Why Is Obama Screwing Apple?
The Antitrust Division has filed an antitrust suit against Apple and several publishers (Simon & Schuster, NewsCorp’s HarperCollins, Hachette, Pearson, PLC’s Penguin Group (USA) and Macmillan).
The complaint seems to be that collusion and smoke-filled rooms paved the way to a deal by which Apple gets a 30 percent cut of the publishers’ eBooks sold for Apple devices, while other vendors are forbidden from selling below a pre-specified price.
Such ordinary business deals, you see, involve a now-disparaged free market instrument called a “contract” and may not be permitted.
Details aren’t complete but this arrangement appears to have been a normal response to Amazon’s deep discounts of ebooks below physical book prices. Publishers likely feared Amazon’s increasing ebook pricing sway and its potential power to undermine physical book sales.
As Steve Jobs himself put it in the Walter Isaacson book, “We’ll go to [an] agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway.”
That quote was invoked as damning by the DoJ heroes.