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Take a look at Bob Kohn's hilarious amicus brief for an idea of just how bad this could go for the DoJ: http://www.scribd.com/doc/104906877/Kohn-Amicus http://

Take a look at Bob Kohn's hilarious amicus brief for an idea of just how bad this could go for the DoJ: http://www.scribd.com/doc/104906877/Kohn-Amicus http://www.scribd.com/doc/104906877/Kohn-Amicus Apple will probably lose the district court case, but that has as much to do with geography and Judge Cote as it does with actual law. When they appeal to the Supreme Court, which they will, they will get the trial they wanted—a trial on whether Amazon, not Apple, committed antitrust violations by selling e-books below marginal cost in order to capture the market. (To be clear, Apple's legal strategy should not be asking the DoJ whether it thinks Amazon practiced predatory pricing. Amazon certainly did, but the DoJ can always say, "No.")

jcrites 13y ago
What is the marginal cost of a digital good? The cost to download it one more time? It seems like the marginal cost to produce one more copy of an existing digital good is close to zero. Books and music and other similar works certainly have a large fixed cost to produce: the opportunity cost of the creator's time; the technology or equipment involved. The producer might choose to market the work, which incurs further cost (but it's not marginal). However, once the work is created, can it really be said to have a marginal cost beyond the cost of digital distribution?
- hox 13y ago
  In this particular case, the marginal cost for Amazon or Apple would be the per-sale licensing fee paid to the publisher. This is a cost set by the publishers, for sure, but it most definitely is a marginal cost in the eyes of the electronic distributor.
- msvan 13y ago
  There is a marginal cost to Amazon. They're paying the publishers a certain amount for every copy sold. And if they're selling a copy for less than they bought it for, they are selling it below the marginal cost.
DannyBee 13y ago
"When they appeal to the Supreme Court, which they will" SCOTUS is unlikely to take it, unless the normal appeal is very strange, which is unlikely. Even the microsoft antitrust case never was heard by SCOTUS. The appeals court is also pretty unlikely to care about what Amazon did, only what Apple did. I think you completely misunderstand what is going to happen here. You don't get to commit an antitrust violation to try to save people from someone else's. So if the trial they want is whether Amazon committed antitrust violations, they are idiots. They should file that lawsuit themselves. The trial here, despite what Apple wants, is whether Apple committed antitrust violations. The answer to that is pretty clearly yes, based on the emails i've seen.
- doctorpangloss 13y ago
  >I think you completely misunderstand what is going to happen here. You don't get to commit an antitrust violation to try to save people from someone else's. You do if the DoJ's guidelines say you do, which is Bob Kohn's whole point. (The Sherman Act makes the DoJ's guidelines the law. Or at least, a finding that Amazon merely practiced "predatory pricing," a low bar, would give Apple estoppel against the DoJ in this complaint.)
  - DannyBee 13y ago
    1. The DOJ guidelines do not have the force of law. 2. The Sherman act says nothing about the DOJ guidelines, actually, and it certainly doesn't make them law. Here is the Sherman act: http://www.law.cornell.edu/uscode/text/15/1 http://www.law.cornell.edu/uscode/text/15/1 Only sections 1 through 7 are the Sherman act. The Sherman act is a very simple act, and nothing in it say anything about the DOJ. Feel free to point out otherwise. Maybe you want to try to argue the various Supreme Court decisions interpreting the Sherman act say something about the DOJ. AFAIK, they don't. The DOJ guidelines are simply used as guideposts for companies to understand how the DOJ is likely to view a proposed act. That's it. The DOJ doesn't have to follow them. It even says this in the guidelines: "By stating their general policy, the Agencies hope to assist those who need to predict whether the Agencies will challenge a practice as anticompetitive. However, these Guidelines cannot remove judgment and discretion in antitrust law enforcement." 3. A finding about Amazon will be completely irrelevant to Apple's conduct in this case. The question is whether Apple committed horizontal price fixing. Amazon's possibly illegal conduct is going to be completely irrelevant in that, as horizontal price fixing is still per-se illegal. They could prove Amazon hurt the market a lot. They could prove whatever they like. As long as the DOJ proves they committed horizontal price fixing, it's game over. Now, the supreme court may, in the end, decide horizontal price fixing should be analyzed under the rule of reason instead of being a per-se violation, but that's completely irrelevant to the current state of the law, and in fact, Apple's behavior. SCOTUS is not going to change the doctrine because they think Apple did the right thing here, they will change doctrine because they think the doctrine was wrong in general. However, that doctrine is the current state of the law, and what this case, and the appeal, will be analyzed under. 4. Bob Kohn is a guy who made his living off running companies dedicated to digital revenue for books. He has a huge stake in this game, and in fact, has unsuccessfully objected to every settlement that doesn't agree with his theories. You should be very wary of his legal viewpoint. It's like listening to Florian Mueller talk about Microsoft or Oracle. The only difference is that Bob Kohn has been rebuked directly no his theories by judges a large number of times now, whereas Florian has just been wrong without having the pleasure of Judges directly address his craziness.
SeanDav 13y ago
Not sure that running at a loss in order to develop a market is illegal otherwise every loss leading promotion in history would be illegal. Once you have a monopoly position, of course, then it is different.
revelation 13y ago
When they appeal to the Supreme Court, which they will, they will get the trial they wanted—a trial on whether Amazon, not Apple, committed antitrust violations by selling e-books below marginal cost in order to capture the market. Thats just all kinds of ".. what?". I don't think you can appeal to the supreme court on the issue of Amazon having comitted a crime in your very own federal trial. That simply does not compute.

