Judge shows opposition to government's case at start of Apple's e-book antitrust appeal
Apple's appeal of the U.S. government's e-book antitrust case got underway Monday, with one judge presiding over the hearing questioning whether the government's original case was legitimate.
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court
In the appeal, Apple hopes it will be able to overturn a verdict that found it and book publishers guilty of a price fixing conspiracy. If Apple can win the appeal, it will pay no penalty, but if it loses, it must pay $450 million in damages and attorney's fees.
As hearings got underway on Monday, Judge Dennis Jacobs -- one of three judges on the appeals panel -- was seen as "openly hostile to the government's case," in a report by AFP. Jacobs appeared to doubt the government's case against Apple, and expressed his view that the iPad maker was taking on "predatory pricing" strategies by the dominant player in the e-book market, Amazon.
"What we're talking about is a new entrant who is breaking the hold of a market by a monopolist who is maintaining its hold by what is arguably predatory pricing," Jacobs reportedly said.
Apple officials have said they continue to fight the case out of principle, because the company exists that no illegal collusion took place between itself and book publishers, even if book prices did in fact rise.
In its appeal, Apple has pointed out Amazon's continuing dominant position in the e-book market. At the time of the iBookstore's launch, Amazon accounted for nine out of every ten e-book sales.
Under negotiations led by Apple executive Eddy Cue, the Cupertino, Calif., company and book publishers opted to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform -- a "most favored nations" clause.
In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so.
Apple has argued that publishers openly discussed their desire to raise prices on books, as they felt titles were being sold for far too little by Amazon under the wholesale model.
As a result of the U.S. government's ruling, Apple is saddled with an injunction that bars it from entering into any unsavory deals with publishers, and the company is under the watch of antitrust monitor Michael Bromwich. The iPad maker's appeal was formally filed in February of this year, asking for a dismissal or a retrial.
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court
In the appeal, Apple hopes it will be able to overturn a verdict that found it and book publishers guilty of a price fixing conspiracy. If Apple can win the appeal, it will pay no penalty, but if it loses, it must pay $450 million in damages and attorney's fees.
Judge Dennis Jacobs is one of three appeals judges hearing the case. On Monday, he appeared to question the government's pursuit of Apple.
As hearings got underway on Monday, Judge Dennis Jacobs -- one of three judges on the appeals panel -- was seen as "openly hostile to the government's case," in a report by AFP. Jacobs appeared to doubt the government's case against Apple, and expressed his view that the iPad maker was taking on "predatory pricing" strategies by the dominant player in the e-book market, Amazon.
"What we're talking about is a new entrant who is breaking the hold of a market by a monopolist who is maintaining its hold by what is arguably predatory pricing," Jacobs reportedly said.
Apple officials have said they continue to fight the case out of principle, because the company exists that no illegal collusion took place between itself and book publishers, even if book prices did in fact rise.
In its appeal, Apple has pointed out Amazon's continuing dominant position in the e-book market. At the time of the iBookstore's launch, Amazon accounted for nine out of every ten e-book sales.
Under negotiations led by Apple executive Eddy Cue, the Cupertino, Calif., company and book publishers opted to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform -- a "most favored nations" clause.
In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so.
Apple has argued that publishers openly discussed their desire to raise prices on books, as they felt titles were being sold for far too little by Amazon under the wholesale model.
As a result of the U.S. government's ruling, Apple is saddled with an injunction that bars it from entering into any unsavory deals with publishers, and the company is under the watch of antitrust monitor Michael Bromwich. The iPad maker's appeal was formally filed in February of this year, asking for a dismissal or a retrial.
Comments
I question the legitimacy of the government's case too!
We currently have one of the most incompetent and corrupt DOJ to ever exist. They have nothing against Apple, it is a witch hunt.
Screw the thugs in the DOJ!
Apple should bring this all the way to the top, to the Supreme Court, if needed.
Any illegal ties between Amazon and the Govt should also be investigated.
You never know, and the DOJ has yet to present its side, right? You just never know what machinations lead a person to make one decision or another.
I like this judge.
But wait, he's agreeing with Apple? Quick, somebody dig up his history and financial records. He must be an Apple shareholder. Or his family all got new iPads and iPhones for Christmas. Gotta be something.
You never know, and the DOJ has yet to present its side, right? You just never know what machinations lead a person to make one decision or another.
Did it say somewhere that Apple was presenting its side?
I find it interesting the judge made the statement about predatory pricing, which is illegal in the US. He is telling the DOJ they need to prove Amazon was not using predatory pricing practices to prove their case. This could be an interesting case.
I like this statement and this is a Lawyer who obviously not familiar with the law, Predatory pricing is simple to understand when you sell a product at or below your costs, Anyone think Amazon is making money on selling books, actually didn't they loose money last quarter I would say it safe to say they using predatory pricing practices, I know this and will continue to by there as long as they are willing not to make a profit.
Malcolm Stewart, the deputy Solicitor General for the US Justice Department, said the department did not believe Amazon's policies qualified as "predatory pricing."
If Apple wins does that mean the bookseller can then come back and say they were unfairly prosecuted, since they all paid base on the language in the apples agreements.
Replace exists with insists.
After all the Justice Department would state that ZERO is a great savings for consumers. They would allow Microsoft's monopoly on web browsers.
These Justice Department lawyers are jerks for thinking backwards like this.
What's that sound? I think it's Bezos trying to write a big check to Judge Jacobs's favorite charity.
