Apple Asks U.S. Supreme Court to Overturn Guilty Verdict in E-Books Antitrust Case

[ElctrcJellyfish]

OK, what could Apple and the publishers have done to stop Amazon other than what they did? How to break Amazon's power to destroy the profit in making books? And more importantly, let the publishers decide things like what they'll charge (which is what producers usually do get to decide)

You act like this is a huge gotcha question.

Antitrust is a civil wrong that can be brought by a third party. You don't need the DOJ to file an antitrust case. If Amazon was truly exercising monopoly power, the publishers could file a lawsuit against them claiming treble damages and attorney's fees, and push for a reasonable injunction.

What they don't get to do is exercise self-help.

It's like this: If someone fails to pay you money they owe you, the law doesn't allow you to break into their house and take their valuables. You have to take them to court and sue them.

Inconvenient, yes, but the rule of law so often is--and I feel no sympathy for large corporations who can't abide by it.

The reason no publisher has sued Amazon claiming monopolization is because Amazon does not actually have market power under the current definitions of "market" and "market power." Back in the day, it didn't account for much more than 10-20% of book sales. Ebook sales were higher, yes, but print book sales? Nope. In the US at least, without market power, any of the things that amount to attempted monopolization are considered just good competition, and therefore beneficial to the consumers.

Even today, Amazon accounts for about 40% of book sales overall--which is precisely the share of the marketplace that Penguin Random House holds.

This really isn't a case (however its been spun) about small publishers being unable to take on Amazon the behemoth. The publishers who participated in agency pricing, with the exception of MacMillan, controlled a share of book publishing proportional to the share of the book selling market that Amazon controlled.

 

[cmwade77]

I never understood how apple got into trouble but Amazon got away with it screwing publishers and ultimately strangling the market..

It's actually rather simple, under Amazon's original model (which they were forced to change because of Apple's practices), the publishers would tell Amazon we want $X amount for each book you sell. We don't care if you sell it at that price or lower or higher, that's your business, as long as we get paid.

Apple came along and said to the publishers we will take 30% of whatever you charge for the books and give you the rest. The publishers did the math and decided to go ahead with Apple's plan, as they wouldn't be able to sell with Apple if they didn't.

So, Apple added a caveat, they told the publishers that the Apple Bookstore had to have the lowest price of any of the markets, which meant that the publishers would now no longer be able to sell on Amazon (based on the then current model of allowing Amazon to charge whatever they wanted to for eBooks) if they wanted to also sell through Apple, so the publishers pressured Amazon to change to the same model, so that they could set the price the same as through Apple. Ultimately this drove the price of many books way up, at least as far as the consumer is concerned, although in many cases the publishers make less on each book.

Now does it make sense why Apple was found guilty? They specifically setup a system where it would cause the prices of eBooks to increase and increase they did. At least until Apple was barred from enforcing their "most favored nations clause". Which ultimately means that publishers can now charge what they want on other stores and Apple can't kick them out simply because they are selling for less on other stores. And we end up with things like Kindle Unlimited, Kindle First, Kindle Lending Library and the like as well as temporary sells on Amazon making books cheap or even free in order to entice readers to read and review them.

Now, here's the kicker about all of this, the Apple book store has been overall a flop, mostly because reading is limited to iPhones, iPads and Apple computers; whereas just about every other book store out there is available for all devices, including Apple devices, so they are far more popular.

As a result, even if Apple were to get the ruling overturned, they wouldn't be able to bring back the "most favored nations clause", as publishers would simply say they are done selling on Apple book store and would focus on the stores that bring them more money.

So ultimately this is a symbolic move and one Apple has the money and apparently the will to fight for some odd reason, so it makes you wonder what they have in mind for the future, as their present state can't justify taking this action.

 

[apolloa]

That's what they're doing: they're appealing.

Touche.....

Tell Samsung. They're still whining about being caught stealing Apples IP. What's good for the goose.........

Sorry, I do not recognise any theft of Apple IP by Samsung.

