“Steve Jobs is remembered as the Thomas Edison of Silicon Valley, but Washington’s trust busters would like to add one more legacy: That the Apple cofounder tried to suppress competition as the ‘ringmaster’ of a conspiracy to fix digital book prices that nonetheless caused prices to fall,” The Wall Street Journal editorializes.
“At least that’s the legal theory behind the federal show trial against Apple that got underway last week, which is incoherent even by the standards of modern antitrust. The Justice Department contends that Apple plotted with five publishers to artificially inflate the costs of books in 2009-2010,” WSJ writes. “Yet the average retail price for ‘trade’ e-books has since dropped to $7.34 from $7.97… Lower prices, more sellers and better products don’t sound like a return to the days of Standard Oil, so Justice’s Antitrust Division conjured up a complaint by looking at the prices for the digital versions of new and bestselling books, which have jumped by a few cents. Justice blames this on Apple’s so-called ‘agency’ sales model… Apple maintains its innocence, with important legal implications. The Justice Department is trying to set a dangerous new theory of antitrust liability, contrary to multiple legal precedents going back to the 1980s.”
WSJ writes, “The government’s evidence is mostly out-of-context emails and innuendo… The book publishers hated the $14.99 cap Apple insisted on to maintain standard pricing across its bookstore, but Justice cites these ceilings that constrain the ability to raise prices in a case allegedly about raising prices… So too for a “most favored nation” clause in the contract that said Apple store e-books must match the cheapest market price. This is a tool for keeping prices down.”
“Amazon and Apple are both innovative, rich, ruthless companies, so this case is hardly David versus Goliath—unless Goliath is the Justice Department abusing its discretion to favor one over the other,” WSJ writes. “The larger spectacle is the Obama Administration attempting to dictate how the book industry and online commerce must be structured in a way that benefits an incumbent like Amazon in what is otherwise a fluid, dynamic market. The case reveals how degraded antitrust law has become as its lawyers search for reasons to justify their existence.”
Read more in the full article here.
MacDailyNews Take: As we wrote the day the DOJ filed this lawsuit, “The U.S. DOJ is plainly inept.”
Once again: Killing real competition for the appearance of competition is just plain stupid.
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