Quoted: Judge rules against Apple in e-books price-fixing 'scheme'

“While many of the trial’s fact witnesses who are employed by Apple and the Publisher Defendants were less than forthcoming, the contemporaneous documentary record was replete with admissions about their scheme. ”

U.S. District Judge Denise Cote in Manhattan, in a 160-page decision released today. She ruled that Apple and publishers conspired to raise prices of e-books, saying that the Silicon Valley tech giant and five book publishers — which have settled charges against them — worked together to compete against Amazon. She said a trial on damages will follow.

Cote said documents showed that the publishers (Hachette, HarperCollins, Simon & Schuster, Macmillan and the Penguin Group) were all unhappy that Amazon, in its dominance of the e-book industry in 2009, had basically instituted a $9.99 price for e-books. By switching to the agency model Apple advocated — publishers set their own prices and Apple takes a 30 percent cut — the publishers saw a more lucrative future. According to the ruling, evidence showed that Penguin executives told authors “who knows, it is $14.99 this year, but in a few years it may be $16.99 or $19.99.”

The high-profile witness at the non-jury trial that ended last month was Apple executive Eddy Cue. As Pat May wrote for SiliconBeat recently, Cue testified that then-Apple CEO Steve Jobs gave him the go-ahead to pursue the e-books market. Cue was under pressure to negotiate with publishers and ensure that the iBookstore would launch along with the iPad.

In her ruling, Cote wrote: “Cue had more personal reasons for making the iBookstore a reality in record-breaking time. Cue knew that Jobs was seriously ill and that this would be one of his last opportunities to bring to life one of Jobs’s visions and to demonstrate his devotion to the man who had given him the opportunity to help transform American culture.” Jobs died in 2011.

 

Eddy Cue, Apple senior VP, at the Yerba Buena Center for the Arts in San Francisco in 2012. (Gary Reyes/Mercury News)

Levi Sumagaysay Levi Sumagaysay (4116 Posts)

Levi Sumagaysay is editor of the combined SiliconBeat and Good Morning Silicon Valley. She also helps take care of SiliconValley.com, the Mercury News tech website. Email: lsumagaysay@bayareanewsgroup.com