Apple accused of forcing book prices higher
Apple senior executive Eddy Cue said in a US federal court this week that some popular e-book titles may have become more expensive after his company got into the business, but that Apple was not to blame for those price increases.
Mr Cue, the head of Apple's iTunes business, has been portrayed by the US government as the "chief ringleader of the conspiracy" between Apple and publishers that worked together to force all retailers to increase e-book prices.
To provide evidence of that collusion, federal prosecutors noted the dozens of email exchanges and records of more than 100 phone calls and notes sent between Mr Cue, other Apple executives and the publishers. In response, Mr Cue admitted he simultaneously negotiated deals with five publishers - Penguin, Simon & Schuster, HarperCollins, Hatchette and Macmillan. He even shared with publishers the progress of negotiations with rivals in general terms.
But he said he was focused on winning contracts for Apple to enter the digital books market, not to unfairly hamper rivals like Amazon. "I didn't raise prices," Mr Cue said.
Mr Cue said he had been working "24/7" because he wanted to complete arrangements with publishers so the e-books store could launch with the introduction of the iPad. It was something he wanted to do for late Apple founder Steve Jobs, who was growing increasingly sick then.
"Steve was nearing the end of life when we launched the iPad. I wanted be able to get that done in time for that because it was important to him," Mr Cue said.
As chief negotiator for Apple in all its content deals with record labels, book publishers and movie studios, Mr Cue is a central witness in the Justice Departments's antitrust lawsuit. The government contends Apple in late 2009 and early 2010 pushed publishers to go with a so-called agency model. That structure allowed publishers, rather than retailers, to set the price of e-books, while Apple would receive a 30 per cent commission from the sales.
The publishers then pushed Amazon, which held 90 per cent of the e-books market, to adopt a similar model, with Apple's backing. Meanwhile, prices rose by as much as $US2 to $US4 ($2.08 to $4.17) for popular titles, US attorneys said.
During testimony, prosecutors introduced a February 10, 2010, email from Mr Jobs to Mr Cue to prove Mr Jobs knew of the scheme to fix prices and force Amazon to increase its e-book prices.
In response to a proposal from Mr Cue to embrace the agency model, Mr Jobs wrote: "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."
Mr Cue said he never received the email, which defence attorneys said was a draft.
In more than five hours of testimony, Mr Cue vigorously defended his negotiations as typical in business. Apple customers got "great prices, great selection, at a better bookstore", he said.
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