Why the market shrugged off the Apple antitrust suit
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.)
- 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.