Quote:
Originally Posted by JeremyE
Now that the government has sued AAPL, does anyone think that their stock will slow down/plummet?
Obviously, this isn't a positive situation for the company.
But in the grand scheme of thinks, it doesn't appear to me that this will be a major influence on the valuation of the company. I'm just speculating though, so take this with a grain of salt....
From what I can tell, the Amazon is mad that Apple and a hoard of Publishers basically changed the business model for selling e-books...which are growing in popularity and pressure the price of print books.
Publishers would normally sell books to retailers (Barnes and Nobel, Amazon) and the retailer, in this case Amazon, would set the price. Amazon was setting the price for new and best seller e-books at $9.99 and eating away margin from publishers. Publishers didn't like this.
The charges basically state the group of Publishers got together and conspired with Apple to change that business model and help raise the price of e-books...which Amazon had large control over. With Apple acting as a new "retailer" they could sell e-books through Apple at higher prices. Here's how I understand it worked.
The new business model would put the power to set e-book prices into the publishers hands and have Apple act as an "agent" (instead of a "retailer"). Apple, being the "agent" takes a 30% commission of book sales sold through its services and allow publishers to now set the price of e-books in a more tiered fashion compared to Amazons $9.99 across the board. This basically takes away an agent/retailers (same thing basically) ability to compete on price and now Apple, Amazon, Google, Barnes and Noble, etc will only compete on service and the commission they take and have no control over e-book pricing.
The charge basically claims that this wouldn't have happened if it wasn't for the publishers and Apple getting together to retweek the business model and this is all being done at the consumers expense....not to mention Amazon and other e-book retailers as well.
I'm not exactly sure what is illegal and what is just normal business practices. I believe that the act of the publishers getting together to jointly act and then engaging Apple to assist them in these actions is the main issue. I assume that if each individual company approached Apple, or Apple approached the individual publishers and pitched them on the idea, that would have been fine. But the group acting together, only signing on if other publishers signed on, the publishers collectively forcing Amazon to change from a "retailer" to an "agent", etc is what crossed the line. Again, I'm just guessing, I have no legal expertise.
I don't know how this plays out in the courts. I'm not even sure what is at risk for Apple. I mean, the work is already done....can the U.S. government force these companies not to use this new model. I mean, if the government breaks all the contracts and more or less resets the industry back to where it was...won't the individual companies just gravitate back to this business model on their own? Now that is is all laid out and operating?
Lastly, e-book commission are a very very very small portion of Apples revenue. It's important to the service they want to provide as a whole and the ability for consumers to easily purchase e-books on iPads and iPhones helps sales of those products but the effects of this on Apples top or bottom line won't be substantial in my eyes. If they get fined for the total commission they've received under the new business model, it will probably be under $200m.
Last edited by sc000t; 04-11-2012 at 09:23 PM.