 

[ElctrcJellyfish]

So, Apple added a caveat, they told the publishers that the Apple Bookstore had to have the lowest price of any of the markets, which meant that the publishers would now no longer be able to sell on Amazon (based on the then current model of allowing Amazon to charge whatever they wanted to for eBooks) if they wanted to also sell through Apple, so the publishers pressured Amazon to change to the same model, so that they could set the price the same as through Apple. Ultimately this drove the price of many books way up, at least as far as the consumer is concerned, although in many cases the publishers make less on each book.

Now does it make sense why Apple was found guilty? They specifically setup a system where it would cause the prices of eBooks to increase and increase they did.

For the record, I've been following this case since forever, and the judge found that Apple specifically induced the publishers to sign on with promises that they would be able to stop Amazon from reducing the prices of their books. The system itself could have been legal under other circumstances; it was the factual finding that the publishers entered into the agreement with the intent to raise prices, and that Apple knew about and encouraged that result, that led to this result.

 

[ElctrcJellyfish]

Now, here's the kicker about all of this, the Apple book store has been overall a flop, mostly because reading is limited to iPhones, iPads and Apple computers; whereas just about every other book store out there is available for all devices, including Apple devices, so they are far more popular.

Also for the record, since I'm being pedantic and nitpicky, this is false. At this point, I'd be willing to bet that Apple is close to the #2 ebook seller in the nation after Amazon, and probably has double-digit marketshare.

 

[LordVic]

Also for the record, since I'm being pedantic and nitpicky, this is false. At this point, I'd be willing to bet that Apple is close to the #2 ebook seller in the nation after Amazon, and probably has double-digit marketshare.

http://goodereader.com/blog/e-book-...-apple-bn-kobo-and-google-have-selling-ebooks

just posting in response out of curiosity. I honestly didn't know and decided to look it up and share it.

Wow, Didn't think iBooks was that succesful

 

[Rocketman]

Apple should put $400-500m in escrow and report that to SCOTUS so all parties know it is not strictly about the money. It is the principal as Apple has always stated.

Do it.

 

[macs4nw]

Oh, has judge Koh moved up to the Supreme Court now then?
You lost Apple, deal with it.

I'm actually interested to see if a) SCOTUS will hear this, and b) wether they will overturn the U.S. Court of Appeals for the Second Circuit's decision, and whichever way they ultimately decide, read their no doubt lengthy reasoning.

I've read and heard a lot of the arguments on both sides, and I find there to be something very unappetizing about the whole seemingly double standard of this case. Sure, low book prices are good for consumers, but if publishers and especially writers are so squeezed out of earning a decent living, the incentive for them to produce quality content also evaporates, and that does nothing for consumers in the long run.

I continue to believe both writers and their publishers wanted the agency model (while that would have initially increased prices for consumers), and that while Apple's intentions were obviously to break up Amazon's stranglehold on the book publishing industry, the added benefit would have gone to the writers and publishers themselves. Not suggesting two wrongs make a right here but if those practices are considered corrupt or illegal, I would suggest they are no more so than Amazon's 'dumping' practices, which put them in that monopolistic position in the first place.

Either way, whether Scotus hears this appeal or declines, the final chapter (no pun intended) in this saga is about to be written.

 

[apolloa]

I'm actually interested to see if a) SCOTUS will hear this, and b) wether they will overturn the U.S. Court of Appeals for the Second Circuit's decision, and whichever way they ultimately decide, read their no doubt lengthy reasoning.

I've read and heard a lot of the arguments on both sides, and I find there to be something very unappetizing about the whole seemingly double standard of this case. Sure, low book prices are good for consumers, but if publishers and especially writers are so squeezed out of earning a decent living, the incentive for them to produce quality content also evaporates, and that does nothing for consumers in the long run.

I continue to believe both writers and their publishers wanted the agency model (while that would have initially increased prices for consumers), and that while Apple's intentions were obviously to break up Amazon's stranglehold on the book publishing industry, the added benefit would have gone to the writers and publishers themselves. Not suggesting two wrongs make a right here but if those practices are considered corrupt or illegal, I would suggest they are no more so than Amazon's 'dumping' practices, which put them in that monopolistic position in the first place.

Either way, whether Scotus hears this appeal or declines, the final chapter (no pun intended) in this saga is about to be written.

