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E-Books Trial: Apple Responds

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Apple's response in e-books trial

The upcoming e-books trial is starting to sound like the “trash talk” before a professional wrestling match. The Justice Department recently released email correspondence between Steve Jobs and James Murdoch. Although it does not definitively show coercion, the emails defame Steve Jobs. Apple recently released pre-trial documents, responding to the Justice Department’s statements and release of these emails.

Apple’s lawyers contend that the Justice Department edited the emails to fit their case. The e-books industry was already shifting to an agency pricing model before Apple was involved. Their lawyers contend that Jobs simply “…proposed an alternative business model to HarperCollins” and that “…Apple has no power to predict or influence other retailers.”

The emails between Jobs and Murdoch are damning only to those uninitiated to the realities of corporate America. Steve Jobs does what any CEO would do — try to make his corporation more profitable. Indeed, the emails depict the former Apple CEO presenting Murdoch with strategic options. There is a viscera of heavy-handedness, but no overt coercion. This is business as usual in corporate America. Amazon was selling books below cost to keep other players out of the market and sell Kindles. They too were taking the rational course of action.

The crux of the email issue is whether it is illegal for one company to persuade another to pursue a given strategy. Within the emails, the Justice Department has no smoking gun that demonstrates coercion. The Justice Department has the burden of proof. They must demonstrate that Apple orchestrated price-fixing. Jobs’ emails constantly use indeterminate pricing as an example — $12.99 or $14.99 as a maximum price.

The focal point of this trial may revolve around Random House. The Justice Department has evidence that Apple threatened to block the Random House app from the App Store unless they agreed to this pricing model. Eddie Cue, the Apple senior VP in charge of e-books, mentioned in an email to Jobs that Random House agreed to Apple’s e-book strategy due to “…the fact that I prevented an app from Random House from going live in the app store”. This puts the spotlight on Cue and demonstrates that Jobs did not initiate withholding app approval. Indeed, Eddie Cue may be implicated in this matter. It is unclear whether this was illegal or just hardball business tactics. Apple can reject apps for just about any reason, just like any retailer can reject merchandise. It is their marketplace. (continue…)

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