“Apple may have lost the original case, before U.S. Circuit Judge Denise Cote. It may have failed to convince two out of three judges on the Second Circuit Court of Appeals,” Philip Elmer-DeWitt reports for Fortune. “But that doesn’t mean the issues Apple raised in its defense are settled. ”
“Antitrust law is murky mess, encrusted with ambiguities and contradictions that have grown like barnacles on the 125-year-old Sherman Antitrust Act,” P.E.D. writes. “Apple could still win the case. But even if it loses, it wins.”
P.E.D. writes, “By taking it all the way to the highest court, Tim Cook reinforces Apple’s image as the company that thinks different, the one that’s in it for the long run, the one that has principles and sticks with them, no matter what the cost.”
If you don’t know that then you are living in an alternate universe. Most of the commenters here if asked would you prefer Che and Fidel’s Cuba or George Washington and Thomas Jefferson’s America, would choose Cuba without a second thought. Of course our President would do the same. He would choose any Middle Eastern Islamic government over the Founders. And that is a fact.
The real problem is not the asinine judge, nor is it the DOJ misapplying the law. It is Apple’s legal team never arguing the salient facts of the case.
The DOJ (and the judge — even before the case went to trial, and so far two of the three Justices involved) have argued that Apple insisted on a Most Favored Nation clause in its contracts with the publishers. This is blatantly false — if Apple’s legal team were to ever actually argue this. The fought over who demanded the clause. They fought over whether there was collusion over the clause. They never did what they should have done and outright showed that it was not (and is not) a Most Favored Nation clause (which can be illegal in some circumstances) but rather that it was a Best Customer clause, which is NEVER illegal. Apple’s legal team really dropped the ball on this one!
The second thing that Apple’s legal team never argued is that what is said in contract negotiations is ALWAYS supplanted by the plain texts of the contracts that result. In contract negotiations you can say or demand anything — so long as those statements in and of themselves are not illegal, e.g., threaten someone’s life or make slanderous remarks — and the final verbiage in the contract takes over. Steve’s oft quoted statement during negotiations and discussions of, “I know you want to raise prices.” is supplanted by the fact that Apple gave up pricing control to the publishers. If they raised — OR LOWERED — prices, it was the publishers who had that power in the final contracts. Apple had no such power to control prices. I have personally been in major, 10s of million dollar negotiations presided over by a sitting justice in California, and in that situation the justice was very clear to everyone that the final agreement, once committed to a written document, was the “be all, end all”. None of the statements made (within the law) or offers or demands meant anything outside the negotiation room itself unless it made it explicitly into that written document. Again, Apple’s legal team completely dropped the ball on this one.
Because I believe that Apple’s legal team will likely still follow the same stupid arguments they already tried and failed at using, I expect Apple’s legal team to fail at the Supreme Court. (That said, there are, unfortunately, certain legal restrictions on the Justices of the Supreme Court allowing Apple to insert new arguments into the case. Apple may have already excluded the possibility of bringing them up by never arguing them before. the Justices could say they won’t hear any arguments not brought up before and only want to hear why Apple thinks the lower courts’ rulings were wrong on Apple’s previous arguments.)
Saying that even failing, Apple wins, is just plain stupid. Failure will have long term negative effects on anyone trying to break into a new segment like Apple was doing with e-books. It will also add a great deal of ammunition to all the Apple haters who will point to a Supreme Court failure as “clearly showing that Apple is a much worse corporate citizen than Apple’s fanbois claim Samsung is”.
From reading up a bit on the definition and use of Most Favored Customer clauses, it makes no sense to have had it (if it actually is a most favored customer clause) since MFCs prevent suppliers from giving a lower price to one customer over the customer with which the MFC exists. In the agent model, Apple is no longer the “customer” but rather an aggregator charging a 30% fee on sales through their channel. I suppose it can be argued that Apple IS a customer if they were actually contracted to sell a certain minimum units of the product(s) to maintain such a status.
It is also important to define the relevant “market” appropriately. You cannot cherry-pick publishers’ new and best-selling titles as indicative of the entire “e-book market”. You need to include all e-books.
