Apple Faces Uphill Fight in Ebook Price-Fixing Trial

NEWS ANALYSIS: The DOJ uses Apple's own emails in its opening antitrust trial statement that charges the mobile-device maker conspired to set ebook prices.

Apple appears to be fighting an uphill battle against the U.S. Department of Justice in a price-fixing case stemming from the introduction of the iPad in competition with a variety of e-readers.

The DOJ's complaint against Apple and several book publishers alleges that Apple and the book publishers wanted higher profit and conspired to raise prices at the expense of ebook buyers and over the objections of online retailers such as Amazon.

Apple is already on record as calling the government's case "bizarre." But Apple quickly settled when the European Union brought its own price-fixing charges. In the trial being held in the U.S. District Court for the Southern District of New York, the judge in the case, Denise Cote, has already told Apple that she expects the DOJ to prevail, but allowed Apple to present its case.

A significant portion of the government's case against Apple is drawn from the company's own email conversations, obtained by the DOJ in an e-discovery operation. The DOJ included many of the emails in a slide show that it presented as part of its opening trial statement on June 3.

Some of the emails include warnings to find ways to hide activities from the government, including a warning from executives at one publisher to "double-delete" the email in which the book companies conspired to withhold ebooks from publication as a way to raise prices.

Worse, Apple's late founder and CEO Steve Jobs seems to have admitted that he had conspired with publishers to raise prices, adding that this is what the publishers wanted anyway. During the period of time in which the alleged price-fixing occurred, book publishers were complaining among themselves that Amazon's normal $9.99 prices for ebooks was too low, but had been unable to find a way to overcome that. Apple was the vehicle that the publishers used to accomplish a price increase by insisting on a model for selling books that let publishers set the retail prices.

For its part, Apple is trying to get the DOJ evidence thrown out by claiming that Steve Jobs is unable to respond and that the government needs someone to "sponsor" each piece of evidence that the government wants to use. However, it's worth noting that Jobs' death is not relevant to the trial since it is Apple that's on trial, and not Jobs. Because Jobs was an employee of the corporation, the company is the responsible party.

Apple is also suffering from a few other legal disadvantages that make its battle harder than it might otherwise be. In addition to having already settled with the European Union, which was partnering with the U.S. in the antitrust case, Apple's co-defendants have also settled with the U.S.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...