Apple monitor under fire for $2.6M bill, “roving inquisition”

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The lawyer overseeing an Apple antitrust order is a political hack who has run roughshod over the judicial process during ten visits to the company’s Cupertino headquarters, a Wall Street Journal editorial charged Tuesday, and he should pay back the $2.65 million he has already charged the company for a court-ordered investigation

The page-long editorial (paywall) makes a case against Michael Bromwich, who was appointed by U.S. District Judge Denise Cote in 2013 to oversee issues related to her ruling that found Apple fixed the price of ebooks.

While the Journal has gone after Bromwich before, Tuesday’s editorial is especially provocative, and is paired with a separate article that excerpts parts of a transcript from a recent appeals court hearing. Here is some of what the Journal, which appears to smell blood in the water, had to say:

Mr. Bromwich has since charged Apple in excess of $2.65 million for his services through January, conducted some 80 interviews with executives and staff, and made 10 fact-finding missions to California. According to billing records and his semiannual reports to Judge Cote, which we reviewed, there are new reasons for the Second Circuit to sack Mr. Bromwich and end what is a major abuse even by the standards of modern antitrust.

The editorial goes on to repeat criticism that Bromwich, who is billing $1,100/hour, has no background in antitrust law, and that he is a friend of the judge. It also claims he has exceeded his authority, and conflated the role of the prosecution and the judiciary:

The problem is that Mr. Bromwich has been stumbling all around Cupertino to conduct a roving, unfettered inquisition into Apple’s business … He even probes units such as Siri voice recognition, the maps group and hardware engineering. None of this is relevant to antitrust.

As for Mr. Bromwich’s narrow ‘defined mission,’ he finds that the live or online antitrust training sessions that are mandatory for 5,000 employees are insufficient because they do not ‘acknowledge, dissect, and discuss past cases in which Apple was involved.’ Apparently he wants these seminars to be encounter groups in which Apple workers come to terms with misdeeds they vigorously deny.

You get the idea. While the Journal has vented about Bromwich before, the new editorial’s tone — and its assessment of an appeals court hearing in December — suggests Apple might just succeed in rolling back parts of Judge Cote’s landmark 2013 ruling. That’s because the new details of Bromwich’s activities (some of which were redacted until) may sway the appeals court judges, who have already appeared more sympathetic to Apple than Judge Cote, that this may be an investigation run amok.

Apple has already agreed to a $450 million settlement with the Justice Department and class action lawyers over claims it headed a price-fixing conspiracy, but the deal is contingent on the Second Circuit of Appeals’ review of the original 2013 decision. In addition to that case, which is still pending, the appeals court is also taking up the question of the Bromwich’s conduct in March.

Critics, including me, have argued that the Justice Department’s antitrust campaign against Apple has been misguided given that the company remains a bit player in a market dominated by Amazon. Now, the Journal‘s latest salvo (whose appearance may have been fostered by Apple’s lawyers) and the upcoming hearing, will but the long-running affair under yet more scrutiny. Here, by the way, is how the Journal thinks the whole thing should end:

If Apple prevails in the Second Circuit, it ought to sue Mr. Bromwich and attempt to disgorge the $2.65 million he has soaked from shareholders.

7 Comments

desdizzy

Friends of Amazon seem to have weighted in against Apple & WSJ. But How about some facts? The Appeals court judges seem to have already noted, with some irony, that Apple, as a new entrant, comes up against a monopolist, in Amazon, and gets sued by the DOJ!

Bob Dinitto

Apple tried to fix e-book prices. They’re the villain in this drama, not the victim. I’m unsympathetic.

Sic Transit

Apple attempted to offer a marketplace where publishers could sell books at a price that actually made a profit. This gave publishers [those being the guys who *pay authors*] leverage to argue against the rock-bottom price gauging of Amazon, who had close to 100% of the market.

Amazon asked the DoJ to investigate to save their own business practices. The DoJ cheerfully obliged. Amazon more or less regained their monopoly.

Irrelevant of whether you like Apple, there’s one very clear winner here. And it sure as hell ain’t people who actually write books.

Chris Meadows

Let’s not forget who owns the WSJ.

Rupert Murdoch’s News Corp, which also owns Big Five publisher HarperCollins.

The elder Murdoch and his son James figured prominently in the price-fixing affair, their names coming up repeatedly in Judge Cote’s opinion.

Gee, do you suppose the WSJ has a dog in this hunt?

mike

I’d just add that the WSJ is a news source which comes up often with ‘leaks’ about Apple information on upcoming products and such.
Just in case anyone can’t read between the line there, I’m saying Apple clearly has a cozy relationship with WSJ and uses them to put out information from its marketing dept without attribution to the marketing dept. A crucial part of the Apple hype machine and a favorite tactic to attempt to minimize competitors time in news cycles.

Sic Transit

All true.
Which doesn’t change the fact that Bromwich has grossly exceeded his investigational remit and authority. Or that he is singularly unqualified to be carrying out the investigation anyway, for which he is so inept he has to hire another lawyer to explain it to him.

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