remember people claiming AAPL would be doomed when Steve Jobs retires or dies. But when it actually happened it didn’t even cause a blip on the charts. I like to think if Apple can weather the loss of Steve Jobs that well, they can handle just about anything. Whatever penalty they could face would be a drop in the bucket, so if I were Tim Cook I’d just settle, pay it, and move on for the sake of PR.

    And speaking of PR, that’s something Apple excels at. So I doubt they’ll let this linger too long, however they resolve it.

    [ Edited: 11 April 2012 03:01 PM by David Nelson ]      
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    Posted: 11 April 2012 03:00 PM #7

    Eric Holder is just trying to divert attention from FAST AND FURIOUS, where they INTENTIONALLY {many have said} allowed Mexican drug cartels to buy almost unlimited weapons in the USA.

    The DOJ is just playing “look, SQUIRREL!!”

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    Posted: 11 April 2012 03:01 PM #8

    There have been so many “bigger” “problems” than a little bit of e-book pricing brouhaha.

    Worth discussing, yes, but not worth losing much sleep over.  Apple has been assaulted by bad press since 1996.  Press:  -50 billion.  Apple:  150 billion.

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  • Posted: 11 April 2012 03:05 PM #9

    From Paul Thurrott:

    “The settlement also prevents the companies from divulging secret information about competitors to other companies, in line with a charge that the publishers illegally revealed Amazon?s eBook retailing practices to Apple.”

    Is it just me or does that sound like the government is forcing the companies to cave to Amazon?

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  • Posted: 11 April 2012 03:22 PM #10

    .... - 11 April 2012 06:05 PM

    From Paul Thurrott:

    “The settlement also prevents the companies from divulging secret information about competitors to other companies, in line with a charge that the publishers illegally revealed Amazon?s eBook retailing practices to Apple.”

    Is it just me or does that sound like the government is forcing the companies to cave to Amazon?

    Yes, it does.  Contracting for best price is not an unusual, or illegal, practice.  The DOJ is treating that practice as if it were harmful to the customer.

    The other aspect of the charges is that the publishers have colluded to “fix” pricing.  I don’t see how this involves Apple legally.  Apple just buys the product, with resale value determined by the publishers.

    Bottom line: if the ‘agency’ model is found to be unfair to consumers, then Apple will still get best price for the product, and sell it with a GM of 30%.  Before Apple got serious about digital books Amazon was getting 50% GM on the books it sold.

    Personally, I see this action as the DOJ forcing Apple to undercut Amazon’s historic pricing.  Apple cannot be accused of using its monopoly status with iPods and iPads to undercut Amazon, when DOJ action forces Apple to use Amazon’s business model (just not it’s margins).

    This is a stupid, poorly thought out suit.  Everyone is going to loser, except Apple and the consumer.

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    Posted: 11 April 2012 03:24 PM #11

    Good thing the Steve Jobs bio is the only e-book I’ll have for a long while, then.

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  • Posted: 11 April 2012 05:09 PM #12

    I am still convinced that SJ and Apple worked out what’s needed for a new digital economy to work, involving everyone who wants to take part, and Apple only makes moves towards that future. So in ebooks Apple will end up proven right too, despite a great deal of very negative commentary for a year or three.  Just like Apple’s “impossible arrogance” over music, and over iPhone carrier contracts.

         
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    Posted: 11 April 2012 05:13 PM #13

    Apple likes e-books and education but _education_ is Apple’s big initiative in that space.  E-books outside of the education context are really more like an Apple TV-sized hobby…if that. 

    Having the foothold in the market is enough.  Let the DOJ do whatever for now.  What, fine Apple $10B for maybe $500M in sales?

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  • Posted: 11 April 2012 05:19 PM #14

    sleepygeek - 11 April 2012 08:09 PM

    I am still convinced that SJ and Apple worked out what’s needed for a new digital economy to work, involving everyone who wants to take part, and Apple only makes moves towards that future. So in ebooks Apple will end up proven right too, despite a great deal of very negative commentary for a year or three.  Just like Apple’s “impossible arrogance” over music, and over iPhone carrier contracts.

    This is true. It seems for their online stores, so far Apple’s way has panned out pretty well across the board with very little deviation from the original plan. The most notable changes I can think of are in fact victories for the consumer, and probably what Apple wanted all along—removing DRM from iTunes music, and allowing you to re-download purchased media. Once the train leaves the station, Apple generally doesn’t end up needing to make any concessions. Which just confirms that they had a solid plan from the start.

    [ Edited: 11 April 2012 05:27 PM by David Nelson ]      
  • Posted: 11 April 2012 11:04 PM #15

    I think the whole thing is an excuse for the AAPL bears to have a little fun.  It won’t amount to anything material at the end of the day.