Caltech, NYU economists file pro-Apple brief in e-book antitrust case, say Denise Cote doesn’t understand markets or antitrust law

“The pro-Apple amici curiae brief filed Wednesday by two economists lays out clearly — more clearly perhaps than Apple’s own trial lawyers — the economic and legal issues the company tried and failed to get across to Judge Denise Cote last June,” Philip Elmer-DeWitt reports for Fortune.

“The document submitted by CalTech’s Bradford Cornell and NYU’s Janusz Ordover fills more than 30 pages,” P.E.D. reports, “but the heart of their argument is laid out in a three-paragraph summary.”

A few snippets:

The District Court [Judge Denise Cote]’s failure to consider the economics… The District Court [Judge Denise Cote] never considered evidence and economic reasoning… The District Court [Judge Denise Cote] disregarded economic evidence and reasoning… The District Court [Judge Denise Cote] also ignored economic evidence and reasoning… The District Court [Judge Denise Cote] also erred… These errors [by Judge Denise Cote] threaten to chill competition… Our antitrust laws should encourage, not penalize, vertical contracting arrangements that facilitate entry and enhance competition.

Read more in the full article here.

MacDailyNews Take: This entire fiasco could have been avoided if a vacant-eyed puppet hadn’t been appointed to a job that she clearly cannot handle.

Lady Elaine Fairchilde (left), U.S. Federal Puppet Denise Cote (right),or vice versa
Lady Elaine Fairchilde (left), U.S. Federal Puppet Denise Cote (right), or vice versa

For the whole sordid story in concise form, please read: Apple’s Star Chamber: An abusive judge and her prosecutor friend besiege the tech maker.

Related articles:
In pretrial view, judge says leaning toward U.S. DOJ over Apple in e-books case – May 24, 2013
Lawyers have complained for years that Judge Denise Cote pre-judges cases before she enters the courtroom – August 14, 2013

Apple urges U.S. appeals court to void ‘radical’ e-books ruling – February 26, 2014
Apple’s e-book appeal to higher court: Toss out the verdict, or give us a real judge – February 26, 2014
U.S. Federal Puppet Denise Cote: ‘Apple’s reaction to the existence of a monitorship underscores the wisdom of its imposition’ – January 16, 2014
Judge Denise Cote denies Apple request block her friend as ‘antitrust compliance monitor’ – January 13, 2014
Antitrust monitor Bromwich rebuts Apple accusations of ‘unconstitutional’ investigation – December 31, 2013
Apple seeks to freeze its U.S. e-books ‘antitrust monitor’ – December 15, 2013
The persecution of Apple: Is the U.S. government’s ebook investigation out of control? – December 10, 2013


  1. I’m sure the usual dim-witted trolls will be along shortly to point out how wrong these experts are, and how they know for certain Apple are guilty as hell.
    In 5, 4, 3…

    1. It will take a few more hours. Too many pages and words confuses the dim-witted trolls. Some will need aspirin to ease the headaches from trying to read and understand those tricky sentences.

  2. I still question the judgement of Attorney General Eric Holder. Why did he file the case against Apple in the first place? The iPad has created (not destroyed) competition in magazines and books, not to mention PC’s. The iPad is our best chance of disrupting the market for textbooks, where students have to mortgage their future just to buy text books. A disgraceful situation that will sooner be changed if Mr. Holder would just get a clue. His actions are destructive, not helpful for ordinary citizens. GO HOME ERIC!

    1. Holder has pulled several dim-witted moves during his tenure. He clearly has no comprehension of a lot of basic law, such as the Fourth Amendment to the US Constitution…

      [skipping over the usual NSA/Impeach Obama and Bush exposition]

      … And anti-trust law. It’s like watching a cartoon over at #MyStupidGovernment.

    2. He filed the case because Amazon spends a lot more money on lobbyists than Apple ever will. He probably expected Apple to cave instead of fighting it, and now he can’t back out because he’s afraid of looking even more stupid than he already does.


      1. This.
        Even penniless groups now outspends Apple’s near-zero dollar expendure.. No excuse, Apple is really harming itself by not staying competitive on the lobbying front, if just to ensure loyal folks stay loyal, when the competition actively panders after them and bribes them for betrayal.

        1. Yes, Apple spends near-zero dollars on lobbying.

          No, Apple doesn’t need to compete in this. Their market is tech, and they should be left alone to do their tech thing, not waste money on politics.

          Once this is settled, they need to sue the Gov back for the money wasted defending all of this so they won’t get pulled into stupid situations like this again. *That* is smart money. Stay out of politics and I’m happier with them.

  3. Either she is dumb as wood, or really smart (or working for someone who’s smart) and this whole thing is really about tying up Apple until they can’t catch up to Amazon.

    1. What can you expect from this wonderful government? As soon as Apple agrees with the NSA surveillance the Potus will stop persecuting it. Let’s not forget the Senate hearing on tax paid by Apple. It is in the same league as this case.

      1. You completely ignore the fact that a whole bunch of republican state AGs have filed a parallel suit against Apple. Somehow I doubt that all those Republicans are conspiring with Obama to bring down Apple.
        Indeed, the oft stated views of many on this board that Obama (personally) or Holder (personally) are behind a witch hunt to force Apple to pay more lobbying fees or to stop resisting the NSA border on lunacy.
        A lot of people think Apple did wrong. A lot of other people think Apple did no wrong. That’s a good enough reason to let the courts decide. If Holder was even consulted on the DoJ’s prosecution of this case it will have been no more than a cursory question by him to the section chief “do you think you can win?” No doubt the answer back was “yes.” In which case, the appropriate action is to let the courts decide.
        And FWIW, I think Apple did no wrong and that Cote’s decision is utterly flawed. But the wholesale vilification of the justice system in this country by the anti-Obama crowd merely emphasizes either massive ignorance or extreme bias.