jcrites 13y ago

What is the marginal cost of a digital good? The cost to download it one more time? It seems like the marginal cost to produce one more copy of an existing digital good is close to zero. Books and music and other similar works certainly have a large fixed cost to produce: the opportunity cost of the creator's time; the technology or equipment involved. The producer might choose to market the work, which incurs further cost (but it's not marginal). However, once the work is created, can it really be said to have a marginal cost beyond the cost of digital distribution?

hox 13y ago
In this particular case, the marginal cost for Amazon or Apple would be the per-sale licensing fee paid to the publisher. This is a cost set by the publishers, for sure, but it most definitely is a marginal cost in the eyes of the electronic distributor.
msvan 13y ago
There is a marginal cost to Amazon. They're paying the publishers a certain amount for every copy sold. And if they're selling a copy for less than they bought it for, they are selling it below the marginal cost.

DannyBee 13y ago

"When they appeal to the Supreme Court, which they will" SCOTUS is unlikely to take it, unless the normal appeal is very strange, which is unlikely. Even the microsoft antitrust case never was heard by SCOTUS. The appeals court is also pretty unlikely to care about what Amazon did, only what Apple did. I think you completely misunderstand what is going to happen here. You don't get to commit an antitrust violation to try to save people from someone else's. So if the trial they want is whether Amazon committed antitrust violations, they are idiots. They should file that lawsuit themselves. The trial here, despite what Apple wants, is whether Apple committed antitrust violations. The answer to that is pretty clearly yes, based on the emails i've seen.

doctorpangloss 13y ago
>I think you completely misunderstand what is going to happen here. You don't get to commit an antitrust violation to try to save people from someone else's. You do if the DoJ's guidelines say you do, which is Bob Kohn's whole point. (The Sherman Act makes the DoJ's guidelines the law. Or at least, a finding that Amazon merely practiced "predatory pricing," a low bar, would give Apple estoppel against the DoJ in this complaint.)
- DannyBee 13y ago
  1. The DOJ guidelines do not have the force of law. 2. The Sherman act says nothing about the DOJ guidelines, actually, and it certainly doesn't make them law. Here is the Sherman act: http://www.law.cornell.edu/uscode/text/15/1 http://www.law.cornell.edu/uscode/text/15/1 Only sections 1 through 7 are the Sherman act. The Sherman act is a very simple act, and nothing in it say anything about the DOJ. Feel free to point out otherwise. Maybe you want to try to argue the various Supreme Court decisions interpreting the Sherman act say something about the DOJ. AFAIK, they don't. The DOJ guidelines are simply used as guideposts for companies to understand how the DOJ is likely to view a proposed act. That's it. The DOJ doesn't have to follow them. It even says this in the guidelines: "By stating their general policy, the Agencies hope to assist those who need to predict whether the Agencies will challenge a practice as anticompetitive. However, these Guidelines cannot remove judgment and discretion in antitrust law enforcement." 3. A finding about Amazon will be completely irrelevant to Apple's conduct in this case. The question is whether Apple committed horizontal price fixing. Amazon's possibly illegal conduct is going to be completely irrelevant in that, as horizontal price fixing is still per-se illegal. They could prove Amazon hurt the market a lot. They could prove whatever they like. As long as the DOJ proves they committed horizontal price fixing, it's game over. Now, the supreme court may, in the end, decide horizontal price fixing should be analyzed under the rule of reason instead of being a per-se violation, but that's completely irrelevant to the current state of the law, and in fact, Apple's behavior. SCOTUS is not going to change the doctrine because they think Apple did the right thing here, they will change doctrine because they think the doctrine was wrong in general. However, that doctrine is the current state of the law, and what this case, and the appeal, will be analyzed under. 4. Bob Kohn is a guy who made his living off running companies dedicated to digital revenue for books. He has a huge stake in this game, and in fact, has unsuccessfully objected to every settlement that doesn't agree with his theories. You should be very wary of his legal viewpoint. It's like listening to Florian Mueller talk about Microsoft or Oracle. The only difference is that Bob Kohn has been rebuked directly no his theories by judges a large number of times now, whereas Florian has just been wrong without having the pleasure of Judges directly address his craziness.

SeanDav 13y ago

Not sure that running at a loss in order to develop a market is illegal otherwise every loss leading promotion in history would be illegal. Once you have a monopoly position, of course, then it is different.

revelation 13y ago

When they appeal to the Supreme Court, which they will, they will get the trial they wanted—a trial on whether Amazon, not Apple, committed antitrust violations by selling e-books below marginal cost in order to capture the market. Thats just all kinds of ".. what?". I don't think you can appeal to the supreme court on the issue of Amazon having comitted a crime in your very own federal trial. That simply does not compute.