From Publishers Weekly:
On Monday, December 15, Apple will finally get their crack at overturning its 2013 e-book price-fixing judgment, with oral arguments scheduled before the Second Circuit Court of Appeals. What are the core arguments that will be pressed before the Second Circuit? What is at stake? And, can Apple succeed in overturning the judgment against them? Here is a short primer:
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Monday’s hearing is the main event: this is Apple’s appeal of Judge Denise Cote’s 2013 liability finding, in which the company was found to have conspired with five major publishers (Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster) to artificially inflate e-book prices.
The 2012 suit alleged that five of the then Big Six publishers, threatened by Amazon’s $9.99 e-book prices,colluded with Apple to simultaneously move the industry to an “agency” model in which the publishers would take control of consumer e-book pricing in conjunction with the 2010 launch of the iPad and the iBookstore.
The five Publisher Defendants settled the charges against them and avoided trial. They admitted no wrongdoing, butrefunded $166 million to e-book consumers, and submitted to two years of Department of Justice sanctions. Apple, however, fought the charges, and, on July 10, 2013, after a two-week trial, Cote found Apple had violated Section 1 of the Sherman Act.
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In Apple’s version of events, the company did “nothing more” than “[hear] out” the publishers’ complaints about Amazon and convey its “openness to pricing above $9.99.” Nothing in the evidence, they stress, definitively shows otherwise.
Did Apple exploit the publishers’ desire to blunt Amazon’s pricing? Sure—but at no time, Apple attorneys insist, did Apple knowingly join a conspiracy—it was simply trying to enter the e-book market under “rational” business terms. And its entry into the e-book market ultimately had “pro-competitive” effects, helping to dent Amazon’s 90% share of the e-book market.
“That Apple used the leverage created by market dynamics and the publishers’ well-publicized antipathy toward Amazon to enter the market is quintessential competition,” Apple argued in a July appeal brief, “not conspiracy.”
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Attorneys for the U.S. Department of Justice counter that Apple did considerably more than “hear out” the publishers—and that Judge Cote got the case exactly right. In the DoJ’s appeal filing, U.S attorneys point out that the evidence against Apple was “overwhelming.” And, despite Apple’s dispute over “isolated pieces of evidence,” the judge “articulated the proper standard, and correctly applied it.”
U.S. attorneys claim they only needed to show there was “sufficient evidence” to enable “a reasonable fact finder to infer that the conspiratorial explanation is more likely than not.” And the volumes of evidence presented in the case, they say, shows that the alleged conspiracy was “more than merely plausible,” but made perfect economic sense: Apple wanted a retail platform for e-books on its new device, the iPad, but did not want to compete with Amazon on price. And the publishers wanted to end Amazon’s low prices, which they believed “devalued” their product.
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Lawyers say it will be an uphill battle for Apple. Look at it this way: to win, Apple must lead the Second Circuit to a completely opposite finding than the slam-dunk verdict Judge Cote came to, based on the same evidence, and a single, brief oral argument (each side is allotted just 20 minutes).
Apple’s appeal is also somewhat unusual in that it leans surprisingly hard on Cote’s reading of the evidence. Appeals generally hinge on legal and procedural errors. But in this case, Apple claims that Cote so abused her discretion that her conclusions are reviewable for “clear error.”Cleveland State University law professor Christopher Sagers, who has followed the case closely, told PW it is “definitely not impossible” that Apple could win. But, in his opinion, Cote’s reading of the evidence is sound, and some key parts of Apple’s arguments, because they revolve around findings of fact, could be deemed unreviewable.
Link to the rest at Publishers Weekly
PG thinks Apple will lose its appeal.
However, PG also believes that the outcome of the appeal is irrelevant to the ebook world. Apple has failed as a savior of Big Publishing and high prices for ebooks. In a nutshell, Apple can’t compete with Amazon in selling ebooks.
At the time the Price-Fix Six hatched its little plot, Apple was going to introduce the iPad and everyone thought it would dominate the ebook world. Although the iPad started off as the only game in town, it’s not any more. Gartner estimated that Android tablets represented 62% of tablet sales in 2013 while iPad sales were 36% of the tablet market.
Theoretically, Apple could remove Amazon apps from the iTunes store, but doing so would upset iPad owners and accelerate the market decline of the iPad.
So, if the Court of Appeals confirms that Apple illegally fixed prices or decides it didn’t makes no difference to anyone but Apple. Amazon is the king of ebook sales and is likely to continue that role, at least in the near-term future.