30 June 2015


Apple has lost its appeal of the antitrust judgment against it in the Wormyfruit e-book pricing lawsuit. The money quote (literally):

More fundamentally, the dissent’s theory — that the presence of a strong competitor justifies a horizontal price-fixing conspiracy — endorses a concept of marketplace vigilantism that is wholly foreign to the antitrust laws. 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.

US v. Apple, No. [20]13–3741 (PDF) (2d Cir. 30 Jun 2015), slip op. at 9–10 (emphasis in original). There's a lot more to plow through — the opinion, concurrence, and dissent add up to over 150 pages — but the bottom line is that the liability and injunctive relief were affirmed in whole (indeed, the concurring opinion is even more dismissive of Apple's "defenses").

I feel vindicated on two grounds. Not only is this the rationale for antitrust lawsuits in the first place, but the court rested its judgment on facts found by the judge after a trial — and that's almost impossible to overturn. I thoroughly expect Apple to call for en banc consideration (especially since there was a dissent), but I do not expect a different result en banc... or on any appeal to the Supreme Court.

When the facts are against you, argue the law. When the law and the facts are against you, make applesauce... of a variety hopefully tastier than that decried by Justice Scalia last week.