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Exhuming Steve Jobs for Antitrust Persecution

“If Steve Jobs were alive today, should he be in jail?”

That’s the astonishing opener of a New York Times article attacking Jobs’s reputation posthumously. A reader could conclude that, had not Jobs died prematurely in 2011, he could — and should — have been incarcerated for violating America’s antitrust laws.

Granted that Apple violated antitrust laws at Jobs’s behest, does that reflect badly on him or on antitrust law? Let’s look at the two cases mentioned in the article.

The first case involved electronic books. In 2010, Jobs was anxious to promote the brand new iPad as a reading device. Apple discovered that the nation’s largest publishers were dissatisfied with how Amazon.com was retailing their ebooks. Amazon was pricing them at or below wholesale, the better to promote sales of its proprietary Kindle ebook reader.

Apple then offered the publishers a more attractive retailing model. Instead of letting Amazon set the retail price, publishers would set prices for their own ebooks and pay a commission to retailers like Apple and Amazon.

The publishers jumped at the plan Apple offered. But a federal court found that this made Apple the “ringleader” of a “conspiracy” to “fix prices.” Had he lived, Jobs could have gone to jail as a price fixer. But was he really a wrongdoer?

I say no. “Price-fixing” is just a pejorative term for price setting. The owner of goods (such as ebooks) has a property right that includes setting all terms for trade. Jobs and the publishers simply set the prices for their own goods and services.
Nobody was coerced into offering the same terms. Every company retained its full property rights. In a free economy, all of this would be legal, and an innovator like Jobs would not have to fear a jail sentence.

The second case involved employee recruiting. Apple, along with several other Silicon Valley powerhouses, agreed among themselves not to “poach” on each other’s technical staff by “cold calling” them to offer jobs. (The agreements didn’t apply when employees chose to seek employment elsewhere.) Steve Jobs was personally involved in maintaining these agreements over several years.

In a class action for “restraint of trade” involving some 64,000 employees, Apple and the other defendants were exposed to a threat of treble damages that could have totaled $9 billion. So they chose to settle out of court for around $344 million. Does any of this mean Jobs was a wrongdoer?

I say no. In this context, “restraint of trade” is just a pejorative term for “deciding whether and when to trade.” Each company has a right to decide when and how to recruit employees. It’s entirely within a company’s rights to decide that avoiding turnover is more desirable than acquiring new talent by “poaching.” In a free economy, such agreements would be entirely legal, and executives like Jobs would not have to fear antitrust prosecution.

As one antitrust expert said in the Times article, Steve Jobs was a “walking antitrust violation.” But do you want to live in a world where a future Steve Jobs can be branded a criminal and sent to jail? If not, then we need to start debating antitrust’s legitimacy.