26 May 2012

Fuck 'em, they're just the government

Nick Wingfield has an article in The New York Times about Apple:
A few days ago, Apple filed a formal response to the antitrust lawsuit filed by the Department of Justice against it and several book publishers. The gist of the 31-page filing is the same as Apple’s previous comments on the case: the company denies that it conspired with book publishers to raise e-book prices in a bid to give Apple’s new iPad a boost and to thwart the low e-book pricing of Amazon. But Apple put its objections to the case in somewhat sharper terms in the new filing, accusing the government of siding with “monopoly, rather than competition”, a reference to Amazon, the leader in e-book retailing.
“The government starts from the false premise that an e-books ‘market’ was characterized by ‘robust price competition’ prior to Apple’s entry,” Apple said in its filing. “This ignores a simple and incontrovertible fact: before 2010, there was no real competition, there was only Amazon.”
One noteworthy part of Apple’s response is a denial of one of the more juicy accusations in the government’s suit: namely that, in 2009, Apple “contemplated illegally dividing the digital content world with Amazon, allowing each to ‘own the category’ of its choice— audio/video to Apple and e-books to Amazon.” The government did not say in its filing exactly what evidence it had to prove that accusation.
Apple, for its part, said it never acted on or even contemplated any such plan to divide up the digital content market with Amazon.
Throughout its filing, Apple also seeks to undermine one of the government’s more curious claims about Apple’s business motivations. In the lawsuit against Apple and the publishers, the government refers several times to Apple’s “thirty percent margins” on e-book sales, describing it as a “highly profitable model”.
In response, Apple clarified that the thirty percent is not a profit margin. That figure represents the portion of an e-book sale that goes to Apple, but it does not take into account the costs involved in running its online book retailing business. “Apple denies that it sought or earned a thirty perecent profit margin, as it incurred substantial costs in running and marketing the iBookstore,” Apple said in the filing.
Apple does not say what its actual profit margin is on iBooks, or any other material that it sells through iTunes. Apple executives have long said that, after expenses for credit card processing, bandwidth, and other costs are subtracted, there isn’t a lot of profit from the iTunes Store. Apple makes nearly all of its profits from the sale of devices like the iPad and iPhone.
Rico says that, based on having worked at Apple, there's no way they'd cut a deal with Amazon; in any market, they want it all...

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