U.S. DOJ’s court victory over Apple may turn out to be pyrrhic

“In a 160-page ruling issued yesterday, District Court Judge Denise Cote ruled against Apple AAPL +1.5% for conspiring with five publishers to raise the prices of electronic books,” Michael Bobelian writes for Forbes. “The verdict marks a high-profile victory for the antitrust division of the Department of Justice and will ensure that the prices of e-books remain low for consumers for the foreseeable future. The long-term impact of the verdict is less clear, however.”

“American antitrust law protects consumers – not competitors, suppliers, or distributors. Sometimes, the interests of consumer and these industry players overlap,” Bobelian writes. “But when they don’t, as was the case with the publishers in this lawsuit, there is little recourse. Are lower e-book prices good for consumers? Absolutely. But what if those lower prices decimate competition in the long run, allowing Amazon to raise prices in the future.”

Bobelian writes, “And is the price of a product the only measure by which consumer welfare should be measured? What if lower e-book prices reduce the variety and quality of books going forward? It may be difficult to provide a true measure of such a qualitative factor, but avid book readers and society at large do lose out when a wide variety of writers, editors, and publishers cannot thrive in this environment.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Rainy Day” for the heads up.]

Related articles:
Apple faces triple damages, longshot appeal over ebook conspiracy claim – July 11, 2013
U.S.A. v. Apple verdict could end the book as we know it – July 11, 2013
U.S. DOJ unwittingly causes further consolidation, strengthens Amazon’s domination of ebook industry – July 11, 2013
Where’s the proof that Apple conspired with publishers on ebook pricing? – July 10, 2013
U.S.A. v. Apple ruling could allow U.S. government to monitor, interfere with future Apple negotiations – July 10, 2013
Judge Denise Cote likely wrote most of her U.S.A. v. Apple ebooks case decision before the trial – July 10, 2013
U.S.A. v. Apple: NY judge rules Apple colluded to fix ebook prices, led illegal conspiracy, violated U.S. antitrust laws – July 10, 2013


    1. OTOH, eBook prices on a par with the paper edition sound crazy. They should be lower instead, given the economics of electronic distribution vs. publishing on paper.

      I don’t buy the argument that 9.99 is too low a price to have a viable eBook industry in the long run.

    2. Let me take my stupid simplistic and moronic head to the highest level I can achieve and summarize this:

      Apple provided a way to allow book publishers to raise the prices of electronic books … For the industry as a whole.

      This sounds like Apple is guilty.

      Publishers could have been told: take your massive profits after our 30% take on e-book sales to supplement your paper book costs and you can’t put a book price higher than Amazon.

      Of course this may not have worked. How do I know. It’s the publisher’s issue with Amazon.

      Now Apple has made it their issue.

      I personally am a cheap skate. I will not pay more than $3 for a paperback (used is ok) or 99 cents for ebooks.

      Without paper, profits are MASSIVE. Let the book business take care of itself.

      Yes the DOJ is inept I don’t doubt it. But Apple did wrong.

    1. Do a little research before spouting BS.

      Excerpt from Wikipedia:

      “Cote serves as a United States District Judge on the United States District Court for the Southern District of New York. Cote was nominated by President Bill Clinton on April 26, 1994, to a seat vacated by Mary Johnson Lowe. She was confirmed by the United States Senate on August 9, 1994, received her commission on August 10, 1994, and took office on August 11, 1994.[1] She assumed senior status on December 15, 2011. On Monday, June 25, 2012, the White House Press Office announced that President Barack Obama had nominated Assistant U.S. Attorney Katherine Polk Failla to the seat. The nomination is pending confirmation by the U.S. Senate.”

      That’s right, she was appointed 19 years ago by Bill Clinton, not Obama. Furthermore, Obama nominated Falia to the seat a year ago. I wonder who has been holding up confirmation of judicial nominations??

      So you might have a case blaming Clinton. You might also have a case blaming the Senate and its partisan division. But it seems ludicrous to blame Obama. Of course, you probably blame Obama for just about everything, don’t you? Get a clue, moron, and go G spank yourself.

  1. Apple has so many enemies, it’s time to take a long look at itself in the mirror for the cause and effect, from there Apple needs to repair damage control bringing back positive perception for the company.

    1. I can remember when Microsoft first brought out Windows. I was meeting with a colleague of mine who had a mid level job in software design for a government agency at the time. He was extolling the virtures of the new Windows operating system, which was ugly – by the way, “almost as good as a Mac,” which, in his next sentence, he disparaged as “not a real computer.” Some people have always looked down on Apple. I don’t know why. But I don’t think you can blame this negative reaction to Mac on today’s management team, Steve Jobs, or any other CEO. It’s persisted throughout the history of Apple. Maybe it’s in Apple’s roots in a garage and the kind of people who went to meetings of the Homebrew Computer Club. I don’t really know. But people in power, who wear nice suits, seem always to have had disdain for Apple. Oh, and that colleague of mine? He eventually went on to head the entire IT division of an entire cabinet level government department.

