Steve Jobs' draft email plays pivotal role in antitrust case

The DOJ presents a wealth of documentation, although observers wonder if such evidence is sufficient to prove collusion

By , IDG News Service |  IT Management

An email composed, but never sent, by former Apple CEO Steve Jobs may prove instrumental in the Justice Department's case that Apple, along with the five largest book publishers, colluded to fix prices for electronic books.

In a draft email intended for Apple Senior Vice President Eddy Cue about negotiations with one publisher, Jobs wrote of the potential deal that "I can live with this as long as they move Amazon to the agent model too for new releases for the first year. If they don't, I'm not sure we can be competitive."

For the Justice Department, Jobs' reference to Amazon showed that the company was trying to end retail price competition among electronic book vendors. However, Orin Snyder, an attorney representing Apple in the case, dismissed the significance of the email in court, noting that it was never even sent to Cue.

As the three-week trial has started to wind down, the DOJ has released a copious set of emails and other electronic documentation between Jobs, Cue -- who was in charge of the negotiations with the book publishers -- and a number of publisher executives. Judge Denise Cote for the U.S. Southern District Court of New York is presiding over the non-jury trial.

The DOJ is piecing together the documentation in an attempt to show that Apple and the five largest book publishers colluded to raise the prices of e-books in early 2010. At the time, Amazon was offering best-selling titles for US$9.99, less than what the online retailer paid for these titles. The publishers worried that Amazon, which enjoyed a 90 percent share of the electronic book market in 2009, was lowering the value of books in consumers' eyes, as well as laying plans to cut publishers out of Amazon's book sales altogether, and to deal with authors directly.

In January 2010, the five publishers -- Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster -- all signed contracts with Apple, allowing Apple to sell electronic books in an agency model. Under such an agreement, the publishers would set the prices of electronic books, chosen from a set of pricing tiers Apple formulated. Apple got a fixed 30 percent cut of each sale through its iBookstore, which would debut on the about-to-be-launched iPad.

Immediately after the contracts took effect in April 2010, and publishers moved all their retailers to the agency model, prices of electronic books offered by both Amazon and Barnes & Noble increased by almost 20 percent, the DOJ charged.

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