Well it would be interesting if the high court takes the case, but I doubt they will bother with it which will end Apple's pursuit of the case I would assume?
I think if they argue Amazon has a stranglehold on books, one would then need to compare that to Apples stranglehold on music.

Personally I think they are both good services offering good value.

 

[Rocketman]

Something like 99% of cases sent to the Supreme Court simply get declined... I think Psystar was a bigger deal than this is (the company that was selling PCs with OS X preinstalled) but they got declined by the Supreme Court... I seriously doubt the Supreme Court will bother with this.

SCOTUS looks for "trialable issues". Apple has a fundamental disagreement with the process of decision, not merely the outcome. It might get heard.

 

[Benjamin Frost]

Like Apple, I have always strongly felt that Apple were in the right and Amazon in the wrong on this issue.

And look at the ebook scene now: it's ill. I think it would have been healthier if Apple had won and the agency model had presided. I trust traditional publishers to set book prices much more than I do Amazon.

I hope Apple win their appeal, as I think they deserve to.

 

[Benjamin Frost]

in many cases.

Prior to the Apple deal: the retailer, IE AMazon / B&N were free to set whatever price they wished on ebooks to the retail channel. Regardless of price they charged at retail, Publishers still got their contracted price.

Amazon would frequently sell certain books at deep deep discounts to get you to their store, where they expected you to continue to buy more things but at their expected retail price.

Apple didn't like this. They wanted fixed prices that they could compete against to retain their 30% profit. They looked to change the model the publishing industry had been working on previously to the "fixed price" and they worked together with the 5 biggest book publishers to change to a model where the publishers determined retail price. (which just so happened to be the 9.99 price point Apple wanted).

Once all 5 publishers agreed to change to this model, they told amazon and other retailers if they wanted content to sell, they'd too also have to switch to this model, and that the publishers would determine book prices, which, at 9.99 often were higher than paperbacks or the previously deep discounts amazon used to offer.

WHile that happened, Apple worked out a deal with the 5 publishers which stated that Apple had to have the lowest cost deal from the publisher. the publishers were free to negotiate with other companies supplier deals, but, they could match, but not be lower than the one apple has.

With chains of emails, conversations and meetings with Apple beteween these executives, the courts deemed that Apple basically orchestrated the shift in the publishers deal, and by them all working together like this, while they're supposed to be competitiors, they were in fact, in violation of collusion, which in most countries is illegal as it's deemed to unbalance the market.

Except that the fundamental allegation is false.

Apple were never found guilty of conspiring with publishers together. They negotiated with each one separately. Therefore, Apple did nothing wrong.

 

[ElctrcJellyfish]

Apple were never found guilty of conspiring with publishers together. They negotiated with each one separately. Therefore, Apple did nothing wrong.

This is true in the sense that finding someone guilty is what you do in criminal court, and Apple was found liable, not guilty, as you do in civil court. It is false in every other sense.

This is the district judge's slip opinion: http://www.justice.gov/file/486691/download

On slip op, p. 114, the district judge says:

There is overwhelming evidence that the Publisher Defendants joined with each other in a horizontal price-fixing conspiracy. Through that conspiracy, the Publisher Defendants raised the prices of many of their New Releases and
NYT Bestsellers above the $9.99 price at which they had previously been sold through Amazon... The Plaintiffs have
also shown that Apple was a knowing and active member of that conspiracy. Apple not only willingly joined the conspiracy, but also forcefully facilitated it.​

Judge Cotes continues on p. 117-18:

This is where Apple’s participation in the conspiracy proved essential. It assured each Publisher Defendant that it would only move forward if a critical mass of the major publishing houses agreed to its agency terms. It promised each Publisher Defendant that it was getting identical terms in its Agreement in every material way. It kept each Publisher Defendant apprised of how many others had agreed to execute Apple’s Agreements. As Cue acknowledged at trial, “I just wanted to assure them that they weren’t going to be alone, so that I would take the fear awa[y] of the Amazon retribution that they were all afraid of.”
​

This is precisely the finding of conspiracy that you claim didn't happen.

