“ parole game , ” an “ vaulting narrative ” and a “ case of inference ” were a few choice phrases used by lawyer Orin Snyder Thursday in close arguments for Apple in the U.S. Department of Justice ’s antitrust , ebooks Leontyne Price fixing case against the tech giant .
The DOJ brought the case against Apple and five of the largest book publisher in the U.S. forallegedly conspiring to confine price competition and heighten price in the ebook marketin 2010 in an effort to intercept Amazon from price their substantially - selling electronic Holy Scripture at $ 9.99 each .
Both the DOJ and Apple are making their closure arguments Thursday before Judge Denise Cote , who will decide the outcome of the antimonopoly suit . The five large publishers also named in the DOJ suit have already settled for a cumulative $ 164 million , leave Apple to hold its practices in court . Cote presided over the three - week , non - jury trial in the U.S. Southern District Court of New York in Manhattan .
Apple makes its case
For Apple ’s summation , Snyder characterise the interaction that Apple had with the five publishers as typical conversations and negotiations that accompany any byplay agreement . At no point did Apple attempt to coordinate the activities of the publishing house in an attempt to fix the damage of electronic books for the market . “ The evidence does not show this , ” Snyder told the motor lodge , arguing that the DOJ made this case exclusively on “ overreaching ” interpretation of electronic documents .
Snyder focalize on the timeline between December 2009 and January 2010 to rebut the DOJ ’s assertions over what took place between Apple and the publishers . He noted that at the time there was “ excitement ” in the ebook market and that Apple executives , who had no anterior knowledge of this marketplace , were talk with publication heads just to hear their concerns . He also offered multiple model of divergence between Apple and the publishing firm over the proposed contracts , this disputation serving as proof that the parties were not acting in unison to posit retail price .
The case stem from contracts that Apple made with the publisher in 2010 , just before the party launch its iPad mobile computation gimmick . In January of that year , each newspaper publisher — HarperCollins , Penguin , Hachette , MacMillan , and Simon & Schuster — agreed to permit Apple sell their electronic al-Qur’an in a comparatively novel business model , one in which Apple would trade their al-Qur’an at the cost the publishers had set , and glean 30 per centum of the retail Leontyne Price .
This approach , called the agency model , dissent from the standard decades - sure-enough sweeping mannequin of Quran selling , in which the retailer , not the publisher , set the script prices . With the new means approach , retail merchant “ lost their ability to compete on price , including their ability to sell the most democratic ebooks for $ 9.99 or for other low prices,”chargedthe DOJ in its complaint .
Agency model at issue
According to the testimonyof Apple Senior Vice President Eddy Cue , publishing company immediately expressed a desire to move electronic book gross sales to the agency poser when he initially approached them in December 2009 to secure electronic book rights for the iPad .
The newspaper publisher catch the agency framework as the solution to the issue of Amazon price the electronic version of best selling books for $ 9.99 , less than what the online retailer pay for these title in many cases . The publisher worried that Amazon , which enjoyed a 90 percent share of the electronic Bible market in 2009 , was depress the perceive cost point of books in consumer ’ eyes , as well as laying plans to trim down publishers out of Amazon ’s book sales altogether and to deal with authors straightaway . The publisher had meet throughout 2009 to discuss the issue , according to Apple .
Cue proposed the representation modeling to then Apple CEO Steve Jobs , who liked the estimation , given that Apple was already using the agency model for its iTunes medium store and the company ’s App store . So , in early January , Apple proposed an agency model agreement with all the publishers , in which Apple would in result get a repair 30 pct commission for each sale .
Apple also added a turn of extra provisions to the contract bridge . It established a tier up of cost points for books . good seller , for instance , could be price at $ 12.99 and $ 14.99 and , later at the publishers ’ insistence , $ 16.99 and $ 19.99 . Apple mandate jacket , or limits to how much newspaper publisher could commit for electronic books . It prohibited publishers from both withhold best - selling titles from electronic firing , and delay the release of some title in electronic form , a practice known as windowing .
Finally , Apple added what it call a “ most favored nation ” ( MFN ) article . The MFN stipulate that the publisher must offer their electronic books to Apple at 70 per centum of the lowest price offered on the retail market elsewhere . In this means Apple could fit the lowest price of ebooks elsewhere and still make its 30 pct cut .
The DOJ had argued that MFN was proof that Apple was attempt to set the prices for ebooks not just for itself , but for the entire industry . Snyder argue Apple was only looking out for its own right sake . Apple did not care what prices the publishers would charge , as long as Apple get its 30 percent cut . “ If books were sold at $ 1.99 , we ’d make a ton of money , ” he said .
Snyder also pointed out that after Apple settled on the idea of including an MFN in its contract bridge , it had no preferences as to whether the record publishers signed other retail merchant such as Amazon to an authority theoretical account . He show up a number of different pieces of correspondence that Cue and Jobs had had with publishers to back this point .
