So here's the problem with what you and werks are saying, and ultimately where the DOJ argument falls flat.
The DOJ is arguing about behavior after the fact with Amazon. Fine, it looks shady, or does it?
Shady? No it was illegal and caused eBook prices to rise industry wise. The consumers were directly harmed by Apple's collusion with the book publishers. Apple didn't not just collude either, they organized and convinced the book publishers to collude.
Before the collusion that led to the agency model:
1. Amazon (and everyone else) purchased ebooks from publishers at whole sale rate (ie $8)
2. Amazon sold the books to consumers at rates that made sense to it's business model (ie $9, $10 etc. Or even less than the purchase price for special sales). This led the entire ebook industry to compete on price and led to cheaper books for the consumer.
Apple convinced all the publishers that rather than compete with each other, they should all collude on price and switch to the agency model. This led to:
1. Amazon (and everyone else) not being able to set their own prices. Publishers set price of the book and vendor got 30% of the profit.
2. Ebook prices increased from lack of competition.
3. Apple removed non-itunes IAP and forced amazon (and everyone else) to their not sell books in app or lose
all revenue by using iTunes IAP. (Publisher got 70%, Apple demanded the other 30%)
4. Every single ebook service stopped offering IAP.
5. Apple's iBook service not only changed the entire industry's price model to stop price competition and harmed the consumer (Apple wouldn't have to compete with amazon on price, everyone had the same price), no other ebook service could even offer IAP ebooks on IOS.
6. If any ebook service offered IAP purchases on IOS, this would be the result. Publisher sets price at $10, ebook service gets $0, publisher gets $7 and Apple gets $3.
7. No business model in the world allows for 100% of revenue to go to cost and apple ibook became the only way to buy books on IOS.
I would also like to address that the DOJ is arguing behaviour after the fact. As if the anticompetitive behaviour was a byproduct of some innocent policy. Apple's
intent was to be anticompetitive from the start.
http://qz.com/118293/the-steve-jobs-email-exchange-that-perfectly-captures-apples-strategy/
In late 2010, Android phones were just overtaking the iPhone in US market share, driven largely by Americans buying cheaper smartphones running Googles operating system. Apple still maintained a revenue advantage, but privately, executives at the company were fretting about the notion that it is easy to switch from iPhone to Android.
Thats the upshot of a new, revealing email exchange, first noticed by GigaOm, which was released today by the US government in its lawsuit against Apple over e-book pricing. Like other emails that have emerged in the case, these provide a rare window into the internal strategy of the worlds largest technology company.
On the evening of November 22, 2010, senior vice president Phil Schiller was watching television and dashed off this note to Steve Jobs (then the CEO), Eddy Cue (then the executive in charge of iTunes), and Greg Joswiak (vice president of marketing):
I just watched a new Amazon Kindle app ad on TV.
It starts with a woman using an iPhone and buying and reading books with the Kindle app. The woman then switches to an Android phone and still can read all her books.
While the primary message is that there are Kindle apps on lots of mobile devices, the secondary message that cant be missed is that it is easy to switch from iPhone to Android.
Not fun to watch.
This is the adWhat if you switch?Schiller was probably referring to:
As Apple diversifies the types of electronics its sells, its strategy has increasingly come into focus: Provide hardware, software, and media that works best when all of your devices are made by Apple. In other words, lock people in. Movies purchased from iTunes, for instance, work seamlessly on your iPhone, iPad, and Mac, but dont try to playing them on devices made by competitors. (You can, but its not worth the trouble.)
In the case of this Amazon ad that had Schiller so alarmed, the point is that e-books purchased from Apples iBookstore, which had launched earlier that year along with the iPad, only work on Apple devices. But if you buy your e-books from Amazon, you can read them on any device for which theres a Kindle app.
Jobs responded to Schillers email later that night:
What do you recommend we do?
The first step might be to say they must use our payment system for everything, including books (triggered by the newspapers and magazines). If they want to compare us to Android, lets force them to use our far superior payment system. Thoughts?
Steve
Sent from my iPhone
What Apple ended up doing, the following year, is insisting that Amazon and similar retailers give Apple a 30% cut of e-book purchases made through their apps. Amazon responded by removing in-app purchases altogether, meaning people could readbut no longer purchasebooks in the Kindle app for iPads and iPhones. That remains the case today.
Apples you only need us strategy has been enormously successful, thanks to the simplicity of its products, which encourage people to keep their media within Apples ecosystem. But with even more competition for smartphones and tablets, the question posed by Amazons adWhat if you switch?likely remains just as scary to Apple today.
