The DOJ accused Apple of colluding with several major publishers to fix the prices of electronic books in its iBookstore.
The evidence was strong enough that three of the five book publishers settled before the DOJ filed the suit. Two, Macmillan and the Pearson PLC (NYSE ADR: PSO) Penguin Group, decided to fight the charges along with Apple.
The antitrust case itself poses little threat to Apple. With $100 billion in the bank, it can afford to fight government lawyers until doomsday.
Even losing the case wouldn't make much of a dent in Apple's pocketbook. The three publishers that settled paid a combined $51 million, hardly a concern to a company that earns an average of $120 million every day in profits.
Likewise, a remedy that forces Apple to lower prices for e-books in its iBookstore would have almost no impact on earnings. Nearly all of Apple's profits come from sales of high-margin hardware like the iPhone and iPad. Profits from all iTunes Store segments, which include the far more voluminous sales of apps and music, account for less than 4% of Apple's profits.
And yet this antitrust suit poses the biggest threat Apple has faced in years, as former tech kings Microsoft Corp. (NASDAQ: MSFT) and International Business Machines Corp. (NYSE: IBM) can attest.
"This echoes back to the peak in Microsoft," Sean Udall, author of Minyanville's TechStrat Report, said in a Yahoo! Finance interview. "Microsoft had a monopoly and was doing great and was the star tech stock of yesteryear. And you can almost draw the peak of their stock when they had major DOJ issues."
The problem with being in the DOJ's gunsight is that it distracts management, makes the company hesitant to innovate, and blemishes the company's public image.
While antitrust woes may not have been entirely responsible for Microsoft and IBM ceding their dominant positions in tech, they were clearly a major factor.
And worse for Apple, the e-book case could be just the beginning.