U.S.A. v. Apple: Cupertino awaits e-book antitrust decision with more lawsuits in wings

“Apple Inc. will find out sometime in the coming weeks whether it’s legally responsible for an alleged scheme to fix prices for electronic books, after an unusual three-week civil antitrust trial in Manhattan,” Bob Van Voris reports for Bloomberg News.

“U.S. District Judge Denise Cote, who heard the trial without a jury, will rule on U.S. claims that Apple, the world’s biggest technology company, led a conspiracy of five publishers to raise the retail price of e-books and to force Amazon.com Inc., the No. 1 e-book seller, to change its pricing model,” Van Voris reports.

“A group of states is also seeking fines and unspecified damages,” Van Voris reports. “If Apple is found liable, damages will be determined in a separate proceeding. A win for the government may fuel class actions by private plaintiffs seeking triple damages permitted under antitrust law.”

Read more in the full article here.

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16 Comments

  1. How much has the DOJ already skimmed from the five publishers who decided to fold and pay instead of fighting this anti-Apple action?

    Will they give the money back to the publisher once the trial is found in favor of Apple?

    The only “fix” is the DOJ stealing from successful , prosperous companies. Apple’s actions revived a dying book publishing industry. It dd not establish a monopoly in a competitive marketplace for publications.

    Amazon now competes directly with those who signed contracts with Amazon to sell books.

    1. The publishers were much closer to guilty. Its a horizontal thing vs a vertical thing. Apple just wanted to sell ibooks with out losing major money. Read Foss and his inputs. He is very spot on.

      1. There is no basis to think publishers are guilty of price-fixing. Yes, publishers wanted to stop Amazon from selling their best-sellers below cost. There are a number of sound business reasons for publishers to feel this way. And publishers may even have discussed business practices and models for successfully selling e-books through third-parties, including Amazon. But this is not the same thing as anti-trust price collusion, particularly if the prices publishers wished to maintain were those that would be set in a competitive market — which appears to be the case (even though prices for their best-sellers are at higher levels than Amazon’s loss-leader prices).

        Also, homogenous prices alone do not indicate price-fixing, as homogenous prices will result from effective competition. Economic principles indicate that the prices of products in competitive markets will tend to cluster. Notice how the prices for a lot of products tend to cluster (eg, beer, food items, airline tickets, hotel rooms). The ability to achieve a higher price requires differentiation — like a best-seller, maybe? But Amazon’s goal was to grow its own e-publishing enterprise at the expense of the established publishers. The publishers never anticipated Amazon would sell their e-books below cost. But that does not mean publishers must live with their mistake. Once they realized what was happening, they wisely, but belatedly, came around to insisting on the agency-model of business with Amazon. Which, incidentally, is the basis on which Amazon sells most of what it sells.

      2. It seems to me that even among the publishers, it would be hard to prove price fixing. They don’t sell the same product. The publisher for Dan Brown (random choice) doesn’t have an interchangeable product with Danielle Steel’s latest offering. You can’t make one compete with the other for my money. Should the publishers be forced to sell “wholesale” quantities of e-books for a low price that a reseller then sells for a lower price? The DoJ apparently thinks so, even though it’s a totally different situation than physical books. You can’t ever have excess inventory of e-books, so the publisher never has to engage in the tradeoff between the impact of selling excess inventory at a lower price vs destroying it. Even if the publishers sat in a room and discussed business development strategies, it’s not the same as colluding to restrict the market. Publishers aren’t even bound from not allowing distribution through resellers at all.

  2. You got to love the civil justice system in the U.S. Once one lawsuit is lost, everybody else can baselessly sue too. Criminal law would call that “double jeopardy”, but civil law calls it “business as usual”, or more accurately, a way for judges and lawyers to make a fortune while everyone else (actual plaintiff and defendant) suffer.

    1. Nonsense. Many crimes are tried in both state and federal courts. Those are not double jeopardy. In business if you sue someone for fraud, and I sue the same person for fraud there is no double jeopardy. Indeed once I find that I was also defrauded in the outcome of another’s trial, I damn well have the right to sue. If many are hurt by a defendant there can be many lawsuits.

  3. This is one of the most chilling and terrifying abuses of power out of many others under the Obama administration. One if the most corrupt and frightening abuses of power I have ever seen from an executive branch in my life time and perhaps the worst in US history based upon new technologies that allow for new abuses that were not available before.

    I would count the days until he leaves office but I’m not confident that it will get better since he set a president that does not appear to have resulted in a meaningful backlash. So we can look forward to even worse in the future.

  4. I have to admit this lawsuit makes no sense to me. I’m an old man, and in my life, I have witnessed several monopolies in action.

    First, in order to have a monopoly, you have to have a dominant market position in the business. Most monopolies wait until they have a dominant share of market sales, and then they raise prices, but only after they use low prices to drive out the competition.

    The companies operating in the book business have little pricing power. They engage in near constant price wars. The only company that has a large enough share of the e-book business to be considered a possible monopolist is … Amazon. Interestingly, Amazon engages in low price warfare as a way of eliminating competition. That is classic pre-monopoly pricing behavior.

    By contrast, Apple was trying to get into the e-book business. They had no significant share of the market sales. So my genius government sues Apple? Really? And Apple tries to break into the book business with higher prices than the dominant player. So the Justice Department sues Apple? My conclusion is that in the Justice Department, the salaries are too high and the IQ’s are too low.

    If you want to witness a monopoly in action, go buy some gasoline.

  5. Apple was doing business just like Amazon. If Apple is found guilty there is someone who is getting paid off for bringing that decision.
    I didn’t read 1 peice of evidence or testimony that made Apple look like any other company doing business like Amazon. DOJ only had 1 piece of evidence but it turned out to be so lame. A draft unsent email. That was there big deal which made them start this waste of time and money. Apple is innocent with out a doubt period!

  6. This is stupid. The US legAl system is stupid.
    Why can they be sued again over the same thing. If the government is right Apple will face stupid lawsuits for years and years… How is that right? How is that legal? It is retarded is what it is. No one has really been hurt in this case.

    THE LAW MUST BE CHANGED!

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