On Apple's e-book price fixing

Earlier this week, John Gruber linked to a post on Fortune magazine about the appeal for the famous e-book fixing case that sees Apple as a defendant.

Gruber argues:

Two of the three judges on the appeal seemed to agree with what I’ve been arguing all along: (a) the agency model — where publishers set prices and Apple takes 30 percent — is not price-fixing; and (b) Amazon, with its monopoly share (80-90 percent) of e-book sales and predatory pricing scheme, is the company the DOJ should be investigating.

Gruber is usually very objective in his analysis, but in this case he's completely ignoring the facts. For instance, nowhere in the article there is any mention of point (a). Also to my knowledge nobody has ever argued that the agency model is per se price-fixing. If it was, half of the world industries would be in trouble. What IS price-fixing is agreeing with publishers controlling 50% of readership that they will set a price for e-books in Apple's bookstore, and that everybody else will have to sell at minimum that price.

From Wikipedia page on the case:

On the day of the [iPad] launch, Jobs was asked by a reporter why people would pay $14.99 for a book in the iBookstore when they could purchase it for $9.99 from Amazon. In response Jobs stated that "The price will be the same... Publishers are actually withholding their books from Amazon because they are not happy." By stating this, Jobs acknowledged his understanding that the Publishers would raise e-book prices and that Apple would not have to face any competition from Amazon on price.

That "the price will be the same" is one of the key problems for Apple, but according to the 2013 decision there is large evidence that "the Publisher Defendants joined with each other in a horizontal price-fixing conspiracy. There is also evidence showing that Apple violated Section 1 of the Sherman Act by conspiring with the Publishers to eliminate retail price competition and raise the price of e-books. The evidence shows that Apple was a knowing and active member of the conspiracy."

This obviously does not mean ignoring Amazon dominating position in the e-book market, or condoning dubious practices - such as predatory prices [^1] - that they allegedly used to keep the competition at bay. Finally, this does not mean assuming that having more competition in the e-book market is a bad thing; obviously it is not. But two wrongs don't make a right. There is no point at trying to justify Apple's behaviour by pointing at Amazon's bad behaviour: all evidence I have seen, including a quote from Steve Jobs himself, suggest that Apple HAS conspired to fix prices with the publishers, and the Fortune article says nothing about this not being the case. Apple could have just launched and used different ways to win (eg iBook could have been the only app where you can buy a book straight from your iOS device), or complain to the authorities for Amazon behaviour. Easy? Certainly not, but I've been surprised by Apple in pulling off unexpected wins before.

I'm proud to be an Apple fanboy, and that's precisely why I won't condone any dubious behaviour from them.

[^1]: predatory pricing is a common practice in monopolies / oligopolies and it is used to keep things as they are, as people cheering for today's low crude oil price should remind themselves of.