Apple In Strong Position To Beat The Government’s Antitrust Suit

Apple In Strong Position To Beat The Government's Antitrust Suit

Apple Inc. (NASDAQ:AAPL) is not likely to lose the case brought against it yesterday by the Justice Department. The company was sued by the Justice Department under anti trust law yesterday along with several book publishers. The suit related to price fixing in the ebook market. Apple’s ibook platform for selling ebooks online was criticized in the suit for using a model that led to cartel like control of prices in the market. Analysis of the suit today by several media outlets has shown that the case against Apple is not a particularly strong one and it looks like the company is in a good position to beat the allegations and continue using its own strategy.

Yesterday three of the publishers sued, HarperCollins, Simon & Schuster, and Hachette, settled out of court immediately while Apple, MacMillan and Penguin said they were fighting on in the legal proceedings. Some details of that settlement were released in a statement from Eric Holder and the Justice Department yesterday. It said that the companies would be allowed to return to the previous publishing model, formerly used by Amazon, that saw the publishers selling books wholesale and allowing Amazon to set the prices. Apple makes publishers set the prices while it adds a 30% fee to every sale in order to give acccess to its platform.

The analysis of the documents pertaining to the suit done on Cnet today by Dean McCullagh and Greg Sandoval. They revealed that the case against Apple is probably too weak to be upheld by the court though the  government has a much stronger case against publishers. It’s clear then why three of the publishers decided to settle but the fate of the two publishers that continue to fight on. MacMillan’s CEO in particular released a strongly worded open letter yesterday explaining the companies position in the case to employees, clients and others interested in the company’s decision. Apple will not find its company broen by this anti trust suit as Microsoft may have wondered about when the Justice Department tried to divide that company at the turn of the century.

No matter what, but by looking at the strength of the case it is clear that both sides are in it for the long haul. Unless the Justice Department’s lawyers realize their case isn’t good enough to secure a win, and drops the proceedings. Apple may emerge the final victor but there will be no resolution any time soon. Though it looks like the case against Apple may be dead in the water, but today this case will remain an interesting one.