Blog Post

Fighting the DOJ’s Apple ebook settlement — in comic strip form

With the Department of Justice’s proposed ebook pricing settlement pending, last week U.S. District Judge Denise Cote granted attorney and licensing expert Bob Kohn, who opposes the settlement, permission to file an amicus brief in the case. But she gave him a restriction: It could only be five pages long. Kohn had previously submitted a 55-page brief.

How to get condense 55 pages into five? Kohn went with a comic strip. “He called his daughter, Katie, who is studying for her Ph.D in film studies at Harvard, who connected him with a fellow student, Julia Alekseyeva. After conferring with Ms. Alekseyeva, Mr. Kohn wrote the script and she drew the illustrations,” the New York Times’ Media Decoder blog reports. (Here’s Alekseyeva’s Tumblr.)

The five-page comic strip isn’t on par with “Calvin and Hobbes” or “Doonesbury,” but it draws attention to Kohn’s role as a “friend of the court” and is a catchy way to distill his argument that the DOJ wrongly defines low prices, not efficient prices, as the true goal of antitrust law. And it’s definitely more interesting than “Family Circus.”

Here’s the full brief.

[scribd id=104906877 key=key-10d80ioh76stj2r8mue0 mode=scroll]

5 Responses to “Fighting the DOJ’s Apple ebook settlement — in comic strip form”

  1. C Gillies

    I agree with Jack C. I thought that Amazon’s predatory behaviour was recognized as illegal. It fits all the criteria for the term. Through pricing below purchase price Amazon has achieved a virtual monopoly or at least an impossible-to-beat head start in the market. How do they get away with that?

    To that I add that books are not just physical objects. They are seeds of culture. By creating a toxic environment for creatives Amazon is attacking our culture – let’s face it, most of the rest of media is a wasteland of impoverished and recycled ideas.

    • Al Norman

      If one simply looked at the cases Kohn cited, then yes, one could come to the conclusion that Amazon engaged in predatory pricing. However, Kohn cites a lower court decision from 1981 but completely fails to mention the last major predatory pricing case, which reached the Supreme Court in 1993.

      Brooke Group V. Brown & Williamson Tobacco Company.

      This case added one stipulation that is needed to show a firm engaged in illegal predatory pricing: the likelihood that the party that allegedly engaged in predatory pricing will, once all competition is eliminated, raise prices above normally competitive levels. Amazon’s entire business model is and has always been based on low prices and low margins, so any claim that they would raise prices ABOVE competitive levels is speculation that would never hold up in court, especially since Amazon stated and followed through with its business model of pricing all best-sellers at no more than 9.99–until agency required them to change their pricing model.

      Thus, selling below cost is not, by itself, illegal, else a truckload of companies would be in the courtroom right after Black Friday. The court reasoned that low prices spur competition, and it made successful predatory pricing claims hard to win because limiting price decreases goes against the very nature of anti-trust laws.

      A few quotes from the judgement in that case, which the defendant won.

      “Evidence of below-cost pricing is not, alone, sufficient to permit an inference of probable recoupment and injury to competition.”

      “As we have said in the Sherman Act context, “predatory pricing schemes are rarely tried, and even more rarely successful,” Matsushita, supra, at 589, and the costs of an erroneous finding of liability are high. “[T]he mechanism by which a firm engages in predatory pricing – lowering prices – is the same mechanism by which a firm stimulates competition; because “cutting prices in order to increase business often is the very essence of competition . . .[;] mistaken inferences . . . are especially costly, because they chill the very conduct the antitrust laws are designed to protect.” Cargill, supra, at 122, n. 17 (quoting Matsushita, supra, at 594). It would be ironic indeed if the standards for predatory pricing liability [509 U.S. 209, 227] were so low that antitrust suits themselves became a tool for keeping prices high. “

  2. I must be missing something.

    Isn’t the fact that the DOJ cleared Amazon of predatory pricing a really big problem? Simply disagreeing with the DOJ’s finding doesn’t invalidate it.

    Based on the prevailing evidence at the time the price fixing occurred, isn’t this a slam dunk?

    • David Thomas

      “Isn’t the fact that the DOJ cleared Amazon of predatory pricing a really big problem? ” — I don’t think DOJ cleared Amazon, they studied the issue and have not released any findings. That’s part of Kohn’s complaint as I understand it.

      “Simply disagreeing with the DOJ’s finding doesn’t invalidate it.” —- Kohn is challenging the legal reasoning of DOJ. There is no summary judgement by either Kohn or the DOJ – that only comes from the court. There is validity for anyone to disagree with the DOJ’s case.

      “Based on the prevailing evidence at the time the price fixing occurred, isn’t this a slam dunk?” —- Hmm? That “prevailling” evidence would be what, exactly? That prices on some e-books changed? What happened was that six publishers enacted a realistic sales policy toward a new format that assumed ownership of the product, a product dependent on a machine to be able to use, in anticipation of the release of a new machine coming on the market. The policy insured that owner/vendors of the machines could not dictate to the owners of the content what the price of that product should be. The DOJ case is not about the legality of the pricing, but on how the six employed the policy. Kohn’s brief says DOJ’s whole case is predicated on skipping over key legal precedents and misinterpreting their own role. Not a slam dunk in either direction.