Why is Apple Inc. on trial? For good behavior, it turns out

Apple Inc., #1 on Fortune magazine’s list of the World’s Most Admired Companies, is currently on trial in Manhattan federal court, defending against antitrust charges,” Thomas A. Bowden writes for Forbes. “Question: How many other businesses in Fortune’s top ten have been recently subjected to some kind of antitrust enforcement? Answer: all of them.”

“Surely, some would say, if the nation’s top companies are getting caught in antitrust’s grip with clockwork regularity, they must be doing something wrong,” Bowden writes. “But what if they’re not? What if America’s best companies are being targeted not for bad behavior but for good? What if they’re being punished not for their sins but for their virtues? It’s hard to imagine, but consider the evidence.”

Bowden writes, “The scandalous truth is that antitrust laws penalize America’s best companies for their virtues, for business practices that generate growth and profit through voluntary trade. Such practices deserve legal protection, not prohibition. Antitrust stands exposed as something quite vicious: a legal regime that punishes good behavior.”

Read more in the full article here.

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24 Comments

  1. Sort of how the government “Compensated” bad companies during the last (or actual) economical crisis given away money with no compromise and now suing companies that never requested help from the government.

    1. A conclusion should be accepted or rejected on the merits of the arguments made to support the assertion. The conduit through which you become aware of the assertion and supporting arguments shouldn’t impinge on conclusions you reach. Agree or disagree with the assertions. Debate them. But dismissing it because it was published by Forbes is closed-minded.

  2. “Bowden writes, “The scandalous truth is that antitrust laws penalize America’s best companies for their virtues, for business practices that generate growth and profit through voluntary trade. Such practices deserve legal protection, not prohibition. Antitrust stands exposed as something quite vicious: a legal regime that punishes good behavior”

    Wrong. Antitrust laws CAN penalize companies. Like all laws, they can be abused by those in charge who selectively choose when to apply laws to “make example” of someone.

    The DOJ persecution of Apple here is abuse, but 15 years ago antitrust laws were *absolutely* used properly to nail Microsoft to the wall for abusing their monopoly position, and the world is a better place that the DOJ pursued that case.

    1. I’m not yet quite sure that the Apple case is an abuse of anti-trust. For now, I’m still willing to accept the premise that a very convincing presentation by Amazon was given to DOJ to pursue Apple, and DOJ (after all, they are all just ordinary people) fell for it and didn’t do proper research of their own.

      The case hasn’t been decided yet; when the judge does decide it, we’ll know if there was abuse of the system or not.

      From DOJ’s perspective, Amazon approached them to complain about a powerful new entrant who seemed hell-bent on conquering their market space by colluding with others. Critical aspect was abuse of market position. Apple being the largest company in the world (by market valuation) and one of the most powerful ones (certainly in the US), DOJ found the assertion quite plausible. With some creative massaging of truth, Amazon’s presentation was probably very convincing.

      Let us not forget; the lawyers who work at the DOJ are often the ones who weren’t competitive enough for private sector (where the really big money is). Of course, occasionally, they also include bright lawyers whose personal ethical standards simply couldn’t stomach the life and work of private practice…

    2. Ding ding, we have a winner!

      Antitrust laws exist for a reason, and were intended to increase competition and benefit the consumers. But, as with all laws, they can be hijacked by the people tasked with enforcing them, and used for political gain rather than serving their intended purpose.

      Unfortunately, we live in a society that feels we don’t have the right to hold our political leadership accountable, and is blind and gullible enough to accept that the politicians actually give a rat’s ass about us.

      As such, no matter WHICH party is in power, they will do pursue whatever personal agenda they want. If the cost turns out to be losing the next election, oh well! There’s always the one after that. So long as you convince half the populace that the “other side” is driving this country into the ground, they’ll always be able to trade leadership.

      All the while, we will continue being led by the nose because they have us so convinced of their fictions. Of course, I can’t even say this is a “recent” development: this is the history of human civilization. It’s just a matter of what political structures are used to enslave us, and who our leaders tell us the enemy is.

  3. “.. an analyst at the Ayn Rand Institute”? Right there he loses credibility with any rational thinking person. Must have been a roommate of Paul Ryan at some point in his early life.

  4. No good deed goes unpunished…

    but bad one may be spared, …

    Why didn’t Amazon get targeted by the DoJ before Apple moved to free/save that industry ?

