FORTUNE -- I haven't had so much fun reading legal documents since the Watergate trials.
I loved U.S. v. Apple et al. for the juicy details: the 56 phone calls, the clandestine meetings in swank Manhattan eateries, the secret e-mails "double erased" to ensure they couldn't be traced.
But what makes Apple's (AAPL) response, filed Tuesday, such a great read is the clarity and precision with which it cuts the government's case to shreds.
At least as it applies to Apple.
In the space of six paragraphs the document characterizes the Justice Department's assertions as "absurd" and "fundamentally flawed," accuses the government of "ignoring inconvenient facts" and of siding with monopoly rather than competition.
The key paragraph:
The Government starts from the false premise that an eBooks "market" was characterized by "robust price competition" prior to Apple's entry. This ignores a simple and incontrovertible fact: before 2010, there was no real competition, there was only Amazon. At the time Apple entered the market, Amazon sold nearly nine out of every ten eBooks, and its power over price and product selection was nearly absolute. Apple's entry spurred tremendous growth in eBook titles, range and variety of offerings, sales, and improved quality of the eBook reading experience. This is evidence of a dynamic, competitive market. These inconvenient facts are ignored in the Complaint. Instead, the Government focuses on increased prices for a handful of titles. The Complaint does not allege that all eBook prices, or even most eBook prices, increased after Apple entered the market.
Apple's filing doesn't try to defend the five publishers the DOJ has accused of colluding to fix prices. In fact, it basically throws them under the bus, pointing out that if there was a price-fixing conspiracy among its co-defendants -- as alleged -- they kept it secret from Apple.
Meanwhile, the government's lawyers are going to have a hard time proving that Apple violated antitrust laws because the company's market share in the e-book business before the launch of the iPad was essentially zero.
They can't make a case against Apple for collusion because whatever the publishers may have said to one another, there's no evidence that Apple conspired with its competitors.
They can't even use as evidence the blunt quotes taken from the Steve Jobs biography because they are hearsay.
The one element of the government's case that seemed to give Apple's lawyers a hard time was the charge that the most-favored-nation provision Steve Jobs added at the last minute was "designed to protect Apple from having to compete on price at all, while still maintaining Apple's 30% margin."
In its response, Apple's legal team can't even bring itself to name the provision, referring to it repeatedly as MFN. But they manage to shoot some holes in the government's argument, pointing out, among other things, that the 30% cut Apple takes is hardly pure profit margin. It costs money to run the iBookstore, and while Apple doesn't claim to lose money on e-book sales, that's not where it gets the big bucks.
You can get the gist of Apple's filing in those first six introductory paragraphs. The rest is an item-by-item refutation of the government's case and a summary of Apple defenses, should it come to that.
The full document is available as a pdf here.
AOL's woes in numbers; Tim Cook goes to Washington; and, the not-so-ignominious end of HP's WebOS.
Meet the tireless entrepreneur who squatted at AOL [CNET]
Unlike most people working at AOL's Palo Alto, Calif., campus who were surely still hours from showing up at the sprawling complex, [Eric] Simons was already there. He'd been living there for two months, hiding out at night on couches, eating the company's food, and exercising and MORE
Fortune Editors - May 25, 2012 12:14 PM ET
Well, sort of. The Warriors move across the bay to San Francisco will be intimately tied-up with the city's technology community.
By Richard Nieva, reporter
FORTUNE -- San Francisco is likely getting a new toy. This week, the NBA's Golden State Warriors announced their intentions to move the Oakland-based team across the bay to San Francisco, complete with plans for a swanky new arena. Yes, the team stressed it would need MORE
May 25, 2012 12:12 PM ET
The company has gotten into scrapes with customers and critics over bandwidth caps. It's backed off for now -- but don't expect that to be the end of the story, not with numbers like these.
