Apple yesterday came up on the losing end of a decision from US District Judge Denise Cote who ruled that Apple did, in fact, collude to artificially raise the price of e-books.
In looking over the decision, I found it interesting that statements made by Steve Jobs were construed as compelling evidence in the eyes of Cote.
Compelling evidence of Apple's participation in the conspiracy came from the words uttered by Steve Jobs, Apple's founder, CEO, and visionary. Apple has struggled mightily to reinterpret Jobs's statements in a way that will eliminate their bite. Its efforts have proven fruitless.
Jobs's statements to James Murdoch that he understood the Publishers' concerns that "Amazon's $9.99 price for new releases is eroding the value perception of their products . . . and they do not want this practice to continue," and that Apple was thus "willing to try at the [$12.99 and $14.99] prices we've proposed," underscored Apple's commitment to a scheme with the Publisher Defendants to raise e-book prices. 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.
Cote again stresses that Apple was unable to persuasively explain away Jobs' comments as being benign. In reaching the conclusion that Jobs was aggressively trying to get publishers to raise the price of e-books across the board, Cote not only relied on emails from Jobs, but also the aforementioned video where Jobs smugly told Walt Mossberg that the price of e-books on Amazon will be the same as the price of e-books on Apple's iBookstore.
The damning video, which was shot by Kara Swisher on her Flipcam, is below. The pertinent part of the video begins at 1:54 when Mossberg curiously asks Jobs why someone would buy an e-book for $14.99 from Apple when they can get it for $9.99 from Amazon.
"The prices will be the same," Jobs explained, before adding that "publishers are actually withholding" books from Amazon because they aren't happy with the terms of their contract.
So just how damning was this video?
Well, Cote cited it as "compelling evidence" in her decision, and we should also point out that Simone & Schuster executives, upon being made aware of the video, were none too pleased with Jobs' remarks, going so far as to label them "incredibly stupid."
The following is a slide from the DOJ's initial presentation during the trial.