At least three publishers confided with one another about their plans, Lawrence Buterman, a Justice Department lawyer, said on the opening day of the government’s antitrust case against Apple, being argued in United States District Court for the Southern District of New York in Manhattan. Government lawyers presented a timeline that included not only the records of the phone calls but also e-mail transcripts. The government also showed an e-mail with the travel itinerary for Apple’s lawyer, which shows him meeting with publishers in December 2009, and his notes from those meetings.
E-mails from Eddy Cue, Apple’s senior vice president of Internet software and services, were part of the publishers’ discussions, suggesting that he assured each of them that they were part of a collective effort to destroy Amazon’s model of selling e-books for a uniform $9.99, the government said.
All this adds up to proof that Apple led an elaborate scheme to fix prices of e-books, they said. “The publishers needed a facilitator and a go-between,” Mr. Buterman said, “a company large enough to give the publishers the confidence that their conspiracy would prove successful. And that company was Apple.”
In the case, brought a year ago, the Justice Department accused Apple and five book publishers of working together in the six weeks before Apple’s deadline of Jan. 21, 2010, to raise the average price of an e-book. The government casts Apple as the “ringmaster” in the conspiracy, arguing that it presented the publishers with the opportunity to sell books at higher prices — from $12.99 to $14.99 — putting pressure on Amazon, which had been selling new e-books for $9.99, to raise its prices.
Simon Schuster, HarperCollins and the Hachette Book Group settled the day that charges were filed; Penguin and Macmillan settled months later.
Apple insists it has done nothing wrong. Its lawyer, Orin Snyder, a partner at Gibson, Dunn Crutcher, said Monday that the government had no direct evidence that a conspiracy took place. He said that government lawyers had taken quotes out of context and completely ignored the details of Apple’s negotiations with the publishers to create a “chain of inferences” that is “tortured and multifaceted.”
In its opening statement, the government brought up comments that Steven P. Jobs made to a reporter after he introduced the iPad and the iBookstore in January 2010. When asked why consumers would purchase an e-book from Apple’s store instead of Amazon.com, where e-books were $9.99, Mr. Jobs replied, “The prices will be the same.”
Mr. Buterman noted an e-mail exchange between Simon Schuster executives talking about Mr. Jobs’s comment. “I can’t believe that Jobs made the statement below. Incredibly stupid,” wrote Elisa Rivlin, Simon Schuster’s general counsel at the time. Mr. Buterman said this remark showed that Simon Schuster felt Apple had given away that they had all been working to fix e-book prices.
But Mr. Snyder, in arguing for Apple, said the e-mail conversations show that the company had to negotiate aggressively to persuade publishers to adopt a different business model known as agency pricing, which allowed the publishers to set their own prices for e-books, giving Apple a 30 percent commission for books sold in its online store.
Mr. Snyder brought up an e-mail exchange between Mr. Jobs and James Murdoch, an executive of News Corporation, the owner of Harper Collins, which the Justice Department was presenting as evidence. Mr. Jobs had written, “Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.” But other parts of that e-mail showed that Mr. Jobs was unsure of whether the $12.99 price would succeed.
Article source: http://www.nytimes.com/2013/06/04/technology/us-cites-book-publishers-phone-calls-in-apple-price-fixing-case.html?partner=rss&emc=rss