Apple Files An Appeal In E-Book Antitrust Case

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Apple has filed an appeal related to last year’s verdict stating that the company violated U.S. antitrust laws by conspiring with publishers to fix e-book prices.

The appeal — which was filed Tuesday with the Second U.S. Circuit Court of Appeals in New York — calls U.S. District Court Judge Denise Cote’s ruling “a radical departure from modern antitrust law and policy,” and argues that it will “stifle innovation, chill competition, and harm consumers” if it is followed.

Apple’s lawyers suggested that the company’s entry into the e-book market marks “the beginning, not the end” of competition in the sector, and states that Apple “kick-started competition in a highly concentrated market, delivering higher output, lower price levels, and accelerated innovation.”

In a continuation of its ongoing squabble with Court-appointed monitor Michael Bromwich, Apple’s appeal also calls the requirement for a monitor “unprecedented and unconstitutional.”

The full appeal can be read below:

Apple Files An Appeal In E-Book Antitrust Case

  • lucascott

    This move doesnt shock me. I have been waiting for it since the first day. Cote made comments that appeared to be biased against Apple before the trial started, seems to have cherry picked evidence to support that bias. While yes the publishers admit that they ganged together to force Amazon to change term styles, nothing was really 100% firm on proving that Apple was any kind of gang leader in anything. Not even the so called smoking gun email which was only proven to have been sent to one company (if they had found copies sent to all of them, and at the start of affairs it would be clear proof)

    The only price fixing that Apple is clearly guilty of is putting limits on the prices the publishers had control of. To avoid ebooks priced like hard cloth releases. That’s not a bad thing.

    The DOJ claims they are looking out for consumers and yet they focused on a single company. They never looked at Amazon’s exclusive book deals (or even current exclusive media deals) or predatory pricing games. Things like that should be on their radar and new rules against all parties to prevent consumer choice should be put in play. Not this targeting one group cause they have a lot of name and money.

    • Robotech_Master

      It’s part of a judge’s job to nudge parties toward settling when possible, to relieve some of the burden on the overtaxed legal system. This includes informing them when the evidence she’s already seen—remember, Cote was in charge of overseeing the settlement agreement between the publishers and the DoJ, which means she was already conversant with the facts from the publishers’ side of things—is leaning heavily in one direction or another. I gather that judges giving “pre-trial views” are not at all uncommon in civil litigation. Not that you’d ever know this judging by the way most places report the story.

      The DoJ DID look at Amazon’s alleged predatory pricing, and found no violation of the law. It’s right there in the legal documents that were filed as part of the case. The thing about predatory pricing is that the legal definition of predatory pricing requires the company be running its entire product line at a loss—that Amazon be marking down all or most of its e-books below wholesale prices to drive competitors out of business. The DoJ investigated, looked at Amazon’s books, and determined AMAZON WAS NOT DOING THAT. Amazon was pricing new hardcovers and NY Times bestsellers at or below wholesale as loss leaders (the same way that Best Buy will price some of its TVs at or below wholesale in weekly circulars to draw people into the store to buy things that aren’t marked down), then making profits on all the rest of the e-books it sold. And that’s perfectly legal. The DoJ checked Amazon’s books, found they were making a profit on their e-books as a whole, and determined there was no violation on Amazon’s part.

      And the publishers are fully aware of this. So is Apple. (Notice how careful Apple was to specify in the appeal brief that Amazon was just marking down new hardcovers and NY Times bestsellers!) They always were. There was nothing preventing the publishers from searching their own titles on Amazon and noticing for themselves that, while new hardcovers’ e-books might be $9.99 on a $26 hardcover ($3 loss over the 50% of retail wholesale price), old paperbacks’ e-books were $5.99 on an $8 paperback ($2 profit). So someone buys one $9.99 hardcover e-book, wants to catch up on the other books in the series, buys five $5.99 paperback e-books. Boom: $7 net profit.

      And that’s why the publishers never tried to file any kind of a lawsuit against Amazon for its “predatory pricing”. They knew that they’d be laughed right out of court. (Doesn’t prevent them from bandying the term about to the press, though. The court of public opinion doesn’t run on evidence.) That’s why they conspired illegally instead.

      Apple’s job in filing this appeal brief was to make themselves look as good as they possibly could. It doesn’t mean they’re right; it just means they talk a good game. (And they damned well ought to, given how much they’re paying their lawyers!) The DoJ will be filing its response in May. We’ll see how it goes from there.

      But legal experts who looked at Cote’s opinion at the time said that she’d done such a good job constructing it that Apple would have a hard time getting it overturned. Appeals courts tend to be very hesitant to overturn district judges’ findings of fact, and most of Apple’s appeal—even the parts where they claim a misinterpretation of law—hinges on overturning those findings of fact.

      I suppose we’ll just have to wait and see.

  • Adam

    Apple are just upset they didn’t get the same Apple cheerleader as a judge like they did in their courtcase against the Beatles and their Apple Corp. The Beatles allowed Apple to use the ripped off name and logo as long as they didn’t use it for music. When Apple decided to go against the agreement to make more money, the courtyard was brought against them.
    Apple don’t care about ripping off consumers, they only care about profits and spending billions on lawyers to protect those profits.
    The entire industry isn’t going to face one case together, rather each company will fave their own case.

About the author

Luke DormehlLuke Dormehl is a UK-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Formula: How Algorithms Solve All Our Problems, And Create More and The Apple Revolution, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme, and other publications. He'd like you a lot if you followed him on Twitter.

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