NEW YORK — The Justice Department on Thursday concluded its antitrust trial against Apple over alleged price-fixing of digital books, with a federal prosecutor saying the creator of the iPhone and iPad engaged in an “old-fashioned, straightforward” conspiracy and Apple’s lead attorney warning that a ruling against the company “will send shudders throughout the business community.”
U.S. District Judge Denise Cote’s ruling in the Justice Department’s first major antitrust trial in more than a decade is expected to have broad consequences for the Internet economy. The Justice Department’s action against Apple, which it calls the “ringleader” of a cartel with book publishers to raise e-book prices, demonstrates the Obama administration’s desire to create clear rules for powerful Silicon Valley firms that have been largely unbridled of regulations.
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On Thursday, for instance, the Federal Trade Commission said it would launch an investigation into patent-holding companies that may use lawsuits to unfairly edge out competition, a problem particularly seen in the high-tech industry.
The suit against Apple and five publishers focused on the book-publishing business, which is undergoing a dramatic transformation as consumers increasingly turn to e-reading devices. And the business deals struck between Apple and publishers are also echoed across many industries as Internet companies race to provide videos, radio and other media offerings over the Web.
“All across the digital economy, we see companies trying to dampen competition with business practices that were clearly recognized as illegal in the physical economy,” said Mark Cooper, a director at the nonprofit Consumer Federation of America.
All five publishers in the trial — Penguin, HarperCollins, Simon & Schuster, Hachette and Macmillan — have settled.
“When an antitrust case goes to trial, especially after every party but one has settled in the U.S. and Europe, the outcome is strongly precedential,” Cooper said.
Cote did not comment about her thinking during closing arguments for the three-week trial at U.S. District Court in Manhattan. The court’s judges typically take two months to arrive at a final decision after trial.
With such weight on the case, Apple’s attorney, Orin Snyder of Gibson Dunn, vigorously argued to the judge that the company’s deals with publishers were legal. And Apple portrayed itself as the underdog, trying to jump into a market dominated by Amazon.
“The government is taking perfectly sensible business agreements to infer sinister conduct,” Snyder said in his closing remarks.
Apple has promised a dogged legal battle and is prepared to appeal if Cote rules against it. Some experts say the case could reach the Supreme Court.
At the heart of the lawsuit are two allegations by the government: Apple wanted to lift prices for e-books, and it facilitated a conspiracy with publishing houses to achieve that goal.
“Apple directed and oversaw a conspiracy to raise e-book prices and prevent low-price competition,” Justice Department attorney Mark Ryan said in his closing remarks.
U.S. District Judge Denise Cote’s ruling in the Justice Department’s first major antitrust trial in more than a decade is expected to have broad consequences for the Internet economy. The Justice Department’s action against Apple, which it calls the “ringleader” of a cartel with book publishers to raise e-book prices, demonstrates the Obama administration’s desire to create clear rules for powerful Silicon Valley firms that have been largely unbridled of regulations.
Multimedia
Thousands of gaming enthusiasts are coming out for this year’s Electronic Entertainment Expo in Los Angeles.
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Ki Mae Heussner | GigaOM.com
The cosmetics company’s cloud strategy has enabled it to increase throughput by 425 percent without increasing spending and achieve more than $70 million in cost savings or avoidance.
Hayley Tsukayama Samsung hosted a big show, showing off several products aimed at several kinds of consumers.
Hayley Tsukayama The social network will let users take 15-second videos through Instagram.
On Thursday, for instance, the Federal Trade Commission said it would launch an investigation into patent-holding companies that may use lawsuits to unfairly edge out competition, a problem particularly seen in the high-tech industry.
The suit against Apple and five publishers focused on the book-publishing business, which is undergoing a dramatic transformation as consumers increasingly turn to e-reading devices. And the business deals struck between Apple and publishers are also echoed across many industries as Internet companies race to provide videos, radio and other media offerings over the Web.
“All across the digital economy, we see companies trying to dampen competition with business practices that were clearly recognized as illegal in the physical economy,” said Mark Cooper, a director at the nonprofit Consumer Federation of America.
All five publishers in the trial — Penguin, HarperCollins, Simon & Schuster, Hachette and Macmillan — have settled.
“When an antitrust case goes to trial, especially after every party but one has settled in the U.S. and Europe, the outcome is strongly precedential,” Cooper said.
Cote did not comment about her thinking during closing arguments for the three-week trial at U.S. District Court in Manhattan. The court’s judges typically take two months to arrive at a final decision after trial.
With such weight on the case, Apple’s attorney, Orin Snyder of Gibson Dunn, vigorously argued to the judge that the company’s deals with publishers were legal. And Apple portrayed itself as the underdog, trying to jump into a market dominated by Amazon.
“The government is taking perfectly sensible business agreements to infer sinister conduct,” Snyder said in his closing remarks.
Apple has promised a dogged legal battle and is prepared to appeal if Cote rules against it. Some experts say the case could reach the Supreme Court.
At the heart of the lawsuit are two allegations by the government: Apple wanted to lift prices for e-books, and it facilitated a conspiracy with publishing houses to achieve that goal.
“Apple directed and oversaw a conspiracy to raise e-book prices and prevent low-price competition,” Justice Department attorney Mark Ryan said in his closing remarks.