Judge Rules Against Apple in E-Book Price-Fixing Trial

Brian X. Chen and Julie Bosman, reporting for the NYT:

A federal judge on Wednesday found that Apple violated antitrust law in helping raise the retail price of e-books, saying the company “played a central role in facilitating and executing” a conspiracy with five big publishers.

“Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010,” the judge, Denise L. Cote of United States District Court in Manhattan, said in her ruling. She said a trial for damages would follow.

Cote’s ruling (PDF) is a cogent read.

Part of the evidence was this video shot by Kara Swisher of Steve Jobs speaking with Walt Mossberg in the hands-on press area after the introduction of the original iPad in 2010. Mossberg asks Jobs why someone would buy a book for $14.99 from the iBookstore when they could buy the same book from Amazon for $9.99.

Jobs: Well, that won’t be the case.

Mossberg: Meaning you won’t be $14.99, or they won’t be $9.99?

Jobs (smiling): The prices will be the same.

Judge Cote found that damning. From her decision:

Jobs’s purchase of an e-book for $14.99 at the Launch, and his explanation to a reporter that day that Amazon’s $9.99 price for the same book would be irrelevant because soon all prices will “be the same” is further evidence that Apple understood and intended that Amazon’s ability to set retail prices would soon be eliminated. When Jobs told his biographer the next day that, in light of the MFN, the Publisher Defendants “went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books,’” Jobs was referring to the fact that Sargent was in Seattle that very day to deliver Macmillan’s ultimatum to Amazon.

No wonder Apple executives so seldom speak on the record.

Sidenote: Pretty sure that’s me over Mossberg’s shoulder at the 1:45 mark in the video. Here’s a photo I took of Jobs and Mossberg. Mossberg remains the only person I’ve ever seen sit on a table at one of these events.

Wednesday, 10 July 2013