Apple dodges antitrust bullet

A California judge has granted Apple's motion to dismiss Psystar's counterclaims that the company violated antitrust laws by blocking third-parties from selling Mac OS-based systems.

A California judge has granted Apple's motion to dismiss Psystar's counterclaims that the company violated antitrust laws by blocking third-parties from selling Mac OS-based systems.

After Apple sued Psystar for selling Mac-clone systems, Psystar later filed a counterclaim which charged Apple with violating federal and state antitrust laws. However, today Judge William Alsup dismissed Psystar's claims and granted Apple's motion to have the counterclaim dismissed unless Psystar can come up with an amended complaint by December 8th.

Some key points from the order:

  • Whether products are part of the same or different markets under antitrust law depends on whether consumers view those products as reasonable substitutes for each other and would switch among them in response to changes in relative prices.
  • The counterclaim admits that market studies indicate that, although Apple computers with Mac OS enjoy strong brand recognition and loyalty, they are not wholly lacking in competition  [n]otwithstanding the consistent upward differentiation in price across a broad spectrum . . . by and between a Computer Hardware System without a Mac OS and a Apple-Labeled Computer Hardware System with the Mac OS, studies by Satmetrix Systems found that Apple is known for its “market performance and brand leadership” and that APPLE “far outranks its closest competitor.” Psystar fails to explain why these “competitor[s]” should be excluded from the definition of the relevant market.
  • Psystar also points to Apple’s extensive advertising campaigns.  Those advertising campaigns more plausibly support an inference contrary to that asserted in the counterclaim — vigorous advertising is a sign of competition, not a lack thereof.  If Mac OS simply had no reasonable substitute, Apple’s vigorous advertising would be wasted money.  The advertising campaigns suggest a need to enhance brand recognition and lure consumers from a competitor. The “brand leadership” and brand loyalty Psystar alleges, if true, suggest that Apple’s efforts have borne fruit.

Full order here (PDF).