June 13, 2013: Apple exec Eddy Cue takes the stand to defend the corporate’s iBooks enterprise technique in an antitrust case concerning e-book pricing.
Cue, Apple’s senior vp of web software program and companies, runs the iBooks Retailer initiative. His testimony proves very important to a case introduced by the Division of Justice, wherein potential damages climb effectively into the 9 figures.
Historical past of the iBooks pricing lawsuit
Filed in April 2012, The USA of America v. Apple Inc. antitrust case alleged that Apple conspired with 5 guide publishers to boost and repair the worth of e-books. The publishers included Hachette Ebook Group, HarperCollins, Macmillan Publishers, Penguin and Simon & Schuster. All 5 settled their claims outdoors of court docket — solely Apple went to trial.
The settlement in query got here as a response to Amazon, which managed the overwhelming majority of the e-book trade when it comes to gross sales. Amazon charged $9.99 for a lot of well-liked books as a part of its objective to change into a market chief with its Kindle e-book reader.
iPad: A savior for guide publishers?
Amazon’s technique upset guide publishers, who frightened that the low pricing ate away at their revenue margins. When Apple launched the iPad in 2010, the publishing homes noticed a possibility to claw again some misplaced floor. This was evidently Apple’s technique as effectively. When Cue spoke with publishers in late 2009, he mentioned Apple deliberate to promote new books for $12.99 to $14.99.
Apple CEO Steve Jobs obtained quizzed about this topic early within the iPad’s lifespan. In a dialog with Walt Mossberg quickly after the unique iPad’s unveiling, the journalist requested Jobs why anybody would need to spend $14.99 on an Apple e-book after they might purchase the identical factor from Amazon for $9.99.
“That received’t be the case,” Jobs responded.
“You received’t be $14.99 or they received’t be $9.99?” Mossberg adopted up.
“The costs would be the identical,” Jobs mentioned. “Publishers are literally withholding their books from Amazon as a result of they’re not completely satisfied.”
Eddy Cue testifies in Apple e-books pricing lawsuit
In the long run, as Jobs predicted, costs rose. Amazon remained the market chief by the point the case obtained to court docket in 2013, however the web retailer’s dominance had fallen from 90% to 65%. Barnes & Noble had eked out 20%, whereas Apple’s share languished within the single digits.
As the principle negotiator for Apple, Cue’s testimony within the iBooks Retailer pricing trial turned a vital piece of proof. On the witness stand, the Apple exec acknowledged that costs of some e-books rose after the iBooks Retailer opened. Nevertheless, he mentioned this stemmed extra from publishers’ unhappiness with Amazon than something Apple did. He additionally described negotiations with particular person publishers as troublesome, and mentioned he didn’t know whether or not publishers labored collectively.
“They argued totally different factors,” Cue mentioned. “In the event that they talked collectively, I assumed it could be simpler to get the offers finished.”
In the end, a federal court docket discovered that Apple colluded with publishers. The corporate settled out of court docket within the e-books price-fixing swimsuit, wherein potential damages rose as excessive as $840 million. The court docket additionally appointed an antitrust monitor to observe over Apple. That call induced Cupertino no finish of complications within the following years.