Apple was worried that the competition to iBook was platform agnostic and that provided Amazon a competitive advantage. Instead of competing with amazon by making iBook platform agnostic or accepting Amazon's competitive advantage, apple took steps to drive out ALL competition from IOS.
So now let's look at 2011-2013. Spotify comes. Offers a service, you can sign up through the App Store. Oh look, you can also sign up for Google Music, Pandora, etc and pay through the App Store. You can also get a subscription to Entertainment Weekly, You can also buy coins for Candy Crush, etc... companies offer IAP, apple sees a cut.
Before Apple took steps to drive out amazon, everone offered IAP for music streaming services, after the change, only a few remained with increased cost to the consumer.
But Apple releases it's own Music service, and now "well they have to pay apple for their competing service (which they had to do BEFORE it was a competing service), so that's not fair!!!"
You are arguing a point that's not true. Apple iTunes competed with spotify long before Apple Music. They offer the same commodity under different business model. Changing the TOS drove out music sub services or increased their price, either way it provided iTunes with a competitive advantage. It just wasn't so glaring obvious since they used a different business and pricing model.
This is kind of my point. No one argues that they have a "competitive advantage" because they see additional revenue from sales off of PSN/XBLA/etc. They (along with App Store, along with Google Play, etc) are merely purchase facilitators.
Your argument is entirely false and obfuscates the real issue. Apple Music and all it's competitors are selling the same commodity with a fixed price of ~70% of revenue. Your comparison would be valid under the following scenario:
1. Bungie sells the rights to Destiny PS4 at $42 per copy wholesale.
2. Both Sony and Activision buys Destiny wholesale to sell on PS4
3. Sony sells Destiny for $60
4. Sony demands $18 (30%) from Activision to sell on PS4
5. Activision can sell Destiny for market price at 0% profit, or it can increase it's price past the market value.
But that scenario doesn't exist.
Beyond that, the Amazon argument seems to be completely different than the Spotify argument. In the case of Spotify, Spotify is merely offering a subscription that apple gets a chunk of.
In the case of Amazon... arguably, apple did make it horrible for them, as they couldn't sell their 500K books in the app, unless they also listed all 500K books as IAP in the App Store. Beyond the 30% cut, the thought of managing that kind of data on the app store is simply a nightmare. I don't think Apple ever intended to make money off of Kindle books. I think they flat out were looking to make it unreasonable for Amazon to even SELL Kindle books on the app store.
You are again making a false argument to support your case. Why would Amazon have to maintain 500K books as IAP, is that what apple does with iBook? No Amazon would just have maintain whatever price point per book and mechanism for charging would be exactly the same as iBook.
The issue was always money. 70% (Publishers) + 30% (Apple) = 0% for Amazon.
The ebook and music scenario startlingly similar. The agency model required 70% of revenue to go to the publishers. Apple demanding 30% for IAP left 0% for anyone else.
Industry wide music streaming contracts all require for 70% revenue for the publishers. Paying Apple 30% left 0% for spotify if they charged market rate for an unlimited music sub ($10)
This is not the same as Spotify at all. Spotify doesn't come down to "competitive disadvantage" at all. Even if Spotify just charge $9.99 on App Store (which they fucking should be doing), that 30% comes down to Apple facilitating the sale. If Spotify chooses, they can choose to not have Apple facilitate sales (like Netflix, etc). Does THAT potentially put them at a competitive disadvantage? Yes, but then it's there choice. Simply making less money than Apple per subscription ($7 vs $10) really has nothing at all to do with competition.
LOL. Do you understand basic math?
$10 music sub - $7 for publishers leaved exactly $3 for spotify. Paying that $3 to Apple doesn't create a competitive disadvantage? They SHOULD be charging $10 on ios? LOL, maybe you went to a business school that taught you to run a business with 100% cost but the rest of us didnt.
The problem isn't less money, it NO MONEY. Spotify would make $0 if it charged $10 (market rate) for streaming sub.
In the eBook case, Apple colluded to create a 70% cost for amazon and then demanded the other 30% by making iTunes the only payment system. Driving out competition.
In the music case, the industry already had a over 70% and demanded the other 30% by making iTunes the only payment system. Driving out most competition and increasing the price of the rest. They benefited from it by making streaming less attractive because of higher cost and iTunes music download more attractive. After launching Apple music, this competitive advantage has been very clear because no one else can compete with Apple music on iOS.
In every scenario, it reduced competition and harmed the consumer.