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Apple's Eddy Cue offers short answers in e-book antitrust trial

Joab Jackson | June 14, 2013
Apple Senior Vice President Eddy Cue offered only short answers in testimony Thursday in federal court when questioned by U.S. Justice Department prosecutors trying to solidify their case that Apple, along with five of the largest book publishers, worked together to illegally set the prices of electronic books for the market.

When the prosecutors asked Cue if, for instance, the publisher CEOs were talking among themselves about Apple's proposed move to the agency model, Cue denied knowing anything about their discussions, or even admitting that he suspected that they were talking among themselves. The DOJ pointed to records of more than 100 phone calls the publisher CEOs had made among themselves in one month after Apple proposed the agency model. "No one [at Apple] had knowledge that publisher meetings were happening," he said.

Cue was careful to point out that while Apple was promising that it could sell books at the publishers' preferred rate, it made no promises as to whether these preferred rates would be accepted by other retailers. At one point., Apple offered to move away from the agency model, should the publishers offer it "Most Favored Nation" (MFN) pricing, in which the publishers guaranteed that Apple could sell their e-books, with the 30 percent markup, at the lowest price offered by any retailer. The publishers balked at this proposal, however.

The DOJ also pointed to an email that one student sent to Jobs asking why Apple was raising the price of e-books, which the student summarized as greedy. Jobs responded in an email to the student that it was the publishers, not Apple, who were raising the prices. The DOJ asserted that Apple was only interested in ensuring that it would get a 30 percent cut of the sales, which was in line with what Apple gets with its sales of other content, such as music and television shows.

Cue also downplayed any assertions that Apple was attempting to replicate what Amazon was doing with its Kindle-based e-book selling. The DOJ pointed to one email exchange between Cue and Jobs, in which Jobs asked if Amazon is selling self-published books, and Cue replied that it was, so Jobs then decided to consider the idea for Apple, and later included self-publishers. But when the prosecutor then asserted, from this exchange, that Jobs was basing his decisions on what Amazon was doing, Cue responded that the idea was "incorrect," without elaborating.

Cue will take the stand again later Thursday and is expected to be more forthcoming with details when questioned by Apple's chief counsel, Orin Snyder.

 

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