Apple fights to dismiss evidence in ebook price fixing row
Apple is battling to limit the torrent of emails which could be used as evidence in its price fixing trial today, as dozens of damning messages painted a picture of a coordinated attempt to force the prices of ebooks upwards.
The US Department of Justice accused the technology giant of "knowingly and intentionally" corralling publishers to raise the price of ebooks from the $9.99 Amazon had established as standard, and to force Amazon to follow suit by withholding key titles if it refused to comply.
The government agency cited scores of emails and handwritten memos from Apple and five different publishers - Hachette, Harper Collins, Penguin, Simon & Schuster and Macmillan - in which they spoke openly about a plan to push prices up to $12.99 or $14.99 across the entire industry.
As proceedings got under way yesterday in room 15b of the austere Manhattan court, Apple lawyers fought to be able to disregard that evidence, unless the Department of Justice was willing to nominate a ﾓsponsorﾔ for each message used, who was willing to be cross-examined.
Apple could not be tried on a "document dump" including messages from Steve Jobs, Apple's founder who died in 2011, the company argued.
It has a battle on its hands. All five publishers settled with the Department of Justice before the case went to trial, leaving the determined technology giant to fight it out with the government agency alone. The DoJ is known for its success rate in convicting its opponents, and only pursuing cases it thinks it can win.
US District Judge Denise Cote, who is presiding over the case at a Federal Court in New York, indicated before the trial even started that the evidence weighed heavily against Apple.
"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 said last month.
Apple claims the allegations are "simply not true". "Let me clear, Apple is going to trial because Apple did nothing wrong," its lawyer, Orin Snyder said.
Instead, he argued, the technology giant ratcheted up competition and drove down the cost of ebooks, ereaders and tablets across the board. Mr Snyder accused the government of using emails selectively, whilst ignoring the fact that "every single indicator of market health improved after Apple entered the market."
The US Department of Justice claimed that the iPad and iPhone maker wanted to enter the ebook market without getting involved in price wars, and used industry-wide concern over the low prices Amazon was charging to bring publishers onside.
Publishers typically price ebooks 20pc lower than they do print copies, and charge retailers half of the cover price. By selling books that cost $25 a copy in print for $9.99, Amazon was only just about breaking even.
Publishers still made their money, but they worried that the low price undervalued their output and would help Amazon establish such a stranglehold on the market that it would be able to force prices even lower in the future.
By contrast, Apple signed publishers up to the so-called agency model of charging, whereby book publishers were allowed to dictate the price of ebooks as long as it handed Apple a 30pc margin and guaranteed that no other retailer would be allowed to sell the books for less.
The Cupertino behemoth was not concerned with the methods publishers would use to force Amazon's hand, the DoJ claimed. However, on one occasion it suggested that book publishers used the threat of "windowing", so that Amazon's rivals would get a head start on selling highly anticipated titles.
According to the DoJ, Eddy Cue, senior vice president of internet software and services at Apple, was "the chief ringleader" of the conspiracy, who held meetings with the chief executives of the five publishers and got them to sign up to the agency model of pricing within 72-hours of each other.
According to memos and emails revealed in court, the chief executives of the publishers compared notes and addressed the issue at meetings in the private room of a restaurant in New York.
They were remarkably open about their plan to get the whole industry on board Apple's pricing scheme, although David Young, chief executive of Hachette, appeared to acknowledge that the alleged conspiracy could get them into trouble.
On one occasion, he asked his colleague to "double delete" an email.
The case continues.