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Recent developments in the e-books case against Apple reveal damaging information. The government released an email conversation between Steve Jobs and James Murdoch. In this conversation, Jobs is seen as pushing Murdoch to accept Apple’s price-fixing scheme. Murdoch repeatedly tries to resist and point out fallacies in Jobs’ contentions. These emails shed new light on the scope of this scandal. The Justice Department contends that Steve Jobs was the ringleader, playing hardball with the publishers to fix e-book prices.
The question remains as to whether this action is illegal. The emails only depict Jobs pitching different pricing models to a publisher.
This is actually good news for Tim Cook and Apple. Perhaps Jobs was more reckless as he approached his demise. He didn’t get someone else to do his dirty work. There is no mention of Tim Cook in the emails.
Eddie Cue may be in the hot seat. As the senior vice president in charge of e-books, it appears there is some solid evidence that he coerced Random House into accepting Apple’s e-book pricing model, by threatening to withhold app approval. In an email from Cue to Jobs, he mentions that Random House accepted Apple’s pricing structure due to “…the fact that I prevented an app from Random House from going live in the app store”.
The released emails clearly show Jobs trying to convince Murdoch that unless HarperCollins raises the price of e-books, publishers and authors will suffer. At one point, Steve Jobs even suggests that HarperCollins withhold sales of e-books to Amazon in order to encourage piracy.
Jobs presented three options to Murdoch. The first was to cooperate with Apple. The second was to do business with Amazon and experience shrinking profits. The third option was to not sell e-books to Amazon, so people would pirate them:
“Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.”
Although this seems awful, and it is, this is not the alleged illegal act. It is perfectly legal for a company to withhold sale of a product to a retailer, even if encouraged by another company. As creepy as it may sound, this is the harsh reality of corporate America. These situations are not unique to Apple. For example, professional hair care products are only sold at salons. The companies refuse to sell these high-end products to drug stores, supermarkets, and mega-stores.
The illegality is in colluding with an entire industry to force price-fixing. HarperCollins was holding out on collusion. Murdoch wanted to control prices and sales. He responded to Jobs: (continue…)