Apple Ebook Price Fixing Trial Starts Monday, Steve Jobs to be Star Witness for Government

Posted on June 2, 2013

The New York Times reports that tomorrow morning, Apple goes to trial to defend itself against the U.S. government's allegations of ebook price fixing between Apple and most of the major U.S. book publishers including Penguin, HarperCollins, Simon & Schuster, Macmillan and Hachette Book Group. All of the book publishers have settled. The case will be heard in front of a judge in U.S. District Court in Manhattan and is expected to last three weeks. It's a bench trial, which means there is no jury. The judge will hear the evidence and decide the case.

The star witness for the U.S. Justice Department is the late Steve Jobs, who left a paper trail a mile wide with emails between him and the major book publishers discussing how to conspire against Amazon.com and and fix the price of ebooks at a higher rate than the $9.99 that Amazon.com was charging at the time. The government will also use Jobs' words to his official biographer Walter Isaacson to make its case.

The Times quotes an email from Jobs to James Murdoch of News Corp., which owns HarperCollins, in which Jobs says that the new iPad would sell more units in a few weeks than the total number of Kindles Amazon had sold to date. He then urges Murdoch, "Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99." And that's just one of the emails Jobs wrote.

Apple CEO Tim Cook says he will not settle because Apple is being asked to say Apple did something wrong, and it did not. But Judge Denise Cote seems inclined to disagree with Cook. In a preliminary hearing in May Judge Cote stated, "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."

This is not a good sign for Apple. After a trial judge makes a comment like that, most trial attorneys would call the other side and talk settlement. But Cook says that is not going to happen.