United States v. Apple: Competition in America

by Chris Sagers

Overview

One of the most-followed antitrust cases of recent times—United States v. Apple—reveals an often-missed truth: what Americans most fear is competition itself.

In 2012 the Department of Justice accused Apple and five book publishers of conspiring to fix ebook prices. The evidence overwhelmingly showed an unadorned price-fixing conspiracy that cost consumers hundreds of millions of dollars. Yet before, during, and after the trial millions of Americans sided with the defendants. Pundits on the left and right condemned the government for its decision to sue, decrying Amazon’s market share, railing against a new high-tech economy, and rallying to defend beloved authors and publishers. For many, Amazon was the one that should have been put on trial. But why? One fact went unrecognized and unreckoned with: in practice, Americans have long been ambivalent about competition.

Chris Sagers, a renowned antitrust expert, meticulously pulls apart the misunderstandings and exaggerations that industries as diverse as mom-and-pop grocers and producers of cast-iron sewer pipes have cited to justify colluding to forestall competition. In each of these cases, antitrust law, a time-honored vehicle to promote competition, is put on the defensive. Herein lies the real insight of United States v. Apple. If we desire competition as a policy, we must make peace with its sometimes rough consequences. As bruising as markets in their ordinary operation often seem, letting market forces play out has almost always benefited the consumer. United States v. Apple shows why supporting cases that protect price competition, even when doing so hurts some of us, is crucial if antitrust law is to protect and maintain markets.

Product Details

ISBN-13:	9780674972216
Publisher:	Harvard University Press
Publication date:	09/17/2019
Pages:	336
Product dimensions:	6.10(w) x 9.40(h) x 1.30(d)

About the Author

Chris Sagers is James A. Thomas Distinguished Professor of Law at Cleveland-Marshall College of Law. He is the author of numerous articles, coauthor of leading casebooks on anti-trust, and is a member of the American Law Institute, a Senior Fellow of the American Antitrust Institute, and a leadership member of the ABA Antitrust Section.

Table of Contents

Introduction: A Case Bigger Than It Seemed 1

Part I Policy as Prologue

1 The Great Generalization 17

2 In the First Ships: Competition as a Concept and Its Special Role in American History 28

3 And Yet, Uncertainty: The Long Shadows of the American Methodenstreit 43

4 Uncertainty of Another Kind: Coping with Capitalism through Association and Self-Help 55

5 Tensions of the Latter Day and Some Unexpected Skepticism 63

6 Competition as a Living Policy, circa 2019 69

Part II The ebooks Case

7 The Old Business of Books 77

8 Bookselling and the Birth of Amazon 97

9 Publishers, Booksellers, and the Oldest Problem in the World 105

10 Price-Fixing in Books 121

11 Content and the Digital Transition in Historical Context 128

12 The Promise and Threat of Electronic Books 140

13 How Electronic Books Came to Be, and What It Would Mean for the Apple Case 150

14 Google Books 164

15 The Kindle 171

16 The eBooks Conspiracy 180

Part III Competition and its Many Regrets

17 The Long Agony of Antitrust 205

18 So Are Books, After All, Special? Is Anything? 213

19 The Virtues of Vertical and Entry for Its Own Sake 220

20 Amazon 228

21 The Threat to Writers and the Threat to Cultural Values 247

22 The Creeping Profusion of Externalities 253

Conclusion: Real Ironies 261

Notes 267

Acknowledgments 315

Index 319

Editorial Reviews

10/14/2019

Cleveland-Marshall College of Law professor Sagers uses the 2012 Apple e-book price-fixing case to explore opposing attitudes toward antitrust policy in his persuasively argued debut. On the facts, the case against Apple wasn’t close, according to Sagers: the evidence “overwhelmingly” established that Apple and five major publishers had conspired to eliminate price competition from the nascent e-book market. But what made the case remarkable, Sagers writes, was the public’s reaction to it. Critics on the left excused the conspiracy as “the last stand” of an embattled publishing industry. Those on the right saw the case as unwarranted government intrusion. And virtually everyone thought that Amazon, the supposed victim of the conspiracy, was the real threat. Through an array of concisely rendered, instructive examples from law and history, Sagers explores the public backlash to the Apple case as a “microcosm” of the broader political and societal dilemmas that have effectively hamstrung modern antitrust enforcement. The lasting lesson of the Apple case, he concludes, is that public support is crucial to good antitrust enforcement, and regaining public favor requires fixing the law’s current shortcomings and enforcing antitrust statutes “for real.” Readers following the recent calls for antitrust action against the tech industry will find this account instructive and timely. (Sept.)