Someday I want to be in a position that can be bought out so that when a controversial decision comes up I can hold out for SO MUCH MONEY for a charity or some such. Like, ludicrous amounts of money.
And then just flip ‘em the bird and rule on the side of truth anyway.
Interesting
http://fortune.com/author/philip-elmer-dewitt/
I question the legitimacy of the government's case too!
We currently have one of the most incompetent and corrupt DOJ to ever exist. They have nothing against Apple, it is a witch hunt.
Screw the thugs in the DOJ!
Apple should bring this all the way to the top, to the Supreme Court, if needed.
Any illegal ties between Amazon and the Govt should also be investigated.
The DOJ is not corrupt but is merely continuing the same arguments that have prevailed for decades. It's wrong, but the position has been wrong all along.
Here is the real problem. Since Reagan administration, we've had continuous mergers creating effective monopolies across a whole range of business sectors. Banking is the obvious one, and you see where this has led. There is a reason we have an oligarchy -- and this is the biggest reason.
The argument that has won out is that all mergers are okayed if the merging businesses declare that consumer prices will decrease. Of course, the low-hanging fruit argument is that mergers will eliminate redundant jobs. Sounds pretty consistent with the reality of the US economic system now: the non-sequitor that eliminating jobs is good for the economy, that lower prices is good for the economy.
Well, neither eliminating jobs nor lowering prices is good for the economy. Shipping jobs overseas to lower prices is not good for anyone but the top 1%. Pushing prices lower eliminates the ability of current competitive businesses to compete on price, and makes it extremely difficult for new businesses to be created. The problem is as much caused by the US consumer who demands lower and lower prices as it is caused by government policy decisions (you may even want to argue that the government is taking these policy positions because the vast majority of citizens approve of these policies due to prices lowering), even if that means eliminating jobs or minimizing wages for jobs that do exist. Of course, by minimizing jobs and lowering wages, it means the consumer with decreasing purchasing power cannot afford the costs for goods and services which maintains a fair and effective economy. This is the US economic death spiral which had been argued would happen and has happened.
One need to not be abstract about what the people have declared they want. When the Government sued Apple and the publishers over the agency model, the comments on this site were at least 10 to 1 in favor of the suit against Apple because the agency model resulted in books prices going up.
The arguments are similarly made against Apple because the prices Apple charges for their hardware exceed by a considerable amount the prices for competing offerings from other companies. In fact, they are so high that if Apple were able to build their products in the US while at the same time paying considerably more than a living wage, the prices of their products would change very little -- according Tim Cook. (Though I have to wonder whether that argument holds water, given the wages Apple pays their Apple Store employees).
No, DOJ is not corrupt -- at least not in this regard. The DOJ's positions and resulting SCOTUS decisions have effectively destroyed any chance of a vibrant and fair and effective economy, but that has been indirectly what the american consumer has been voting at the ballot box.
I find it interesting the judge made the statement about predatory pricing, which is illegal in the US. He is telling the DOJ they need to prove Amazon was not using predatory pricing practices to prove their case. This could be an interesting case.
Predatory pricing is not illegal in the US per se (it is in France). It's only illegal as a tool to create or maintain a monopoly--and it's basically impossible to prove this in court. http://en.wikipedia.org/wiki/Predatory_pricing#United_States So feel free to run a money-losing business. It's legal and strategically foolish.
I don't think Apple did anything wrong in this case, but I also don't want the Feds coming down on Amazon (or Walmart) for selling goods as cheaply as they can.
Philip Elmer-DeWitt at Fortune has a funny courtroom story on this today, not to be missed.
http://fortune.com/author/philip-elmer-dewitt/
yep he nails it and glad the judges pointed out what I said all long, Amazon was the one they should have gone after for their predatory practices. this may backfire really bad on the DOJ.
It sounds like someone in the DOJ office was on the take similar to the IRS targeting the tea party groups for a special examine.
Predatory pricing is not illegal in the US per se (it is in France). It's only illegal as a tool to create or maintain a monopoly--and it's basically impossible to prove this in court. http://en.wikipedia.org/wiki/Predatory_pricing#United_States So feel free to run a money-losing business. It's legal and strategically foolish.
I don't think Apple did anything wrong in this case, but I also don't want the Feds coming down on Amazon (or Walmart) for selling goods as cheaply as they can.
Your right you are allowed to loose you shirt doing your business as long as it does not hurt competitors which can be easily shown in this case, how many book stores when out of business of Amazon's practices. Also, it illegal to sell to the US government below costs, I would bet Amazon in fact sells to the US government. The reason it is illegal is like buying the business from the government.
Yes we know Wal-mart some time sell at a lower cost then they bought (lost leader) or most time they sell at profits to the point where they trying to clear the shelves of the last products they have (they already made all the profits they going to make) so they dump the rest at cost or below, again this all allowed. Also Walmart makes a profit and they do not do things which will not allow companies like Target or other to compete. If you ever do price comparison at walmart their ever day price are the same as most other stores some times they are lower.
Did it say somewhere that Apple was presenting its side?
AI doesn't have much of anything about the proceedings. They just started today. Don't know how long it will go.
We will see how it goes. Like I said, while the arguments may be convincing, you never know what goes through the minds of the judges or the jury in these things.
AI doesn't have much of anything about the proceedings. They just started today. Don't know how long it will go.
We will see how it goes. Like I said, while the arguments may be convincing, you never know what goes through the minds of the judges or the jury in these things.
According to The Verge, the case is now 'in the hands of the jurors'.