Apple 2.0

Covering the business that Steve Jobs built

Why the market shrugged off the Apple antitrust suit

April 11, 2012: 11:20 AM ET

Shares opened higher, despite news the company may have stepped in legal quicksand

Having Justice Department lawyers around, veteran tech watcher Dana Blankenhorn reminds us in a Seeking Alpha post this morning, "is bad for any company. Especially antitrust lawyers. Especially tech companies."

"Every tech company the Justice Department has ever gone after -- IBM (IBM), the former AT&T (T), and (most especially) Microsoft (MSFT) can attest to this fact. All were transformed and grievously damaged by their antitrust cases."

So why didn't Apple's (AAPL) share price take a huge hit after news broke that the DOJ's antitrust division had sued the company and five publishers for alleged collusion in the e-book business? (See DOJ sues Apple over price-fixing scheme.)

Three reasons:

  • It was hardly a surprise. Someone close to the case has been shopping details of the investigation to Bloomberg, Reuters and the Wall Street Journal for weeks
  • There's still a chance for a settlement. Three of the publishers are reported to have already cut a deal. Apple and the other two -- despite their tough talk during negotiations -- could still climb on board.
  • It's not Apple's main business. The $2.03 billion in "Other music related products and services" -- which includes revenue from the iTunes Store, the App Store, and iBookstore in addition to sales of iPod services and Apple branded and third-party iPod accessories -- represented 4.4% of the $46.333 billion in sales Apple reported last quarter.

UPDATE: As it happens, Apple's share price did show some ill effects Wednesday, closing down $2.24 (0.36%) on a day that the NASDAQ closed up 0.84%. But it could have been much worse.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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