Publishers Weekly

This book couldn’t be timelier. Amid growing calls from legislators and industry leaders to break up the big tech firms and to fire up the nation’s long dormant antitrust engines, Sagers’s richly detailed exploration of the Apple ebooks case, a rather ordinary case on the facts, offers an extraordinary lens on the very nature of competition, and the importance of sound, vigilant antitrust enforcement.

Andrew Richard Albanese

It just blew me away… This is one of the best academic books I’ve read in a long time.

Brian L. Frye

Sagers is a wonderful storyteller. His narrative is both rich in relevant factual information and entertaining stories. The reader will come away from this book with a much deeper understanding of the book industry, the role of antitrust in American society, and the relationship between the two.

Abraham L. Wickelgren

United States v. Apple was not a close call: Apple and five publishers conspired to rig the prices of ebooks, taking money from readers. But many observers seemed to think that Apple, the villain of the story, was somehow the hero—and Amazon, the biggest victim, was secretly the villain. In this masterful book, Chris Sagers convincingly refutes this antitrust revisionism. United States v. Apple is an essential guide to one of the digital economy’s most important cases.

James Grimmelmann

In this enjoyable, timely, and insightful book, Chris Sagers uses the colorful price-fixing case of United States v. Apple to explore the complexities and ironies of antitrust law. By bringing to the surface the cultural implications of antitrust and popular attitudes toward it, Sagers adds a much-needed dimension to the public and academic debate.

Eric A. Posner

At a time when national attention has turned to antitrust law to cure the perceived excesses of the largest and most successful technology firms, Sagers reminds us that there is no gain without pain when it comes to industrial revolutions. A society that does not address this pain through social policies will quickly lose popular support for antitrust laws and competition.

Andrew I. Gavil

There is, I think, great wisdom in Sagers’s decision to look at antitrust history and policy from the perspective of a particular antitrust case that has generated a lot of public discussion…Pulls some interesting and important threads from antitrust history…Not only brilliantly conceived but also well timed, coming at a moment of great uncertainty about the goals of antitrust law.

Washington Lawyer - Don Allen Resnikoff

Chris Sagers has written an instructive and thought-provoking meditation on much more than an important antitrust case about ebooks. Page after page rewards the reader with new insights and important lessons.

Jonathan B. Baker

Sagers takes his readers on a fascinating journey through the history of the book industry… This essay cannot do justice to the in-depth, complex, and captivating narrative strands that Sagers weaves together to take us [to the Apple case]. Indeed, by the time the readers get to the conspiracy itself, Sagers’s rich analysis makes it look like an almost unavoidable result of the longstanding tensions in the relevant industries and in the law.

Guy A. Rub

At a time when national attention has turned to antitrust law to cure the perceived excesses of the largest and most successful technology firms, Sagers reminds us that there is no gain without pain when it comes to industrial revolutions. A society that does not address this pain through social policies will quickly lose popular support for antitrust laws and competition.

co-author of The Microsoft Antitrust Cases: Competition Policy for the Twenty-first Century

07/19/2019

Most people welcome a good bargain. Yet that was not the case with ebooks, according to this analysis of the public reaction to the 2013 federal court ruling against Apple corporation for price fixing. Sagers (law, Cleveland-Marshall Coll. of Law) contends that this view reflected ambivalence toward competition across the political spectrum, disdain for Amazon despite its low pricing, and the failure of antitrust law. The author begins by addressing the theoretical and historical basis underlying the case and the concept of market competition itself. The history of ebook development is then covered, from the "old business of books" to the dynamics of the Apple case. The work concludes with a discussion of antitrust practice and reform, controversy over Amazon, and publishing as a "special case" deserving of protection from the pain of competition owing to its cultural significance. Though the arguments are strong and highly instructive, the author seems to downplay the damage that a large monopoly monopsony such as Amazon could eventually inflict on publishing and the scope of writing itself. VERDICT More of an armchair than a beach read, this authoritative work contains a wealth of information in a readable format. Highly recommended for serious readers interested in hot topics on the economics of publishing.—Antoinette Brinkman, formerly with Southwest Indiana Mental Health Ctr. Lib., Evansville

Library Journal