Here is the second circuit's opinion in the case. http://caselaw.findlaw.com/us-2nd-circuit/1706094.html

The second circuit, in affirming, said:

By organizing a price-fixing conspiracy, Apple found an easy path to opening its iBookstore, but it did so by ensuring that market-wide ebook prices would rise to a level that it, and the Publisher Defendants, had jointly agreed upon. Plainly, competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new ebook retailer at the expense of passing control over all ebook prices to a cartel of book publishers—publishers who, with Apple's help, collectively agreed on a new pricing model precisely to raise the price of ebooks and thus protect their profit margins and their very existence in the marketplace in the face of the admittedly strong headwinds created by the new technology.​

This is precisely the finding of conspiracy you claim didn't happen.

Finally, this is Apple's petition for certiorari: http://blogs.reuters.com/alison-frankel/files/2015/10/usvapple-applecertpetition.pdf

Go ahead and look at what Apple is arguing. It argues that its conduct--because it is vertically situated in the supply chain with the publishers, instead of horizontally situated--should be legal.

It does not at this stage deny that conduct occurred. (That's because it would be silly to do so, not an admission--the Supreme Court isn't going to overturn a district court's factual finding.)

 

[jerwin]

If I get charged with running a red light, can I revisit the case and ask that my conviction be overturned?

You appear to be none too clear on the important distinction between "charged" and "convicted",

 

[LordVic]

This is true in the sense that finding someone guilty is what you do in criminal court, and Apple was found liable, not guilty, as you do in civil court. It is false in every other sense.

This is the district judge's slip opinion: http://www.justice.gov/file/486691/download

On slip op, p. 114, the district judge says:

There is overwhelming evidence that the Publisher Defendants joined with each other in a horizontal price-fixing conspiracy. Through that conspiracy, the Publisher Defendants raised the prices of many of their New Releases and
NYT Bestsellers above the $9.99 price at which they had previously been sold through Amazon... The Plaintiffs have
also shown that Apple was a knowing and active member of that conspiracy. Apple not only willingly joined the conspiracy, but also forcefully facilitated it.​

Judge Cotes continues on p. 117-18:

This is where Apple’s participation in the conspiracy proved essential. It assured each Publisher Defendant that it would only move forward if a critical mass of the major publishing houses agreed to its agency terms. It promised each Publisher Defendant that it was getting identical terms in its Agreement in every material way. It kept each Publisher Defendant apprised of how many others had agreed to execute Apple’s Agreements. As Cue acknowledged at trial, “I just wanted to assure them that they weren’t going to be alone, so that I would take the fear awa[y] of the Amazon retribution that they were all afraid of.”
​

This is precisely the finding of conspiracy that you claim didn't happen.

Here is the second circuit's opinion in the case. http://caselaw.findlaw.com/us-2nd-circuit/1706094.html

The second circuit, in affirming, said:

By organizing a price-fixing conspiracy, Apple found an easy path to opening its iBookstore, but it did so by ensuring that market-wide ebook prices would rise to a level that it, and the Publisher Defendants, had jointly agreed upon. Plainly, competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new ebook retailer at the expense of passing control over all ebook prices to a cartel of book publishers—publishers who, with Apple's help, collectively agreed on a new pricing model precisely to raise the price of ebooks and thus protect their profit margins and their very existence in the marketplace in the face of the admittedly strong headwinds created by the new technology.​

This is precisely the finding of conspiracy you claim didn't happen.

Finally, this is Apple's petition for certiorari: http://blogs.reuters.com/alison-frankel/files/2015/10/usvapple-applecertpetition.pdf

Go ahead and look at what Apple is arguing. It argues that its conduct--because it is vertically situated in the supply chain with the publishers, instead of horizontally situated--should be legal.

It does not at this stage deny that conduct occurred. (That's because it would be silly to do so, not an admission--the Supreme Court isn't going to overturn a district court's factual finding.)

how did I get quoted saying that. I think you misquoted on that one

 

[Benjamin Frost]

This is true in the sense that finding someone guilty is what you do in criminal court, and Apple was found liable, not guilty, as you do in civil court. It is false in every other sense.