It is also necessary to examine the anti-trust impacts over a relevant time frame, which is fairly long (years) in publishing. The relevant time frame is not weeks, or months, or even several years. That’s how long the effects of e-book decisions may take to be felt in the marketplace.
Furthermore, raising prices above _predatory low price levels_ is not exactly the definition of “causing consumers harm”. So the simplistic fact that prices (of some books) might rise, over a short period, in this scenario does not imply anti-competitive behavior. It simply indicates a market correction.
Also, it is clear the publishers made a mistake in agreeing to sell e-books to Amazon on the (traditional) wholesaler basis, rather than on the agency basis, which is much better suited to e-book sales (for example, there is really no need to transfer legal title for an e-book to a middleman). Any student of Game Theory (developed in the 1930s, but which really came of age much more recently) can tell you that the publishers made a bad decision — in fact, their decision is contrary to their own best interests. They realized it too late, however. But this should not mean that must NOT change their mind. There is no reason why the publishers should not be able to change their business deal with Amazon and put e-book sales on the agency basis of sale. This does not constitute anti-trust. Fair and healthy market competition does not require players to shoot themselves in the foot…
Lastly, economics and data analysis have seen huge innovations in the past 100 years. Apple and/or Apple’s legal team needs to hire some kick-ass statisticians to analyze the e-book market w.r.t. the same criteria that the US DOJ utilizes when determining potential anti-trust implications of various proposed mergers.
Judge Cote would not allow Apple’s legal team to argue certain points at all. She ignored Apple’s team’s requests to bring certain legal experts into court, ruling their testimony to be irrelevant even though they were experts in the very field under discussion. She had made up her mind immediately after reading the Department of Justice’s brief and would not hear any evidence to the contrary. She basically stated so at the beginning of the trial. She listened to the Apple witnesses with a biased view that they were automatically liars, and so stated in her decision which was written, she admitted, except for slight revisions to add those comments, before the trial started. Other attorneys who have appeared before Judge Cote have stated this is a pattern for her. She writes her opinions before trial and then only revises them to adjust for anything she wants to add from the testimony.
The boss of the current DOJ prefers Cuba’s economic model to that of the US. Of course, most of the readers of MDN do also.
From what orifice did you pull that last sentence? I think you slipped a synapse. As for the DOJ: Crooks in and of themselves. So much for ‘justice’.
If you don’t know that then you are living in an alternate universe. Most of the commenters here if asked would you prefer Che and Fidel’s Cuba or George Washington and Thomas Jefferson’s America, would choose Cuba without a second thought. Of course our President would do the same. He would choose any Middle Eastern Islamic government over the Founders. And that is a fact.
Where do you think you are? Talk to us tomorrow after the drugs wear off.
I not saying this about you guys. Just the people here who voted for Obama.
If the Supremes rule for Apple, it would stick a fork in the eye of Amazon.
How the hell Amazon is getting away with this is beyond me.
I wonder what Amazon’s monopoly e-book share is now?
Me to. Waiting to see some numbers up from the media.
GO GET’EM!
The real problem is not the asinine judge, nor is it the DOJ misapplying the law. It is Apple’s legal team never arguing the salient facts of the case.
The DOJ (and the judge — even before the case went to trial, and so far two of the three Justices involved) have argued that Apple insisted on a Most Favored Nation clause in its contracts with the publishers. This is blatantly false — if Apple’s legal team were to ever actually argue this. The fought over who demanded the clause. They fought over whether there was collusion over the clause. They never did what they should have done and outright showed that it was not (and is not) a Most Favored Nation clause (which can be illegal in some circumstances) but rather that it was a Best Customer clause, which is NEVER illegal. Apple’s legal team really dropped the ball on this one!
The second thing that Apple’s legal team never argued is that what is said in contract negotiations is ALWAYS supplanted by the plain texts of the contracts that result. In contract negotiations you can say or demand anything — so long as those statements in and of themselves are not illegal, e.g., threaten someone’s life or make slanderous remarks — and the final verbiage in the contract takes over. Steve’s oft quoted statement during negotiations and discussions of, “I know you want to raise prices.” is supplanted by the fact that Apple gave up pricing control to the publishers. If they raised — OR LOWERED — prices, it was the publishers who had that power in the final contracts. Apple had no such power to control prices. I have personally been in major, 10s of million dollar negotiations presided over by a sitting justice in California, and in that situation the justice was very clear to everyone that the final agreement, once committed to a written document, was the “be all, end all”. None of the statements made (within the law) or offers or demands meant anything outside the negotiation room itself unless it made it explicitly into that written document. Again, Apple’s legal team completely dropped the ball on this one.
