NEW YORK – Apple’s late founder, Steve Jobs, was a key figure Monday in the Justice Department’s suit against the Silicon Valley giant for allegedly leading an illegal scheme to raise the prices of e-books.
But the focus on Jobs’ role in conversations and deals made three years ago creates an odd dilemma for the court and was protested by Apple’s attorneys. Justice painted the iconic tech leader as the “chief ringleader” of a joint scheme with publishers to raise prices of e-books by $3 to $5 to break Amazon’s dominance and fatten their profits.
But Jobs can’t be questioned to put his emails into context, Apple’s attorneys said. The court would be left to guess what Jobs was thinking in his comments to journalists and in emails to publishing executives, they argued.
“They selectively quote from Mr. Jobs, then call him the chief ringleader,” Apple attorney Orin Snyder said in opening statements on the first day of the closely watched trial. “The government is asking Your Honor to proceed on a perilous path.”
Rarely does a federal antitrust suit go to trial, and Apple’s stubborn defense has drawn great interest, offering a rare glimpse into the inner workings of the nation’s tech giants whose innovations have roiled the media and entertainment landscape.
Attorneys from Amazon and Google attended the trial and asked U.S. District Judge Denise Cote to keep sealed documents that could reveal their business secrets. All five publishers in the suit have settled with the Justice Department, but their executives will be called to testify.
A highlight of the case will be the testimony of Apple’s head of iTunes, Eddy Cue, Jobs’ right-hand man on the e-books deals. Cue is scheduled to appear in court June 13, and the Justice Department has alleged that Cue executed a plan, approved by Jobs, to persuade publishers to switch from Amazon’s wholesale model of pricing that kept books at $9.99. Jobs was intimately involved in the plan, the government alleges.
The government presented as evidence an email exchange on Jan. 24, 2010, between Jobs and News Corp. executive James Murdoch. News Corp. is the parent company of HarperCollins.
Jobs had written, “Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.”
But Apple attorney Snyder said that the email was selectively chosen and, in context of the full letter, does not show wrongdoing. In another part of the email, one of 15 exchanged between Jobs and Murdoch, the late Apple executive appears doubtful about changes to the e-books market.
“Heck, Amazon is selling these books at $9.99, and who knows maybe they are right and we will fail even at $12.99,” Jobs wrote to Murdoch. “But we’re willing to try at the prices we proposed. We are not willing to try at higher prices, because we are pretty sure we’ll all fail.”
The government spent more than 1½ hours presenting emails, travel itinerary, handwritten notes and phone logs on a slide deck.
At one point, Lawrence Buterman, a lawyer at the Justice Department, highlighted a Wall Street Journal interview from June 2010. When asked by a reporter why anyone would buy an e-book for $14.99 when Amazon was selling them for $9.99, Jobs responded: “That won’t be the case,” adding that “the prices will be the same.”
The next day, Simon & Schuster’s then-general counsel Elsa Riven sent an email to her chief executive, Carolyn Reidy, calling Jobs’ remarks “incredibly stupid.” Reidy is expected to testify Tuesday.
“This is not about how large Apple is or a corporate dislike between Apple and Amazon,” Buterman said. “This is a straightforward case of price-fixing.”
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