  5. perhaps the reason that the DOJ and other govt. departments have lessened their harassment of Google and Msft is not because they have changed their behaviour BUT because they have increased their LOBBYING spending:

    2012 lobbying expenses:

    Goog: 18.2 m (not sure if that adds Motorola’s spending as well)
    Msft 8.09 m
    Amazon 2.5 m
    Apple 1.97 m

    Google a smaller company than Apple Spends 9 times Apple in lobbying!
    (Goog has got more convoluted tax schemes than apple but doesn’t get called to congress, Android phones found to infringe don’t get banned like apple devices, billion dollar Samsung jury award gets cut in half…. )

    Amazon makes WAY less profit than apple (christmas quarter amzn profits 97 m vs Apple’s 13000 m i.e 13 billion ) yet SPENDS MORE ON LOBBYING!
    Guess who had 90% ebook share and who is on trial for anti trust?

    In the old days Walmart used to get into Govt. trouble all the time: Unfair business practises (taking mom and pop shops out of business), labour abuse issues, import issues etc etc. Than they were told to set up a Big Lobbying Branch which hires Ex Senators and Congressmen (i.e Fat Retirement for Politicos) and miracles! the charges against Walmart has dropped in recent years …. (has Walmart stopped expanding? have they stopped making products in third world countries? NOPE BUT THEY HAVE UPPED THEIR LOBBYING PLAN!).

    sorry to say but as one billionarie said about the political shit in Business : “Either Play By the Rules i.e when you play basket ball you can’t use Football rules or they will PUNISH YOU”.

    The Powers cannot let Apple (the riches corp in USA) SET A TREND for LOW LOBBYING SPEND. (note most lobbyists are ex politicians including Presidents. I don’t think their salaries are included in the lobbying expenses stats. ).

    LOL, perhaps it’s time for apple to up lobbying expenses. Hiring a few ex senators and congressmen and judges as ‘Advisors’ will be start (Samsung hired the UK judge Sir Robbin that asked apple to apologize in Print)…

    (most of my post is tongue in cheek but I think there’s a sad truth in it… )

    1. To add to my long post:

      I’ve lived in various places in the world and EVERYWHERE whether democratic or dictatorship, capitalist or communist, liberal or fundamentalists … Governments (i.e the rulers) want to shake down business and make money.

      In one Religious Fundamentalist country I lived in with ferocious laws which is supposed to keep everyone morally upright ( where you can’t even talk to a girl alone or hold hands in public) Bribery is Supposed to be a big NO NO.

      So INSTEAD on the birthday of the state’s (little province) ruler the Sultan all the clued in businessmen are supposed to give Birthday Gifts… (hey they are birthday gifts not bribes)
      I’ve talked to one businessmen who said his friend had to buy a Truckload of flowers plus other stuff for the ruler’s birthday party.
      The dudes who give enough are ‘knighted’ and given a title. They get deals on business licenses, permits etc. They even have special license plates for their cars showing their status (which makes them unofficially exempt from parking tickets or from cops who want a shakedown … !)

      lol.

  6. The real problem with this entire case is the application of anti-trust laws by the DOJ. The anti-trust act was intended to prohibit a company from using its monopolistic position to essentially squash any competition, much like what Standard Oil did to smaller oil companies.

    The facts, at first glance, seem to show something might be there with Apple:

    1. Amazon is selling e-books for $10 (just to use a figure)
    2. Apple, with billions in the bank, enters e-book market with contracts that change the terms for all publishers and force Amazon to change its model
    3. Publishers raise prices of books
    4. Ergo, Apple must be bad for consumers because book prices went UP.

    The problem with this analysis is that it misses the entire setup.

    1. Amazon releases Kindle and enters e-book business
    2. Amazon, being a major, major book retailer, demands wholesale pricing for e-books and forces publishers to set prices according to Amazon’s demands
    3. Amazon dominates e-book market with about 90%
    4. Borders bookstores is liquidated in bankruptcy
    5. Barnes & Noble bookstores suffer poor e-reader sales and e-book sales, along with diminishing physical book sales
    6. Publishers realize their mistake in agreeing to Amazon’s e-book demands
    7. Apple comes along and wants to enter e-book market with agency model
    8. Publishers, who have been waiting for some way to force Amazon to change its model so the publishers can make some money, all sign up with Apple
    9. Amazon has to change its wholesale model due to Apple’s contracts with the publishers
    10. Amazon is pissed because now Apple can compete with Amazon, and Apple has the better e-reader device (Amazon forced to release Kindle Fire just to compete with the iPad)
    11. Amazon goes whining and crying to the DOJ about anti-trust, even though Amazon was the 800 lb. gorilla in the industry

  7. Amazon’s CEO got pissed, called the White House, and demanded DOJ go after Apple.. “Dammit, Barack, I didn’t donate to your re-election just because I’m civic minded!”

  8. This article is a load of baloney. It states that Microsoft did nothing wrong by bundling Internet Explorer with Windows 95. Is there anyone on this site that believes that??

    ——RM

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