DOJ compares Apple to Big Oil

For those of you who might be trying desperately to keep up with the Department of Justice’s ebooks case, but are nevertheless finding yourselves falling behind (or falling asleep, even, every time you attempt to plow through another dry-as-tree-bark news report), I’d suggest this recent update from PaidContent. [Title: “DOJ compares Apple and publishers to big oil in ebooks case.] (How can you not read a story with a headline like that?)

At any rate, here’s the main takeaway:

“In a filing late Wednesday in response to Apple and book publishers, the Department of Justice reiterates its claim that agency pricing and the alleged conspiracy have resulted in “unmistakable consumer harm,” but refuses to release its ebook pricing analysis.”

And here are a few brief but especially choice excerpts:

“In its response to recent filings from Apple, publishers and booksellers on its proposed ebook settlement with three publishers, the Department of Justice addresses few specific complaints (PDF; full filing embedded below). Rather, citing the “unmistakable consumer harm that has resulted from the conspiracy in this case,” the DOJ calls on Judge Denise Cote to approve the settlement without a hearing.”

Response to Apple:

“Last week, Apple argued that the DOJ’s proposed settlement, which it has not joined, affects its interests by forcing it to tear up existing contracts. As such, Apple says it’s entitled to a trial before the settlement is approved. The DOJ says Apple “is not entitled to preclude the United States and Apple’s co-defendants from obtaining the immediate benefits of their settlements, as it is well established that the United States ‘need not prove its underlying allegations in a Tunney Act proceeding.’” (The Tunney Act relates to anti-trust proceedings).”

Response to Penguin:

“Last week, Penguin argued that the DOJ has not proven that ebook prices across the board rose under agency pricing. Penguin, which along with Macmillan is holding out against the settlement, also provided evidence showing that even prior to agency, Amazon priced many of its new titles above $9.99.”

Response to Macmillan: 

Macmillan echoed Penguin’s demand for the DOJ’s research on ebook pricing and also asked the DOJ to show, as required by antitrust law, that the settlement would not result in Amazon gaining a monopoly. The DOJ responds by saying that there is no evidence that the settlement would result in Amazon gaining a monopoly because of “competition from established companies such as B&N, Google, Apple, and Sony.”

Response to the ABA and Barnes & Noble: 

In their amicus brief, the booksellers argued that the number of public comments against the proposed settlement vastly outweighed the number of comments in favor of the settlement. The DOJ responds that “it is not unprecedented for parties to oppose a settlement because they have a stake in an anticompetitive status quo,” and claims “the majority of the comments received opposing the decree did not come from those seeking to represent the public interest, but rather from those that benefited from the conspiracy and that have a vested interest in maintaining the status quo.” 

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Click here to read the entire original PaidContent post, where you’ll also find the 17-page Reply Memorandum in Support of the United States’ Motion for Entry of Final Judgement (also available as a PDF on Scribd).

5 Comments on DOJ compares Apple to Big Oil

  1. The DOJ is going after Apple comparing it to Big Oil, but they aren’t going after Big Oil as the prices rise and rise for no sane reason? What’s wrong with this picture?

  2. Apple as Big Oil? At the time Apple was allegedly in this dastardly conspiracy to raise prices, it had a whoppingly big 0% of the ebook market. It’s hard to do anything with that. Even today, the ebooks it sells with only display on iDevices. You can’t even read them on Macs.

    Duh! What’s with these DOJ lawyers? I suspect they got duped in their meetings with Amazon and charged ahead without talking with anyone else in the industry. Now they’re in a mess they can’t get out of. Hence the name calling and the dubious analogies.

    And Amazon threatened by competition with Sony? I see lots of Kindles. I’ve never seen anyone with a Sony reader.

  3. Apple has over $110 Billion in cash reserves which is about the same current market capitalization of Amazon. They recently hit the news as the most valuable company of all time. They are bigger then big oil. The idea that they couldn’t fairly compete in the e-book market is laughable. Are we supposed to believe that Apple was afraid of Amazon’s deep pockets?

    Amazon entered the e-book market with 0% share too, what does that have to do with anything?

  4. Regarding the “big oil” assertion, wouldn’t it be better to calculate both the percentage of total revenue attributable to eBooks as well as the total dollar revenue attributable to eBooks for all who are involved?

    I’d guess that eBooks are not a big percentage of Apple’s business and probably not 100% of Amazon’s business either. Further, I’d guess that Amazon eBook revenue is higher than Apple’s eBook revenue.

    Anyone have those numbers handy?

  5. Frank, Amazon doesn’t share numbers. They are notoriously secret about it. The same with Apple.

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