        1. I am not ignoring the fact that there are other legal procedures against Apple. What i am stating is the nature of two cases where the government might be involved. I am not assuming the others come from the same source.

  4. Once the publishers’ realized their error — ie, in selling e-books to Amazon on the same basis as they had traditionally sold paper-books to wholesalers — it was in each publisher’s best interests to move e-book sales to the agency basis of distribution (in which publishers retained legal rights to their e-books, including price determination, and the seller — Amazon — received a commission on sales). Otherwise, the publishers risked spoiling their entire publishing business, which includes sales of new & best-selling paper-books AND (incremental?) e-books. This does not require a conspiracy. All it requires is one or more publishers screwed by Amazon! There is no reason a publisher must stand by a previous, poor decision (ie, to sell e-books to Amazon on the wholesaler basis instead of the agency basis). Publishers are entitled to the same rights as anyone else to change their minds. It makes logical sense to sell e-books to Amazon on the agency basis. Furthermore, this is how Amazon sells most of its stuff. The conspiracy is the DOJ-Amazon conspiracy.

    1. The most glaring anti-competitive crime in all this was when amazon pulled their ‘Buy Now’ button out of spite for one of the publishers who had moved to the agency model.

      That raised eyebrows…. /s

  5. It seems to me when the judge’s appointment originates from the Office of the President of the Socialist States of America that economic reasoning goes straight out of the window because inasmuch as communists try to understand the workings of a free market economy where prices are freely set by the selling entity and you stand or fall by the economic attractiveness of your offerings, in a command economy the government in the shape of the DOJ pre-approves prices at which free enterprise entities are obliged to accept on pain of a state commissar being appointed to oversee prices. These commissars are political appointees who are invariably cronies of the state.

    Unsurprising really when the manifesto of the communist incumbent at the White House has the stated aim of spending your money for state sponsored causes which is a byword for mismanagement and pissing it on cronies of the state.

    1. To be fair, the nonsense attack against iBooks can’t be put down solely to the U.S. DOJ and certainly not the White House. Over half the state attorneys general filed their own suits or joined one of the others. Well over half of the suing attorneys general are Republicans, some of them even Tea Party Republicans. The Texas Attorney General has an ongoing war with the DOJ on almost every other issue but filed suit against Apple. It is the state suits that could represent most of the financial damages, so the state participation in this witch hunt is hardly inconsequential.

      1. Yes. Under their own “logic” and reasonings, they must admit that DOJ and the low standard league of judges are all conspiring with Amazon to kill Apple’s iBook from entering the game… Because the are “vertically” aligning their views… no evidence needed. Case close. Apple should assign someone from the iBook team to monitor them from trying to seek industry knowledge from anyone who is potentially and already a beneficiary of the Amazon’s business.

    2. “the workings of a free market economy where prices are freely set by the selling entity”

      This is exactly what Apple’s contract with the publishers and the Agency model PREVENTED from happening.. if the publishers were directly selling to the end-users I could go along with them setting the price I would buy at.. However companies like Amazon and Apple (The Sellers) are the ones the customer goes through. to make their purchase. All Sellers as a result of the contract and agency model were FORCED to sell at the same price thus killing part of the free market economy where large companies could by economies of scale sell products for lower prices..

      1. Such free market shall be created by the government and not by each of the industry player when monopoly has not yet been created. Before Apple’s iBook agency model rolled out, we do however see Amazon creating a unhealthy Amazon-fixed price structure eBook industry, which is not “free” at all as far as the interests of individual writers and small publishers are concerned…

        1. They weren’t forced to sell at the same price. Apple’s contract only said they couldn’t sell some books (New York Times best sellers for example) on Apple’s Store for more then it was sold anywhere else. They could always have sold it for less through Apple. Also this only applied to certain categories of books, popular categories like the New Your Times Best sellers.

  6. I just read the entire brief. I do say that they have quite the compelling argument to make. Full disclosure: I’m not a lawyer and maintain a strong pro apple stance on this case.

    The biggest take away I got from it is that by making the decision it did… The court is effectively reducing competition to enter (or remain in) a market dominated by one player (Amazon) due to the risks associated and capital needed to enter into and effectively compete in a monopolized market.

    The best part is at the end they give specific examples of three retailers that saw significant decline in revenue after the ruling. (B&N, Sony – who has exited the market, and a small Canadian based player who has warned the Canadian authorities that imposing a similar set of rules would effectively gimp their ability to stay in the Canadian market, as in the US market, they have already had to significantly downsize as a result of the ruling,)

  7. And what about the fact that Apple ebooks are often better I quality than Amazon ebooks? Apple ebooks could have images, benefit from a better interface and gave publishers a better platform to work with. iBooks can be interactive and have pictures and animations and color and better search and highlighting tools.

    1. And Amazon is enjoying their time “catching” up with iBook’s quality standard and capability for as long as the court and DOJ allow. Well, if there is still iBook at last. Apple. You will be fine.

  8. Lately I would expect nothing less from our government and judicial system other than illogical, clueless, stupidity. It’s the new norm. Now the only time I am shocked is when there is an intelligent ruling on something.

  9. You could have posted a more intelligent collection of snippets. Basically, what Apple did should be legal in markets dominated by a single player. Anyway, I hope what you did drives Webb traffic though.

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