Apple is Appealing – in More Ways Than One!

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Apple is Appealing – in More Ways Than One!

E-Books, Price Fixing, and a Second Appeal

Intrinsic Books - Judge Denise CoteThe stock price is most appealing. The company is appealing the ebook price fixing verdict. And soon Apple will be appealing the onerous (and possibly illegal) appointment of Special Monitor Michael Bromwich. It’s all very appealing to write about.

There is hope after all for justice and common sense in the US courts. It is not guaranteed, mind you, as it will be a few more months before the appeal by Apple of the guilty verdict in their ebook pricing trial is decided. If the appeal overturns the misguided guilty verdict by Judge Denise Cote it will mark a return to common sense and affirmation of American beliefs in antitrust and anti monopolistic practices.

The Honorable Judge Cote missed quite a few tricks in the trial and ignored key evidence. Her pretrial statements opened a few eyes when she seemingly declared Apple guilty before any evidence had been heard.

During the trial Judge Cote showed a shallow knowledge of publishing, the mechanics of the publishers and of their marketplace. Despite clear testimony, especially the eloquent and straightforward outline of the ebook market by Macmillan CEO John Sargent, Judge Cote stuck to her pretrial thinking: ‘the publishers and Apple colluded with each other and forced “Agency model” pricing on the market. This raised prices. At least she said it did.

Ignoring the facts that the contracts between Apple and the publishers were entirely legal, and that the creation of the iBookstore made for healthy competition in what had been a monopolistic market, Judge Cote had decided: guilty it was going to be, and guilty it was.

But Judge Cote was not done. In a move that I still find absolutely stunning, Judge Cote appointed one Michael Bromwich as a Special Monitor, to oversee Apple’s compliance with the antitrust verdict and specific behavior she ordered. It should be noted that Mr. Bromwich has no experience – nor did he claim to have any – with antitrust cases. The Wall Street Journal has characterized Mr. Bromwich as, “the first and only involuntary monitor ever in civil antitrust litigation.” That is not an honor to shout about.

Not surprisingly, it has been reported that Apple will file another appeal with the court, this time challenging Mr. Bromwich’s appointment as “illegal and unconstitutional.” Should they win this appeal – and in my humble opinion they should win both – they might seek to have some of the 2.65 million (as reported by the WSJ) he has billed for his ‘services.’

In hearing Apple’s appeal of the price fixing guilty verdict, Justices Dennis Jacobs and Debra Livingston expressed reservations about key points in the DoJ’s case. That Apple should prevail in its appeals is an opinion I share with many of my publishing colleagues. If the court come to its senses, so much the better for truth, justice and the American Way. But if the shortsighted and dimwitted prevail, Apple will be forced to pay some $450 million in damages, continue with the insane billing of the very special monitor Michael Bromwich (now at $2.65 million and counting) and face other penalties I’m sure will be in the millions. This will not be difficult for a company that as of February 10, 2015 has a reported market capitalization of more than $700 billion.

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