Apple has vehemently denied conspiring with publishing industry heavyweights to artificially inflate ebook pricing, countering Department of Justice claims that Steve Jobs attempted price fixing with the argument that Apple and the rights holders were in fact strongly opposed throughout negotiations. Apple, representatives from which appeared in a New York court on Monday this week as the latest phase of the ebook price fix case kicks off, argued that the DoJ’s assertion that Steve Jobs and the five big publishing houses were working together to force ebook prices up from the $9.99 Amazon had been commonly charging, to the $12.99-14.99 of the agency model, was patently false, and that the former-CEO’s emails with publisher counterparts were being taken out of context.
The case began with opening statements from the DoJ’s legal team and then Apple’s team. As the DoJ portrayed it, Apple took on the role of “facilitator and go-between” and shuttled between the publishers, the leadership of which was marked with “weak-kneed CEOs.” The goal, the DoJ’s attorney Lawrence Buterman claimed, was to “move the whole market off of $9.99” – the price which Amazon had previously gravitated toward with Kindle ebook sales, and a figure the publishing industry felt devalued its wares in comparison to hardbacks.
Such a shift into more expensive territory suited Apple, Buterman pointed out, because it would give the company’s new iBookstore on the iPad more profits. The result was a forced push to the so-called agency model, where publishers set the retail price rather than retailers themselves, with Apple supposedly “a conduit” passing information – including talk from negotiations between publishers and Amazon, it’s claimed – between the content owners so that a unified front could be presented.
Unsurprisingly, Apple didn’t agree. In a three hour long opening statement, attorney Orin Snyder redressed Jobs’ emails to publishers as the exploration of a new industry, not an attempt to manipulate it; Apple, Snyder pointed out, “simply was not willing to start a new business that would lose money,” as he argued it would do had it followed Amazon’s $9.99 lead.
In fact, Snyder suggested, the Cupertino firm should be praised not accused of misbehavior. “Apple should be applauded and not condemned for its beneficial impact on the ebook market” he said, firing back that “what the government wants to do is reverse engineer a conspiracy from a market effect.”
Far from being a dangerous conspiracy, Snyder suggested, the relationship between Apple and the publishers was in fact “contentious and hard-fought” and led, in some cases, to “knock-down, drag-out fights.” As for the most-favored nation (MFN) clause Apple negotiated – which guaranteed it the best deals with the publishers – Snyder pointed out that Apple wouldn’t have required it if it already knew the nature of the deals being agreed with other retailers.
However, attempts by Apple’s lawyers to pick at Justice Cote’s earlier stated “tentative view” about the potential outcome of the case fell flat. “My view was a tentative view,” Cote told Apple attorney Orin Snyder. “The deck is not stacked against Apple unless the evidence stacks the deck against Apple.”
While the publishing houses have each folded and inked deals with the DoJ – albeit not admitting any fault – Apple looks unlikely to let the case slide. CEO Tim Cook described the case as “bizarre” last week, saying that Apple planned to take “a very principled position on this.” Whereas the content owners may have conceded, Apple was “not going to sign something that says we did something we didn’t do. And so we’re going to fight” Cook concluded.