This is the district judge's slip opinion: http://www.justice.gov/file/486691/download

On slip op, p. 114, the district judge says:

There is overwhelming evidence that the Publisher Defendants joined with each other in a horizontal price-fixing conspiracy. Through that conspiracy, the Publisher Defendants raised the prices of many of their New Releases and
NYT Bestsellers above the $9.99 price at which they had previously been sold through Amazon... The Plaintiffs have
also shown that Apple was a knowing and active member of that conspiracy. Apple not only willingly joined the conspiracy, but also forcefully facilitated it.​

Judge Cotes continues on p. 117-18:

This is where Apple’s participation in the conspiracy proved essential. It assured each Publisher Defendant that it would only move forward if a critical mass of the major publishing houses agreed to its agency terms. It promised each Publisher Defendant that it was getting identical terms in its Agreement in every material way. It kept each Publisher Defendant apprised of how many others had agreed to execute Apple’s Agreements. As Cue acknowledged at trial, “I just wanted to assure them that they weren’t going to be alone, so that I would take the fear awa[y] of the Amazon retribution that they were all afraid of.”
​

This is precisely the finding of conspiracy that you claim didn't happen.

Here is the second circuit's opinion in the case. http://caselaw.findlaw.com/us-2nd-circuit/1706094.html

The second circuit, in affirming, said:

By organizing a price-fixing conspiracy, Apple found an easy path to opening its iBookstore, but it did so by ensuring that market-wide ebook prices would rise to a level that it, and the Publisher Defendants, had jointly agreed upon. Plainly, competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new ebook retailer at the expense of passing control over all ebook prices to a cartel of book publishers—publishers who, with Apple's help, collectively agreed on a new pricing model precisely to raise the price of ebooks and thus protect their profit margins and their very existence in the marketplace in the face of the admittedly strong headwinds created by the new technology.​

This is precisely the finding of conspiracy you claim didn't happen.

Finally, this is Apple's petition for certiorari: http://blogs.reuters.com/alison-frankel/files/2015/10/usvapple-applecertpetition.pdf

Go ahead and look at what Apple is arguing. It argues that its conduct--because it is vertically situated in the supply chain with the publishers, instead of horizontally situated--should be legal.

It does not at this stage deny that conduct occurred. (That's because it would be silly to do so, not an admission--the Supreme Court isn't going to overturn a district court's factual finding.)

Repeating that 'this was the finding of conspiracy' doesn't make it any truer.

The fact is, there was no evidence that Apple had conspired to a mass agreement with the publishers. What you are quoting is circumstantial evidence. There is no hard evidence of meetings or communication that took place between two or more publishers and Apple. As such, Apple have reasonable grounds for appeal.

 

[ElctrcJellyfish]

Repeating that 'this was the finding of conspiracy' doesn't make it any truer.

The fact is, there was no evidence that Apple had conspired to a mass agreement with the publishers. What you are quoting is circumstantial evidence. There is no hard evidence of meetings or communication that took place between two or more publishers and Apple. As such, Apple have reasonable grounds for appeal.

There are multiple problems with what you are saying.

1. You used the word "no finding." Those words have specific legal meaning: they mean that the trier of fact (in this case, the district judge) made a finding about the facts of the case. The district judge absolutely found (as quoted above) that Apple engaged in, facilitated, and in fact enforced such an agreement. It is simply wrong to say that there was no finding. When I repeated "this was the finding of conspiracy" I meant that in the strictest legal sense. The district judge made a factual finding that Apple had engaged in a conspiracy.

That is a fact. It's not an opinion. You can disagree with it, but anyone who knows remotely anything will understand that your disagreement demonstrates that you don't know anything about US law.

2. You completely misunderstand the appeals process, and the basis of Apple's appeal. At least in the United States, it is extremely rare to win an appeal on the grounds that the trier of fact got the facts wrong. Grounds to appeal to the Supreme Court are even more stringent. SCOTUS takes cases because (1) There is a split among circuits, or (2) The legal question raised by the case is an issue of national importance.

Apple's petition for cert doesn't even say that the district court got the facts wrong. They don't mention it because they know it's a loser. If you write a cert petition saying, "The district court was wrong about the facts" a clerk will write a two-page pool memo saying that you request factbound error correction, which is an automatic deny.

