When the Department of Justice announced sweeping antitrust charges against Apple and five of the world’s biggest publishers last week, it simply formalized what we knew all along: The companies had all colluded to make eBook prices higher. But Apple has many well-meaning backers in the mainstream and tech media who, ignoring the law, are coming to the company’s defense and, in the process, obfuscating the real issues in this case.
The villain in this rewriting of history is, of course, Amazon.com, which established what’s now being called a monopoly in the eBook business. And in this new version of history, Apple rode in on its white horse, met with publishers, albeit in “private rooms for dinner in upscale Manhattan restaurants,” as the DOJ suit alleges, and gave them what they wanted: The ability to set the price on eBooks, just as Apple now gives the same power to music publishers.
Naturally, the publishers raised prices, and dramatically. When Amazon’s evil monopoly ruled the land, new eBooks generally sold for $9.99. Now, they sell for $12.99 to $14.99, with the latter price point being far more common. Take that, Amazon!
Wait, what?
Lost amid all the monopoly-busting, good-news vibes of the Apple-friendly press are some simple facts. Among them: Monopolies aren’t illegal. No one has legally established that Amazon even had a monopoly, let alone that it did so illegally (which is, incidentally, illegal). Higher prices harm consumers. And Apple, no tiny, good-natured company itself, only entered the eBook market because it had already locked up the markets for online music, TV shows, and videos, and needed a new feather in the cap of its dominant iPad hardware. (Which, not coincidentally, was seeing surprisingly strong competition from Amazon’s own Kindle lineup of eBook readers.) Oh, and let’s not forget: Conspiracy among supposed competitors to fix prices is, get this, illegal.
Apple’s backers—and there are many, including highly placed media giants like “The New York Times,” which described Amazon this past week as “Book publishing’s real nemesis”—will tell you that Apple was doing right by customers because, “lower prices are not necessarily in the long-term interests of the public at large.” The theory here is that customers should embrace higher prices, since that will allow old-school, inefficient book publishers to stay in business rather than change their business practices and become more efficient in this new digital age.
(I’m surprised that the New York Times and these other Apple backers didn’t rush to the defense of the music industry in 2003 and demand that Apple raise the price of its 99 cent digital downloads when that was all Apple offered for several years. But let’s not lower ourselves to the tactics of the competition and redirect the debate. What’s a little ancient history between friends?)
A few thoughts about this case.
The book publishers are not victims. I write books, so I have a personal stake in this. And without completely trashing the companies I’ve written for, let’s just say that book publishers are perhaps even more clueless than the music industry when it comes to evolving with the times. Propping up these firms is rewarding bad behavior. Book publishers are bloated, inefficient, and slow, and if these companies are unable to keep up with the revolutions rocking the technology world right now, they need to step aside, as has happened in so many other industries.
Apple is not the hero. We can wring our hands about the supposed future where a monopolist Amazon simply raises prices after all its competitors are gone. Or we can simply see what Apple really did: Greedily enter yet another new market and engineer a price hike that has harmed consumers for two years straight. Not in some future fantasy land, but now, in real life: New eBooks now sell for $3 to $5 more than they did before Apple entered the market.
Amazon is not the villain. It is an aggressive, uncompromising competitor, yes. But unlike Apple and the five book publishers that are now being sued, and fairly so, by the DOJ, Amazon has not broken any laws. In fact, Amazon can and should be credited with jumpstarting the eBook industry, which was a backwater wasteland before the company released its Kindle platform. While Amazon was busy building a business everyone else thought was superfluous, even industry seer CEO Steve Jobs said the Kindle would fail.
“The fact is that people don’t read anymore,” he said. “Forty percent of the people in the US read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.”
But when the Kindle actually succeeded and threatened the iPad and Apple’s digital content ecosystem, it was Jobs and Apple—and not Amazon—that cheated. That’s why Apple is in hot water with the DOJ.
This isn’t “Time Cop.” If you’re interested in justice, as so many of these Apple backers claim to be, you should be concerned about Apple’s collusion with book publishers to raise prices for consumers, not in some fanciful alternate reality where Apple’s actions were done not to further its own aggressive corporate needs but were purely for the public good. That defense is so laughable, it hurts.