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US Justice Department makes opening arguments in e-book price fixing case


Apple's e-book price fixing trial began yesterday in New York and the US Justice Department wasted no time painting a picture purporting to show that Apple, along with five publishing houses, colluded to artificially raise the price of e-books.

In a series of 81 slides released on Monday, the Justice Department laid out its case as it attempts to prove that Apple and five publishing companies violated the Sherman Antitrust Act. The five publishers at issue include the Penguin Group, HarperCollins, Simon & Schuster, the Hachette Book Group and MacMillan. Notably, all five publishers have since settled, thereby leaving Apple the only company actually taking the case to trial.

Front and center in the DOJ's case are emails sent from Apple executive Eddy Cue to publishers in an attempt to get them to sign up for the agency model as it pertains to e-book pricing. The DOJ also alleges that Cue routinely told some publishers what other publishers had already agreed to, thereby greasing the wheels for collusion.

The entire slidedeck can be viewed below.

U.S. v. Apple Et Al Opening Slides

Apple, for its part, claims that its dealings simply served to increase competition in the marketplace and break Amazon's monopolistic grip on the e-book industry.

Last April, Apple had this to say regarding the DOJ's allegations:

The DOJ's accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry. Since then customers have benefited from e-books that are more interactive and engaging. Just as we've allowed developers to set prices on the App Store, publishers set prices on the iBookstore.

The result of Apple attempting to foster "innovation and competition," however, is that the price of e-books rose significantly in April of 2010. The chart below is rather telling.

US Justice Department makes opening arguments in ebook price fixing case

Covering the trial, Philip Elmer-DeWitt reports that Apple, as one would expect, countered that the DOJ's case lacked merit. Specifically, Apple's lawyers said that the company merely used the same approach it used when first getting music publishers on board the iTunes bandwagon. The end result, Apple noted, was an influx of billions of dollars into the US economy.

"Apple should be applauded, not condemned," an Apple attorney stated.

Well, this will certainly be an interesting trial. While Apple does settle legal disputes from time to time, this doesn't seem like one of those cases. During his recent All Things D interview, Apple CEO Tim Cook emphasized that Apple has done nothing wrong, and out of principle, will refuse to admit to doing something it did not do.

In any event, Eddy Cue is slated to testify during the trial on June 13. I guess he'll be missing Bill Nye The Science Guy.

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