SCOTUS is not set up to try facts or revisit factual findings by the district court. Disagreeing with the district judge's factual findings are not reasonable grounds for appeal to SCOTUS.

3. You act as if circumstantial evidence is insufficient. No US court has ever found this to be the case. The rule is instead: Was there evidence to support the trier of fact's verdict? If there is, it won't be questioned. And civil cases have a lower standard than criminal cases.

You may not like this fact, but "the evidence was only circumstantial" is not grounds for appeal if it is otherwise sufficient.

(And circumstantial evidence is quite often better than eye witness testimony, which is notoriously unreliable and probably responsible for the greatest travesties of justice).

4. You're simply wrong. The passage quoted clearly states that Eddy Cue communicated information from one publisher to another about the terms of the agreement, and communicated the fact of agreement to publishers in succession. There is no requirement anywhere in the law that they have to sit in the same room and chuckle evilly. If you read the entire district court opinion, you can also find evidence that Jobs contacted Murdoch of Harper Collins and specifically told him what other publishers had done. You can communicate by passing information through an intermediary, and Eddy Cue admitted at trial that he in fact acted as an intermediary. There are emails from Jobs to Murdoch that specifically show him conveying information about the other publishers.

If what you are saying is, "I don't see an email in which Jobs ccs two publishers at the same time," you are correct, but this is irrelevant. It's like saying, "Yes, I hired a contract killer, but I asked my secretary to send the email, so it doesn't count." The law doesn't care how the communication is facilitated. The question is: Did it happen? And Apple undoubtedly communicated information about one publisher's negotiations to another.

Antitrust liability has been found on much, much weaker grounds.

You don't have to believe me, and you probably won't. But ask yourself this: Have you read the district court's opinions? Have you read the DOJ briefs and accompanying exhibits? And if you haven't actually examined the evidence in detail, how on earth are you qualified to say what is and is not contained in the evidence?

 

[charlituna]

Oh, has judge Koh moved up to the Supreme Court now then?

You lost Apple, deal with it.

actually I'm glad they didn't just 'deal with it'

looking at the various articles and documents it does appear that the judge had already made up her mind before the whole thing started and cherry picked evidence to justify it. And her monitor apparently stepped out of line several times. If all of that is true then Apple shouldn't just bend over and put up with it. Large companies using their rights to appeal is part of the checks and balances to make sure the courts aren't giving out biased degrees etc

 

[charlituna]

There is no hard evidence of meetings or communication that took place between two or more publishers and Apple. As such, Apple have reasonable grounds for appeal.

Yep. The only thing close to 'hard' evidence was the email to one single publisher that basically said that everyone else was cool with the terms Apple had offered. But that doesn't equal to a giant meeting etc

 

[Stephen123]

It was the same price because Apple struck a price fixing deal with the major book publishers, which is what the lawsuit was about - breaking up the price monopoly. I was an early adopter in reading ebooks and I noticed a sharp spike in book prices after Apple's deal.

I’ve never understood this claim. At the time, the sharp drop in ebook prices was quite clear.

 

[MacAddict1978]

Antitrust case killed competition.

How? Facts to support your statement?

Because it did the opposite. This case allowed Amazon to go back to setting their own sale prices again, and it also paved the way for others (B&N, Kobo) to do the same after they were black balled into fixed pricing because of this bs thing Apple is totally guilty of doing.

Wait, you don't know that Amazon had the ability to have sales on ebooks and even some print books or other retailers? Well, that's what happens when you don't know facts and make blanket statements with nothing to support them.

The publishers even sold apple out to get deals in this case. The evidence against apple was indisputable which is why they got the fine.... and I doubt the supreme court will waste their time hearing a blatantly guilty verdict for apple with really important cases being brought to them.

Apple has lost twice now. For a reason. They need to pay up.
A lot of good it did them.... iBooks didn't exactly take off and conquer the market.

 

[tooltalk]

Tell Samsung. They're still whining about being caught stealing Apples IP. What's good for the goose.........

except that they are two difference cases. Samsung's case is far more sound and many in the legal community (and academia) and US companies are interested in the outcome of the case.