Five of the six big book publishers all signed Apple agency contract bridge within a few days of one another in January ( the sixth and largest publisher , Random House , abstained ) . Over the next few months , the publishers had fix up other way correspondence with other retailers as well , such as Amazon .
straight off after the contracts have effect in April 2010 , and publishers strike all their retailers to the agency exemplar , and prices of electronic rule book offer by both Amazon and Barnes & Noble increased by almost 20 percent , the DOJ forecast .
In his summation , Snyder made the suit that the publishers , and even other retailers such as Barnes & Noble and Google , were already considering the exercise of the agency simulation before converge with Cue . He noted for instance that Barnes & Noble had also approached the publishers in January 2010 with an agency model to sell ebooks for its Nook reader . This was proof , he asserted , that the whole industry was about to undergo a transmutation in how electronic book were sold to retail merchant .
While the DOJ had highlighted the many talks Cue had with publication executives as evidence that they were coordinating activity , Snyder aver that these meeting were only introductory meetings and , later , individual contract dialogue . Snyder regorge doubt on the idea of a price fixing cabal given that the publishers had already been in talk for more than a year about dealing with Amazon . “ How can Apple be a ringmaster before the iBookstore was even a scintillation in Apple ’s eyes , ” he rhetorically asked , referring how up until late December 2009 , Jobs was n’t even concerned in entering the electronic book market .
At one point , Cote require Snyder if Apple was aware that the publishers may have been conspire among themselves . “ We do n’t have an opinion on that . It ’s not our load ” to confute that type of assertion in courtroom , he answer . He also bespeak out that the contract dialogue between Apple and the publisher were far too litigious to be view collusion . As of mid - January Apple did n’t have any agreements with the publishers and each newspaper publisher had taken number with dissimilar parts of the proposed correspondence , such as the MFN clause , or the price cap . If there was a secret agreement already in place , the negotiations would have go far more smoothly , he asserted .
Justice Department gets its turn
When ready its slip , the DOJ had to prove anticompetitive behavior in a routine of ways . It had to show that the publishers had conferred with one another for set up up a young cross - publishing company pricing model that would confine retailer price control , and that Apple helped exchange selective information among the publishing firm . It also had to show that the publishing house had attempted to hold in their communications . In addition , it had to show that consumer were harmed by this connivance .
Whether the DOJ has made its font sufficiently to Cote remains to be escort . Early reports indicated that she believe that the government had a strong showcase . Thus far , the DOJ has compiled acopious amount of email and other electronic documentationthat it feels points to how the unlike parties make with one another .
Legal commentator , however , have doubted that the DOJ documentation is sufficient , and that its caserelies too heavily on inference .
For the government ’s summation , DOJ theatre director of litigation Mark Ryan challenged Snyder ’s idea that difficult negotiation between Apple and the publishing company constituted proof there was no conspiracy .
“ Sure , there was some conflict … about what the price should be , ” he said . “ But disagreement among a cartel does n’t mean there is n’t a cartel . ” He press the court to look beyond the discussion of the agency model , MFN and other details , and to pore on how Holy Writ price forthwith change after the office agreements went into period of play .
Ryan described the events of early 2010 as “ the publishing firm acting as a group , and Apple bringing that group along . ” There was a “ moderately brazen price - fixing element to this , ” he said .
He brush off the fact that Apple was a Modern entrant — and not yet a powerhouse — in the eastward - book market , asserting that the Sherman Antitrust Act , the law on which the suit is based , made no distinction for new entrants . “ There is no homage conclusion say that because you are new you may organize the provider of the market place . This is not a defence , ” Ryan said .
Ryan also noted that Apple , in its talks with book newspaper publisher , stressed how move to the government agency theoretical account would solve “ the diligence ’s ” job with Amazon . Less often did Cue and Jobs talk about how it would aid an single publishing house .
Cote asked if Apple , in talking about the Amazon issue , was n’t just making a gross revenue pitch . Perhaps Apple recognized the difficulty publishers were having and proposed a resolution like any fresh stage business might , she posited . Ryan countered that part of Apple ’s pitch was to help all the newspaper publisher confront Amazon in unison , which was an antitrust violation .
Apple put the MFN in seat with one goal in mind , Ryan argue : to get Amazon to move to the agency role model . Without Amazon doing so , Apple could not contend on Mary Leontyne Price . But it was essential for the major book suppliers to act in unison to get Amazon to agree to an office framework , or so the publishing company thought at the time . In a complimentary grocery store , Ryan said , each publishing firm would work out their issues with Amazon severally .
It was the “ collective force ” of the publisher that prompted Amazon to adopt the agency model and stop offer $ 9.99 best sellers , Ryan say .
“ Apple was plainly unbiased to customers pay higher prices , ” Ryan said .
Cote is expected to reach her decision within a few week .
This article was updated on June 21 to make up a description of sweeping book selling .
