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Comment by pwthornton | Hacker News Reader

This is like arguing that Walmart shouldn't get a cut of book sales. It's Apple's store. Apple still allows iOS users to purchase and use books from other stores on their devices.

What's the point of operating a store if you don't get a cut of the sales?

But if you just get rid of the agency model, which the DOJ is trying to do, this naturally goes away. With a wholesale model, Apple, Amazon and the publishing companies can all make money on an ebook sale. The agency model doesn't leave room for two middlemen.

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The analogy is flawed. Consumers don't get locked into a 2-year contract forcing them to shop at Walmart exclusively. If they did, and Walmart required, say, a cut of all DVDs purchased for play on a Walmart-sold TV, I think that certainly would qualify for restraint of trade. Target could push their DVD prices all the way to zero and shoppers would still be stuck with their Walmart contracts.

(edit for those not reading carefully: Saying that the contract is willful has nothing to do with the argument. Consumers do not sign contracts with retailers. So applying logic about retail sales is a flawed analysis. Doing things like leveraging the illiquidity of platform choice to increase prices in a way that would be legal for a retailer is not, necessarily, legal for a platform vendor. Apple has control over the market that Walmart does not. That's what the whole idea of "restraint of trade" is about.)

Nobody gets forced into anything. You agree to a 2-year contract when you decide to get a phone for ~$400 below market price.

Nobody gets locked into a 2 year contract forcing them to do anything with Apple.

iPads are not sold on contract. iPhones come with a contract, but the contract doesn't force you to keep using the device - just the wireless service.

You can sell the phone and buy a different one to use with the same contract if you don't like it.

I am not a lawyer, but to me this seems like they were the market leader in smartphones at the time and using that monopoly to monopolize another market.

Being the market leader doesn't give you a monopoly in any market, and certainly not in a young and growing one.

Considering that Steve Jobs wanted to "destroy" Android, they were at least headed in that direction, and at the time, they had the majority of the smartphone market, i.e. phones where you could actually buy an ebook.

These things are irrelevant to the definition of a monopoly.

And the definition of a monopoly is irrelevant to the DoJ case being discussed. So it appears everyone is even.

(edit: crap, just realized I'd been tricked into responding to rbarooah again. Apologies all.)

When was the last time you saw anyone on HN directly insult someone else here in such a mean and insidious way?

You wrote that edit just to try to hurt and undermine me.

I think this is the first time I've seen anything like it here, and it has a really unpleasant schoolyard bully vibe to it.

> It's Apple's store.

Amazon's website is not Apple's store. Amazon, Barnes & Noble, etc. do not sell books through the Apple App Store.

The analogy would be Walmart getting a % from songs bought on an iPod if the iPod itself was purchased from Walmart.

You can still purchase books on Apple's devices from Amazon's store. You just can't download an app for Apple's store and sell in-app purchases without paying a cut. I buy Kindle books all the time on my iPad. I just go to amazon.com, which is Amazon's main store.

You also can't link to your ebook store website from within the app. That's the issue.

That's not what the original post is arguing. If that was the crux of it, I'd agree with it. A good middle ground would probably be that Apple still gets a cut of in-app purchases but website links are allowed.

That doesn't make any sense.

> Amazon's website is not Apple's store.

Indeed, and Apple gets no money from things you buy on Amazon.com.

> The analogy would be Walmart getting a % from songs bought on an iPod if the iPod itself was purchased from Walmart.

Only if you buy those songs through Walmart.

They disallow Amazon from linking to their ebook store from within the app.

> Only if you buy those songs through Walmart.

With Walmart disallowing songs to be bought from anywhere other than Walmart.

That's why the analogy (which has been repeated over and over) is rather silly. When you purchase something from a retailer you establish 2 relationships; one with the retailer and one with the product you purchased. In the App Store universe, Apple places itself in between the second relationship. Whether this is legal or not I will leave to those with relevant degrees.

> With Walmart disallowing songs to be bought from anywhere other than Walmart.

But that's not the case, you can buy kindle books directly from Amazon.com and the process has nothing to do with Apple.

There was an interesting article on HN today about the "wholesale model" versus the "agency model". Apple is forcing the agency model down all publisher's throats - music, movies, books, apps.

The agency model lets Apple get a fixed 30% no matter what the price the publisher chooses to sell. The retail price is in effect fixed to the wholesale price, and there are no sales and no competition at the retail level.

The wholesale model is the publisher sets the price and the retail sells it for whatever they wish. So one store can offer New York Times bestsellers at 30% off, while another store sells them fixed price, and another store has a "buyers club" that gets you 10% off everything in the store.

The variable pricing model, wholesale, is better for consumers. The fixed pricing model, agency, is better for the retailers. It's the same for publishers since they get their wholesale price either way.

Apple is smart - they think this "sell it as cheap as you can make a profit" model is not for them. It's always been their model actually.

Doesn't make sense, because the big six publishers _wanted_ the agency model. They used Apple to force Amazon to use it too. What happened I think (correct me if I am wrong), is that till two years ago Amazon used its market power to pass on their low wholesale prices to the publishers: "We only will sell your eBook if we can get it for this price" In the agency model the publisher can set its own price.

Also notice, that Apple only uses the agency model for Apps and eBooks. Music songs are sold in the iTunes store for a constant price (99 cents).

