Apple’s negotiator-in-chief, Eddy Cue is out to clear the air surrounding the price-fixing conspiracy Apple was found guilty of by U.S. federal court in 2013, before the case hits an appeals court later this month.
In a rare interview, Cue sat down with Fortune to talk about the ebook controversythat has embroiled Apple and the six top book publishers ever since the iPad launched with the iBookstore in 2011.
Apple was found guilty of conspiring to raise ebook prices in 2011, after the launch of the iBookstore saw price of ebook new releases spike 17% overnight. Apple has maintained its innocence through the entire ordeal, and though the company has been criticized for its litigious nature, Cue says the company has to “fight for the truth,” no matter what.
“Is it a fact that certain book prices went up?” asks Cue. “Yes. If you want to convict us on that, then we’re guilty. I knew some prices were going to go up, but hell, the whole world knew it, because that’s what the publishers were saying: ‘We want to get retailers to raise prices, and if we’re not able to, we’re not going to make the books available digitally’…You have to fight for your principles no matter what. Because it’s just not right.”
In his interview Cue recounts how he came up with the idea of the iBookstore one day in November while playing with an iPad prototype. An iBookstore similar to iTunes was suggested to Steve Jobs after Cue realized iPad would make a great ebook reader, but the Apple CEO told Cue, “I’m not going to delay the product for this, but I’ll let you go see what you can get done.”
Jobs tasked Cook with working out the negotiations with publishers, as Cue had already done the negotiations for iTunes Store in 2003, the App Store in 2008, and most recently Apple Pay in 2013. According to Cue’s account, he didn’t meet with the publishers together. And he didn’t conspire to raise the prices with them. But he did suggest switching to an agency model that ran counter to Amazon’s wholesale model that steeply discounted top titles and gave them a monopoly on ebooks.
Apple’s team of lawyers will try to convince the appeals court that the Justice Department is picking on the wrong bully, and that Amazon is actually the one violating anti-trust laws, but legal experts say the company is facing an uphill battle.
If Apple wins its appeal the company will be off the hook for any damages fees, but faces a steep $450 million bill if it loses. Eddy Cue isn’t phased though.
“If I had it to do all over again, I’d do it again,” Cue says. “I’d just take better notes.”
Source: Fortune