FORTUNE -- If it seems as if Comcast has acted arrogantly in addressing widespread complaints that it favors its own video streams on its Internet service over those of its competitors, it could be in part MORE
Dan Mitchell, contributor - May 25, 2012 10:54 AM ETCompanies like Apple, IBM and Microsoft once stood in the shadow of much larger and more powerful Japanese electronics giants. Those days are long gone -- and, lately, it looks like they may never come back.
By Kevin Kelleher, contributor
"This country is in a war and some people understand it and some people are siding with the enemy."
FORTUNE -- Believe it or not, someone once wrote those paranoid words about MORE
May 25, 2012 10:40 AM ET
The company managed, however, to stay off Goldman's list of the funds' favorite shorts
FORTUNE -- Goldman Sachs (GS) on Thursday issued its Q1 2012 Hedge Fund Trend Monitor report, which lists both the 50 stocks most important to hedge funds as well the 50 "Very Important Short Positions For Hedge Funds."
Apple (AAPL) doesn't appear on the second list, but it tops the first:
Stock: Number of funds with stock as top 10 holding.
1. MORE
Philip Elmer-DeWitt - May 25, 2012 10:21 AM ET
Apple CEO Tim Cook has paid his first visit to a place Steve Jobs preferred to avoid: Capitol Hill. Aides say Apple's hot-button issues were not addressed.
By Tory Newmyer, writer
FORTUNE -- Apple CEO Tim Cook got barely any notice when he slipped into the Capitol last Tuesday for a handful of meetings with Congressional leaders. The low-key visit was in keeping with the company's traditional approach to Washington. But MORE
May 25, 2012 8:54 AM ET
One of the company's biggest boosters on Wall Street hasn't lost the faith
FORTUNE -- Borrowing one of the oldest devices in print and online journalism, Piper Jaffray's Gene Munster has boiled his thoughts about Apple (AAPL) into something like a top 10 list.
Munster is on record predicting that the company's share price -- which closed at $565.32 Thursday -- will hit $1,000 within two years. Here are his 10 ideas MORE
Philip Elmer-DeWitt - May 25, 2012 7:39 AM ET
Talk about a sea change. These three business titans are cutting back.
By David A. Kaplan, contributor
FORTUNE -- The oldest adage on the sea is that the two happiest days in a sailor's life are the days he buys his boat and the day he sells it. For three business titans, the days seem to be getting happier.
In 2009, Tom Perkins, the nonpareil venture capitalist of Silicon Valley, sold the MORE
May 25, 2012 5:00 AM ET
Asks the board not to issue dividends on his 1.125 million restricted stock units
FORTUNE -- It's not everybody who can afford to turn down $75 million. But given the attention his bonus package has gotten, it may be that Apple (AAPL) CEO Tim Cook couldn't afford not to.
In an amendment filed with the SEC Friday, the company's compensation committee determined that the $2.65 per share cash dividend scheduled to be paid to MORE
Philip Elmer-DeWitt - May 24, 2012 8:07 PM ETEvery morning, discover the companies, deals and trends in tech that are moving markets and making headlines. SUBSCRIBE
Receive Fortune's newsletter on all the deals that matter, from Wall Street to Sand Hill Road. SUBSCRIBE
Covering the digital giants of Silicon Valley and beyond, an in-depth look at enterprise companies, and the startups disrupting them. Emailed twice weekly. SUBSCRIBE
Anne Fisher answers career-related questions and offers helpful advice for business professionals. SUBSCRIBE
| Company | Price | Change | % Change |
|---|---|---|---|
| Bank of America Corp... | 7.15 | 0.01 | 0.14% |
| Sprint Nextel Corp | 2.62 | 0.09 | 3.56% |
| Cisco Systems Inc | 16.33 | -0.06 | -0.37% |
| Chesapeake Energy Co... | 15.81 | 0.23 | 1.48% |
| Ford Motor Co | 10.60 | 0.01 | 0.09% |
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 12,454.83 | -74.92 | -0.60% |
| Nasdaq | 2,837.53 | -1.85 | -0.07% |
| S&P 500 | 1,317.82 | -2.86 | -0.22% |
| Treasuries | 1.74 | -0.01 | -0.80% |