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US antitrust ruling could temper Apple's revolutionary zeal

Joab Jackson | July 11, 2013
Apple may not approach other markets as aggressively as it did with book publishers in 2010.

Apple "provided the Publisher Defendants with the vision, the format, the timetable, and the coordination that they needed to raise e-book prices," wrote Judge Cote in the 160-page opinion.

All the publishers settled out of court, leaving Apple to defend its practices by itself.

Although legal experts agreed that the case is not nearly as significant as the antitrust case that the DOJ brought against Microsoft in 1998, it will have an effect on Apple, given its dominant role in the market of electronic devices and in certain forms of media, such as recorded music sales. "Because Microsoft's case concerned such a wide-ranging scope of conduct, it was bigger. But few cases are that big," said Ankur Kapoor, an antitrust lawyer for the law firm Constantine Cannon.

Apple vowed to appeal the decision, but opinion is divided over whether it can succeed at that.

That Cote has written a comparatively long and detailed opinion might hamper Apple's ability to remake its case. "That limits the freedom the appellate court has to modify a district court's decision," Hylton said.

Others see more optimistic prospects for Apple. Despite the copious amount of evidence it presented to the court, the DOJ "did not prove what they set out to prove, that Apple conspired with the publishers to raise e-book prices," Kapoor said.

"The most that the government could show was that Apple pushed the publishers to move to an agency model and had the publishers do the same with Amazon. But that is a different agreement," Kapoor said. "On balance, there is too much contradicting [evidence] that Apple conspired with the publishers to raise prices."

In the meantime, Apple's lawyers also may be defending the company in other courts.

The European Union, which has come down even harder on monopolistic practices than the U.S., may now be spurred on to investigate Apple as well, Reisman said. Because Apple commands such a large percentage of the markets for tablets and smartphones, the DOJ or the European Union could investigate how Apple interacts with its suppliers or with its retailers.

The ruling will also pave the way for private class-action suits, Hylton said. "There is a lot of room for plaintiffs to seek damages now," he said.

"Apple is sitting on a lot of money already, which means Apple may be able to pay the damages, and a lot of lawyers will have incentives to sue Apple," Hylton said.

The ruling also sends a message to other companies, now that the DOJ successfully prosecuted an antitrust case.

"Be very, very careful with communications when you are negotiating industrywide deals," Kapoor said. "The DOJ will examine your communications under a microscope."


 

 

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