If Apple is scared of the U.S. Department of Justice, it sure isn’t showing it.
On Monday, in the opening rounds of the federal government’s antitrust e-book case against Apple, company attorney Orrin Snyder called the Justice Department’s claim against the company a “bizarre” case based on a “sinister inference,” based on shaky evidence. During opening remarks that AllThingsD called “aggressive” and “withering,” Snyder argued that federal prosecutors essentially fabricated a case against Apple out of select, decontextualized quotes and not much else.
The government claims that Apple fixed e-book pricing in cahoots with five major publishing houses: HarperCollins, Hatchett, Macmillan, Penguin and Simon & Schuster. Though all five publishers have already settled with the government, Apple CEO Tim Cook vowed earlier this week to fight what he also deemed a “bizarre” case.
But Snyder, Cook, and company faced an uphill climb even before the trial started. Presiding U.S. District Judge Denise L. Cote has already predicted a victory for the feds. “I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that,” she wrote in a pretrial opinion.
‘The Prices Will Be the Same’
The feds’ case claims that Apple, led by then-CEO Steve Jobs and senior vice president of Internet Software and Services Eddy Cue, conspired with publishers to drive e-book prices up from the $9.99 price point Amazon had established. In other words, Apple wanted to take pricing control away from retailers and give it back to publishers – to the benefit of Apple’s own newly launched iBooks store.
An email exchange between Jobs and News Corp.’s James Murdoch has become central to the case. News Corp. is the parent company of HarperCollins, one of the publishers who settled with the DoJ last year, and in Jobs is quoted in the email suggesting that HarperCollins “[t]hrow 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.”
(See also: The DoJ’s e-Book Attack Solves Nothing)
Jobs also made comments in a June 2010 Wall Street Journal interview that, to the feds, prove that Apple wanted to leverage publishers against Amazon in order to raise e-book prices. From this AllThingsD video of Jobs speaking with Walt Mossberg just after the first iPad launch:
Walt: “Why should she buy a book for $14.99 on your device when she can buy one for $9.99 from Amazon or Barnes & Noble?”
Steve: “That won’t be the case.”
Walt: “You won’t be $14.99 or they won’t be $9.99?”
Steve: “The prices will be the same.”
Elsa Riven, former chief counsel to Simon & Schuster, sent an email the next day to her chief executive, Carolyn Reidy, calling Jobs’s remarks “incredibly stupid.” Reidy is slated to testify this week.
Apple says the case is based entirely on cherry-picked quotes like the above two, framed in a way that “reverse engineers a case” while leaving out scores of relevant context and other conversation amongst the key parties. Snyder said Monday, “What the government is trying to do is reverse engineer a conspiracy from a market effect.”
You can peruse the entirety of the federal case against Apple on the Justice Department website. The trial continues Tuesday in Manhattan District Court, and is expected to last three weeks.
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