Because I believe that Apple’s legal team will likely still follow the same stupid arguments they already tried and failed at using, I expect Apple’s legal team to fail at the Supreme Court. (That said, there are, unfortunately, certain legal restrictions on the Justices of the Supreme Court allowing Apple to insert new arguments into the case. Apple may have already excluded the possibility of bringing them up by never arguing them before. the Justices could say they won’t hear any arguments not brought up before and only want to hear why Apple thinks the lower courts’ rulings were wrong on Apple’s previous arguments.)
Saying that even failing, Apple wins, is just plain stupid. Failure will have long term negative effects on anyone trying to break into a new segment like Apple was doing with e-books. It will also add a great deal of ammunition to all the Apple haters who will point to a Supreme Court failure as “clearly showing that Apple is a much worse corporate citizen than Apple’s fanbois claim Samsung is”.
From reading up a bit on the definition and use of Most Favored Customer clauses, it makes no sense to have had it (if it actually is a most favored customer clause) since MFCs prevent suppliers from giving a lower price to one customer over the customer with which the MFC exists. In the agent model, Apple is no longer the “customer” but rather an aggregator charging a 30% fee on sales through their channel. I suppose it can be argued that Apple IS a customer if they were actually contracted to sell a certain minimum units of the product(s) to maintain such a status.
Totally agree, Shadowself.
It is also important to define the relevant “market” appropriately. You cannot cherry-pick publishers’ new and best-selling titles as indicative of the entire “e-book market”. You need to include all e-books.
It is also necessary to examine the anti-trust impacts over a relevant time frame, which is fairly long (years) in publishing. The relevant time frame is not weeks, or months, or even several years. That’s how long the effects of e-book decisions may take to be felt in the marketplace.
Furthermore, raising prices above _predatory low price levels_ is not exactly the definition of “causing consumers harm”. So the simplistic fact that prices (of some books) might rise, over a short period, in this scenario does not imply anti-competitive behavior. It simply indicates a market correction.
Also, it is clear the publishers made a mistake in agreeing to sell e-books to Amazon on the (traditional) wholesaler basis, rather than on the agency basis, which is much better suited to e-book sales (for example, there is really no need to transfer legal title for an e-book to a middleman). Any student of Game Theory (developed in the 1930s, but which really came of age much more recently) can tell you that the publishers made a bad decision — in fact, their decision is contrary to their own best interests. They realized it too late, however. But this should not mean that must NOT change their mind. There is no reason why the publishers should not be able to change their business deal with Amazon and put e-book sales on the agency basis of sale. This does not constitute anti-trust. Fair and healthy market competition does not require players to shoot themselves in the foot…
Lastly, economics and data analysis have seen huge innovations in the past 100 years. Apple and/or Apple’s legal team needs to hire some kick-ass statisticians to analyze the e-book market w.r.t. the same criteria that the US DOJ utilizes when determining potential anti-trust implications of various proposed mergers.
Judge Cote would not allow Apple’s legal team to argue certain points at all. She ignored Apple’s team’s requests to bring certain legal experts into court, ruling their testimony to be irrelevant even though they were experts in the very field under discussion. She had made up her mind immediately after reading the Department of Justice’s brief and would not hear any evidence to the contrary. She basically stated so at the beginning of the trial. She listened to the Apple witnesses with a biased view that they were automatically liars, and so stated in her decision which was written, she admitted, except for slight revisions to add those comments, before the trial started. Other attorneys who have appeared before Judge Cote have stated this is a pattern for her. She writes her opinions before trial and then only revises them to adjust for anything she wants to add from the testimony.
Well, history has shown us that Apples legal team has its head up its neather hole.
An interesting read on the Second Circuit’s Apple Ebooks opinion for those interested in the reasoning involved with their decision.. http://www.antitrustlawblog.com/2015/09/articles/articles/the-second-circuits-apple-ebooks-opinion/