The United States Department of Justice’s antitrust lawsuit filed yesterday against Apple and five major book publishers for allegedly colluding and price-fixing e-books is still reverbing throughout the tech industry — after all, pretty much anything having to do with Apple these days is going to attract attention, and a major antitrust lawsuit is never something to be taken lightly. However, since the majority of participants named in the suit are in book publishing, this is obviously not a tech-only story. And beyond the well-reported details around what brought the lawsuit on and what the allegations exactly are, it’s still a bit unclear what this all means for the technology industry at large.
So it was great to have Gary Reback join us on TechCrunch TV to provide some larger perspective on the situation. An alum of Yale (where he worked as a computer programmer to help pay his undergraduate tuition bills) and Stanford Law, Reback has spent the past three decades working as an attorney specializing in all things antitrust — perhaps most famously by helping to lead the United States’ case against Microsoft in the 1990s. These days, Reback is still in the litigation game as a lawyer of counsel at Silicon Valley law firm Carr & Farrell, spearheads the Open Book Alliance aimed at keeping book digitization open to companies other than Google, and authors books such as 2009’s Free The Market!. In short, when it comes to technology, antitrust law, and publishing — basically everything having to do with the DOJ/Apple case du jour — Reback really knows his stuff.
You can watch our interview in full in the video embedded above. Here are some of Reback’s points:
This Won’t Take The Shine Off Of Apple
Even though this is likely just the start of a long and drawn-out legal battle, Reback said that Apple itself will likely make it through the case just fine. “I don’t think that what happens here will have a material affect on Apple or its business,” Reback said. “Apple, after all, is doing quite well and it can afford to deal with this lawsuit.” The book publishers, on the other hand, have been in a precarious financial situation for years already, he said. They will probably be the ones most heavily impacted by this case when it’s all said and done.
A Wake-Up Call For Google’s Old-School Ad Rivals
According to Reback, the biggest takeaway from the Apple e-book lawsuit is that companies in older industries need to be very careful in how they choose to fight back against their new tech-powered competitors. “This lawsuit does show how computer technology and digitization is moving through the rest of the economy. And specifically, it raises the question of how the players in the older sectors of the economy are going to respond to the changes with technology,” he said.
In particular, this case should make New York advertising houses think twice about how they deal with Google’s current domination in online ads. “The big New York publishers can now see what happens if they don’t act the right way,” Reback said. “The big book publishers were afraid of Amazon, and according to our government they did exactly the wrong thing. They not only got their business trashed, but they ended up being the subject of a government lawsuit against conspiracy. My prediction from this particular lawsuit is that it will serve as a wakeup call to the New York advertisers and ad agencies, and they’ll get more involved and more public with respect to the FTC investigation with Google.”
That means that instead or taking the situation completely in their own hands like the book publishers did here, smart advertisers may decide to work with the government. “The advertisers fear Google much as the book publishers fear Amazon,” Reback said. “Right now the advertisers have the opportunity to be on the government’s side as they move against Google.”
The Government Is Flexing Its Muscles In Silicon Valley
Although it’s often popular opinion in Silicon Valley that the government lags behind the fast-moving tech industry, the authorities are very focused at the moment at proving that stereotype wrong. “The Department of Justice has taken it upon itself to get more on top of things” in the technology industry, Reback said, noting that the the DOJ’s leaders have made it very clear recently that they are “not afraid to litigate against big companies, and will be litigating more in the future.”