Apple executive denies plot to fix e-book prices
A top Apple executive acknowledged Thursday that prices of best-selling e-books rose after the tech giant launched iPad book sales in 2010, but denied any role in a plot to fix prices.
Eddy Cue, a senior vice president for many of Apple’s Internet products, did admit in federal court that he had discussed a possible bid with late founder Steve Jobs to carve up the Internet books and music market with Amazon.
Cue testified in the New York anti-trust trial the company had “protected” consumers with the deals it arranged with publishers.
Prosecutors produced figures at the trial to show that prices of best-selling e-books rose after Apple launched its iPad in April 2010.
Cue said he was “not surprised” but added that it had only affected “certain books.”
The US Department of Justice has accused Apple of being the “chief ringleader” in a price-fixing scandal that has cost consumers hundreds of millions of dollars. The company denies all the charges.
Apple has sought to put the blame on publishers for the increased cost of books.
“They had expressed they wanted higher prices from us,” Cue said.
Cue disputed comments by prosecutors that the company did not care if people paid $12.99 or $14.99 for e-books instead of the $9.99 on rivals such as Amazon.
“Our consumers were protected by my price points,” he said. “I thought we were going to treat our consumers very, very fairly.” Cue said Apple charged “great prices.”
Cue was closely questioned about talks in late 2009 and January 2010 with publishers Harper Collins, MacMillan, Simon and Schuster, Penguin and Hachette who have settled with the government to avoid a trial.
But he strongly denied any involvement in their alleged efforts to push up prices.
“You constantly pitched the deal that you were proposing as a way for them to change the entire e-books industry,” said prosecutor Lawrence Buterman.
After an email exchange between Cue and Jobs was produced by prosecutors in court, Cue did admit that he and Jobs had “contemplated” a “market allocation” deal under which Apple would let Amazon have the book market and Apple would take music.
He gave no detail as to why the pair decided not to go ahead.
The trial is expected to last until next Wednesday and Cue was to give more evidence on Monday.
The case centers on an intense month and a half of negotiations between Apple and the six largest US publishers ahead of Apple’s January 2010 launch of its iPad and the announcement of its e-bookstore.
Prior to then, the publishers sold books to Amazon and other online booksellers through a “retail” model in which the retailer set the price.
After Apple’s entry, the industry shifted to an “agency” model, where the publisher sets the price and the online bookseller receives a 30 percent commission.