 

[Rocketman]

Here is the second circuit's opinion in the case. http://caselaw.findlaw.com/us-2nd-circuit/1706094.html

The second circuit, in affirming, said:

Apple's help, collectively agreed on a new pricing model precisely to raise the price of ebooks and thus protect their profit margins and their very existence in the marketplace in the face of the admittedly strong headwinds created by the new technology.​

When suppliers go out of business there is a form of pricing pressure that was not considered in this case. There is also a palpable loss of purchase options which while very important in a country with a first amendment is hard to measure or litigate.

Rocketman​

 

[BaldiMac]

Judge Cotes continues on p. 117-18:

This is where Apple’s participation in the conspiracy proved essential. It assured each Publisher Defendant that it would only move forward if a critical mass of the major publishing houses agreed to its agency terms. It promised each Publisher Defendant that it was getting identical terms in its Agreement in every material way. It kept each Publisher Defendant apprised of how many others had agreed to execute Apple’s Agreements. As Cue acknowledged at trial, “I just wanted to assure them that they weren’t going to be alone, so that I would take the fear awa[y] of the Amazon retribution that they were all afraid of.”​

Judge Cote elsewhere in her decision:

Cote: "If Apple is suggesting that an adverse ruling necessarily implies that agency agreements, pricing tiers with caps, MFN clauses, or simultaneous negotiations with suppliers are improper, it is wrong. As explained above, the Plaintiffs have not argued and this Court has not found that any of these or other such components of Apple’s entry into the market were wrongful, either alone or in combination."

Cote: "It is also not illegal for a company to adopt a form “click-through” contract, negotiate with all suppliers at the same time, or share certain information with them."​

All of those actions that she used to describe Apple's participation in the conspiracy, she also acknowledged as legal "either alone or in combination." That's the kind of double-talk that makes this case frustrating to discuss.

Here is the second circuit's opinion in the case. http://caselaw.findlaw.com/us-2nd-circuit/1706094.html

The second circuit, in affirming, said:

By organizing a price-fixing conspiracy, Apple found an easy path to opening its iBookstore, but it did so by ensuring that market-wide ebook prices would rise to a level that it, and the Publisher Defendants, had jointly agreed upon. Plainly, competition is not served by permitting a market entrant to eliminate price competition as a condition of entry, and it is cold comfort to consumers that they gained a new ebook retailer at the expense of passing control over all ebook prices to a cartel of book publishers—publishers who, with Apple's help, collectively agreed on a new pricing model precisely to raise the price of ebooks and thus protect their profit margins and their very existence in the marketplace in the face of the admittedly strong headwinds created by the new technology.​

And here we have the court assuming the elimination of price competition when in reality the market went from less price competition to more price competition. Before Apple, one company (Amazon) determined retail pricing for 90% of the market. After Apple, a multitude of publishers competed in retail pricing. Keep in mind that the publishers involved in this case only represented 40% of the market combined.

 

[BaldiMac]

What they don't get to do is exercise self-help.

Well, that's not true. And that's actually one of the arguments that Apple has made in their appeal. Normally, in an antitrust case you can look at the overall market impact. Judge Cote ruled that this case was a per se violation of antitrust law and therefore didn't consider the overall impact. The dissenting appeals court judge disagreed with this determination.

The reason no publisher has sued Amazon claiming monopolization is because Amazon does not actually have market power under the current definitions of "market" and "market power." Back in the day, it didn't account for much more than 10-20% of book sales. Ebook sales were higher, yes, but print book sales? Nope. In the US at least, without market power, any of the things that amount to attempted monopolization are considered just good competition, and therefore beneficial to the consumers.

Even today, Amazon accounts for about 40% of book sales overall--which is precisely the share of the marketplace that Penguin Random House holds.

And that's not true either. Amazon had market power in the eBook market which was the one being examined in this case (90% share). The newness of the market should have given the DOJ pause, but it should have given them pause in Apple's case as well.

The reason that they weren't sued for what can be be considered predatory pricing could be for several reasons. The most obvious is that predatory pricing is notoriously hard to prove under current precedent. It requires Amazon not only engage in below cost pricing, but also evidence that it would raise those prices after competitors leave the market. Seems a bit too late a that point. Was Apple supposed to wait until that happened?