That's not correct. In the agency model the publishers set the price that Amazon (and others) sells it to the end user.

Apple doesn't use the agency model for music because they are dominant in that market. The agency model was meant to prevent Apple from having to compete with Amazon on price. They couldn't sell at the same price as Amazon without taking a loss.

No what Apple did was force all sales of virtual goods to use their API, with a 30% cut for them, while also forcing all book sales to only give a 30% cut to the retailer, ergo no one but Apple can sell ebooks via iPhone apps. I can think of at least one YC company that might have been forced out of the market by this.

Considering the fact that only legitimate way to get an app on the device is through app store, its more like your ISP demanding a cut from developers based on different features in web applications. ISPs are reduced to dumb pipes. It's time app stores go the same route.

In the days before the consumer internet, there were online services like Compuserve, Prodigy, and AOL. They did demand a cut from developers based on different features they provided.

They were driven out of business through competition from the open internet.

If the current situation is analogous, then over time we can expect open app stores to drive the closed ones out of business. No need to involve the government.

Let's suppose that one of those online services had been owned by an unrestrained, pre-breakup AT&T (as would have been the case without the government intervention see as unnecessary).

Who here thinks that the open Internet would still have obviously and inevitably won?

What exactly are you comparing to an unrestrained, pre-breakup AT&T? I'm not aware of any modern equivalent.

That is not exactly what is happening, based on how I'm reading this.

Apple is demanding 30% of any sale made on Amazon's website through Amazon's app, because it is an iPhone app. Amazon is not selling products through iBooks.

The analogy is flawed because Walmart has not made a deal with publishers to ensure that physical books sell for the the exact same price in every retail outlet, and the same wholesale price to every retailer.

"It's Apple's store."

But it's your device. When I buy a consumer product -- such as a $700 tablet -- why should the manufacturer (who happens to make enormous margins on it) get a cut of everything else I do on it? Why, if I bought a book in the Kindle app (which I can't do because of this problem), does Apple deserve a penny? I of course can't install alternatives outside of the App Store as Apple prevents it.

This is akin to GM demanding a 30% cut of all groceries that I buy and carry in it. Where else in the market is this sort of behavior tolerated? My television manufacturer demanding a 30% cut of the DVD that I bought. Etc.

A consumer could simply buy an alternative, but that is seldom as simple as it at first blush may seem. "Just use something other than Winodws" a million apologist would rant. That's why large companies get constant oversight.

This is where Apple's incredible success is going to, well, haunt them a bit. When they were the underdog, emerging from years of excellent products but little commercial success, they could get a way with this. As a $600 billion dollar colossus with completely unprecedented profits, however, the behaviors get more attention.

Except that you know this is a strawman, since you regularly argue that the competition is strong:

http://news.ycombinator.com/item?id=3822163

http://news.ycombinator.com/item?id=3823863

I cannot find where exactly the strawman is. Where did I say there was a lack of competition, or even that Apple was a monopoly? If you're going comment diving, come up with something better as your big hurrah.

Apple is a $600 billion company. They are getting away with behaviors that no one else could actually get away with because they're so successful. Companies that large are exactly why the FTC and DOJ oversight exists.

You said it wasn't easy to buy an alternative, and you used switching away from Windows during Microsoft's dominance as your example.

It was true that moving to the competition was hard during the Windows era because there weren't good alternatives. That's a strawman because there actually are good alternatives now, and your comments indicate that you know this.

Oversight exists to prevent abuse of monopolies, not to regulate companies just because they are successful.

You said it wasn't easy to buy an alternative

I actually said "but that is seldom as simple as it at first blush may seem". Have a bunch of apps and iBooks? Ready to completely abandon them? Accustomed to any of the countless apps and services that only exist on the iPad? Ready to do without them?

Apple's actions are acts of bravado, and they only come from a position of strength. They earned that position of strength, but you can't simply say "Oh don't like it -- this policy and tax that most buyers don't even know about -- then don't buy it". It is hardly so simple.

Accustomed to any of the countless apps and services that only exist on the iPad? Ready to do without them?

Severing business or consumer relationships with anyone but a totally incompetent supplier or commodity service involves a trade-off. Some benefits you are accustomed to may not be present, but others which are more desirable presumably exist. Understanding this is part of being responsible for how you spend your money and it applies universally.

Are you arguing that consumers should be protected from having to understand and exercise this responsibility by the government?

> Where else in the market is this sort of behavior tolerated?

Have you ever seen a gaming console? Have you ever seen an eInk Kindle Reader which is tied to Amazons eBook store?

Also here is a fun fact from the past: Before the iPhone mobile App developers (yes, there was stuff like J2ME applications, but it was a tiny market compared to the App store economy of today) were glad if they earned 20% on the price of their products. The providers or download portals pocketed the fat end.

Tablets and smartphones are replacing computers. If we're using the game console model as our standard, we are, pardon the expression, fucked.

I shudder whenever someone so easily uses it as the comparison.

No one in the world has a problem with the App Store in general. Apple does a fantastic job running a storefront, lubricating a world wide payment and gift card system, etc. They run a tight, gorgeous system. The problem is when they push their reign of influence such that alternatives can't exist. When Amazon can't even link to a web store from their own app. That is just egregious overreaching that is indefensible.

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