      1. If that person is still a friend of yours, you might want to tweak him with a little known fact.

        Microsoft (Gates, actually) negotiated a deal with Apple (Sculley, actually) whereby Apple provided actual Macintosh System software source code to Microsoft to help them develop Windows 1.0. Note that I didn’t say “Mac technology” or “Mac intellectual property” or “Mac software designs” but rather “Macintosh System source code”. Yep, the source code itself.

        Gates knew that the Mac’s interface was the way of the future (and even said so many times quite publicly). Gates knew that Microsoft’s programmers were way, way behind in the development of the Windows skin for MS-DOS. (Windows, up until Windows 95 was not really an OS in and of itself but rather was a skin on top of MS-DOS.) In order to catch up Gates convinced Sculley to license the software source code to the Mac to Microsoft.

        Insiders have reported that Gates threatened to stop ALL development for the Mac (including Excel which was Mac only at the time, Word, BASIC, FORTRAN, etc.) if Sculley didn’t cave. Sculley caved.

        Microsoft, under a license from Apple, included that software source code in all versions of Windows 1.x, 2.x and 3.x. (By the bye, when the source code showed up in Windows 2.0 Apple sued — and lost!)

        Some people even say that without Sculley’s help to Gates there never would have been a Windows to deal with in any way. That’s probably an exaggeration. Microsoft would have eventually gotten Windows out the door. It would have just taken them a year or two longer.

        Maybe, just maybe, he’ll have just a bit more respect for the original Mac. Somehow I doubt it..

    2. Cause: Do the right thing. Resist corruption. Don’t pay kickbacks to senators.

      Effect: Villified by media. Witch hunts led by government. Justice denied in courts.

      The only cure is to……
      Play the corrupt government game. Bend to the media by developing products that only the media says you should develop. Pay the media to say good things. Let competitors copy without hinderance. etc etc.

      1. The other option would be to expose what is happening and fight back and expose the government corruption and DARE the government to keep poking at Apple and make sure that any time they are attacked the people that do it and their agendas are well exposed.

        Do the same thing with the New York Slimes.

  2. Book Publishers to Amazon: We can’t pay authors or promote new works or take chances new authors while chasing lower and lower prices. In fact, we are losing money on each of these e-books we sell through Amazon.

    Amazon to Publishers: Don’t worry. You’ll make it up in volume.

        1. While slimon has made many patently false statements, this one is likely true.

          As stated, Amazon does not lose money on ebooks.

          That statement takes all of Amazon’s ebook sales as a whole — as an aggregate. Amazon does not lose money on all ebook sales.

          It is fact that Amazon loses money on the sale of some ebooks. However, there has never, as far as I have seen, been any evidence provided that shows Amazon loses money across the aggregate of all its ebook sales.

          When we try to combat rampant falsehoods, we must not slip into the same mode and claim that true statements (even from those who often spew forth inaccurate data) are actually false or we lose credibility too.

          Keep to the actual facts — and with luck the truth will come out and prevail.

        1. Publishers sell to Amazon at wholesale, which is often barely 30% of standard retail price. Amazon then determines the retail price (which is, for e-Books flat $10 across the board).

          Some books have publishers’ proposed retail price set at $40. Amazon gets them at wholesale for about $13 and loses $3 on that sale. However, most books retail for less than $30, and Amazon therefore gets them for less than $10, giving them a chance to make a profit on all those e-Books they bought for under $10 and sold for $9.99.

          Publishers hate the model; the perceived value of their physical book ($25 for example) rapidly loses meaning when people discover that the book can be had for less than $10.

      1. Keep seeing this enough times and people will begin to think it’s true. Apples lawyers were told Amazon’s business practices were irrelevant to their case, even though Many including myself highly disagree.

  3. If there was an impact to be felt in terms of “lower e-book prices,” it would have been felt already. Three of the five publishers settled with the DoJ over a year ago and all of them settled before the Apple trial. Part of that settlement included 1. a termination of all existing publisher contracts with retailers and 2. no “most-favored nation” clause in any new contracts for a period of 2 years. That means the Apple contracts with the publishers were well terminated and the market should have returned to Amazon’s abuse of it…errr…I mean the pre-agency levels.

    Go take a look at the difference between the prices of NYT bestsellers for both Amazon and Apple and tell me how much of this “lower e-book prices” bullshit is happening. I’ll even save you the trouble of having to look it up:


    Every aspect of the government’s case against Apple is a joke.

  4. When I read the ruling I found it interesting that the demeanor of the witness came into play when the facts where not what the judge wanted to hear. I was under the impression that judges where to try cases on facts not on how someone behaved.

    I do not see anyplace in the ruling that Apple told the publisher what price to set for their books.

    I do see where the judge took a quote for Jobs and came up with what she thought he meant, when Jobs was talking about Amazon, how does she know what he meant. She put words in a dead mans mouth.

    Last but not least, the whole ruling appears to be written from a point of prejudice.

    I found it interesting that she did not recuse herself because of all the previous information she was exposed to by hearing the “facts” from the publishers trials.

    Before the trial started she stated that the government would win.

    If Apple would have won this case the previous judgements against the publishers would have to be reviewed.

    Apple lost this case before the first words where spoken in court.

    Apple has every right to appeal this ruling on the grounds of Judicial prejudice.

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