The settlement requires that Google’s pricing algorithm be “designed to operate in a manner that simulates how an individual Book would be priced by a Rightsholder of that Book acting in a manner to optimize revenues in respect of such Book in a competitive market” (4.2(c)(ii)(2)) It also requires that the books be priced at one of a number of set price points or “bins,” ranging from $1.99 to $29.99, (4.2(c)(i)), such that the initial distribution of books into bins “will be 5% ($1.99), 10% ($2.99), 13% ($3.99), 13% ($4.99), 10% ($5.99), 8% ($6.99), 6% ($7.99), 5% ($8.99), 11% ($9.99), 8% ($14.99), 6% ($19.99) and 5% ($29.99).” (4.2(c)(ii)(1))
I don’t see how to square these two requirements with each other. If the algorithm is supposed to optimize the revenue for each book, what if the optimal prices don’t match the percentage allocations? It’s true that this is only an “initial” allocation, but still, that does mean there has to be a moment in time at which either the optimal-pricing rule or the distribution-of-prices rule is violated. What am I missing? Has Google already run the algorithm and knows that these are the prices that result? Does some other section in the settlement make one of these rules advisory only? Or what?