Apple founder Steve Jobs was the “ringleader” in an e-books price-fixing conspiracy that cost Americans “hundreds of millions of dollars” in overpriced books, US government lawyers told a judge yesterday.
“It’s no accident, it’s the result of a scheme by Apple to fix prices,” lawyers for the Justice Department told a Manhattan federal court judge as Uncle Sam opened its case against the tech titan.
Apple claims it did nothing wrong but faces an uphill legal battle as five publishers also charged in the case settled before the trial and are set to testify against the Cupertino, Calif., company.
Jobs and Apple laid out the conspiracy in 2010 as they prepared to introduce the iPad, the government charged.
To battle Amazon, which then controlled 90 percent of the e-book business, Apple suggested to publishers a so-called agency model where publishers would set retail prices, it is alleged.
Amazon, at the time, bought books from publishers and often sold them for $9.99 — or less than cost.
Publishers didn’t like Amazon’s approach as the low prices hurt sales through brick-and-mortar stores.
Apple sold e-books at up to $14.99, taking a 30 percent cut.
Jobs admitted colluding with big publishers to his biographer, Walter Isaacson, government lawyers claim.
Apple said its iPad brought innovation and competition to e-book retailing and called Uncle Sam’s case “bizarre.”
The company claims it acted unilaterally to protect itself and did not conspire with publishers.
Kevin Saul, an Apple iTunes lawyer, took the stand and was asked about visits he made with publishers and a document suggesting they join the agency model.
He admitted to seeing the document but said he didn’t know if e-book prices rose or fell after Apple launched its iBookstore.
Apple lawyer Orin Snyder spent hours defending Jobs’ reputation. “Tragically, he is not here to defend himself against government accusations.”
He added the government had twisted the facts and omitted language, and that short of holding a séance it would be hard to determine Jobs motive beyond his original intention which was to “open a book store with competitive prices.”
Apple argues that the publishers came kicking and screaming to its terms rather than as willful participants in a cartel. Also, it claims that Amazon even considered changing to an agency model rather than buying books on a wholesale model from publishers, before Apple even came to market.
The trial, presided over by Judge Denise Cote without a jury, continues today.