June 13, 2013: Eddy Cue takes the stand to defend Apple’s business strategy in an antitrust case against Cupertino regarding e-book pricing.
Cue, Apple’s senior vice president of internet software and services, is the Apple exec in charge of the iBooks Store initiative. His testimony proves vital to a case brought by the Department of Justice, in which potential damages climb well into the nine figures.
While Apple decided to hold out for a court battle — that it eventually lost — five of the publishers involved in the iBookStore price fixing antitrust case have already reached settlements with the DOJ. Two of those publishers, Penguin and Macmillan, are already sending out emails to customers to notify them that they’re eligible to receive iTunes credit, or a check for the settlement.
The ongoing iBooks antitrust case between Apple and the United States Department of Justice took a very interesting twist this morning when the DoJ and 33 state Attorneys General laid out plans to remedy Apple’s wrongdoings and restore competition to the market.
The DoJ wants Apple to terminate all of its deals with book publishers, and refrain from entering into any new ones for at least five years. It also wants the company to start selling e-books from rivals like Amazon and Barnes & Noble.
The European Commission announced today that it has reached a deal with publisher Penguin regarding the e-book price fixing charges raised by the EU back in 2012.
Like the four other publishers charged with colluding with Apple to fix the price of e-books, Penguin has agreed to ditch Apple’s agency model for e-books that let publishers set prices for e-books while distributors like Apple, Amazon or Barnes & Noble get a cut of the sale.
David Shanks, CEO of Penguin Books, testified today that a provision in its e-books contract with Apple played a role in its decision to change contracts with other retailers, like Amazon.com, a crucial part of the US government’s case against Apple in the e-book anti-trust case happening now in federal court. Shanks said that the clause in question was “certainly a factor” in seeking out other retailers to an agency model, in which publishers control prices, not retailers, a model Amazon originally flouted.
In the anti-trust case, the US government is charging that Apple conspired with five publishers to fix prices for e-books between 2009 and 2010. Penguin is the first publishing company named in the suit which also includes HarperCollins, Simon & Schuster, Hachette Book Group, and Macmillan.
Penguin announced this morning that the company has reached an agreement with the US State Attorneys General to pay $75 million as a settlement for the eBook price fixing claims that have been launched against Apple’s iBookstore.
US authorities have called Apple out for collusion with electronic book publishers, saying that the Cupertino-based company conspired with publishers to raise eBook prices when negotiating iBooks by playing them all against each other and against rival eBook retailer, Amazon.
Here’s Penguin’s official statement on the settlement:
Walter Isaacson, the author of the best-selling biography about Apple co-founder and former CEO Steve Jobs, will not have to share his notes or testify in an ongoing lawsuit over alleged eBook price fixing between Apple and book publishers.
Lawyers wanted to see Isaacson’s notes from interviews with Jobs in an effort to establish Apple’s agreements with publishers, but Isaacson refused to hand them over, citing a New York law that allows journalists to shield their sources.
Did Apple conspire with major publishers to increase e-book prices? The European Commission has launched an antitrust probe of Apple and five publishers amid claims the industry was “terrified” by Amazon’s $9.99 e-book push. At the heart is Apple’s iBookstore and the tech giant’s “agency model” that a California lawsuit charges inflated book prices.