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The United States Department of Justice is trying to take a bite out of Apple. The tech giant has been hauled before a Manhattan court to answer accusations that it gouged consumers by conspiring with publishers to inflate the price of ebooks.
The Department of Justice alleges that, in a bid to break Amazon.com’s stranglehold on the ebook market, Apple tried to convince publishers to set prices across the industry. At the time, Amazon enjoyed 90% of the e-book market, due in large part to the popularity of their Kindle reader. In order to steer customers toward the Kindle, Amazon would sometimes sell ebooks at a loss, making it difficult for other retailers to compete.
The government claims that Apple’s late founder, Steve Jobs, was intimately involved in the price-fixing scheme. The Department of Justice believes it has a ‘smoking gun’ in the form of emails that Jobs sent to other Apple executives as well as executives at major publishing houses. For example, in an email to News Corp executive James Murdoch, Jobs asked News Corp to “[t]hrow in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.”
Apple’s legal team has vigorously contested the government’s attempt to use these emails. “There’s something inherently unfair and uncomfortable about placing such reliance on the out-of-court statements of someone who’s not here to explain them or place them into context — particularly when in almost every instance the government either omits key language to draw an inference, or blatantly mischaracterizes what the statements mean,” said Apple attorney Orin Snyder said in his opening statement.
Five publishers were named alongside Apple as co-defendants: the Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin, and Simon & Schuster. However, all of them decided to settle out of court. The presiding judge, District Judge Denise Cote, has urged Apple to settle as well. “I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of ebooks,” she said back in May.
But Apple vows to fight on. “We’re taking a very principled position on this,” said CEO Tim Cook. “We were asked to sign something that says we did do something, and we’re not going to sign something that says we did something we didn’t do. And so we’re going to fight.”
Image credit: Adam Fagen via Flickr