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Justice Department releases slides showing alleged Apple ebook conspiracy

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A long-anticipated trial in which the federal government is accusing Apple(s AAPL) of fixing the price of ebooks got underway on Monday morning. The legal issues are complex, but the trial also represents a high-stakes PR battle between the Justice Department and the technology giant.

As Reuters explained, the Justice Department has shown a new confidence in recent years in going after antitrust cases, following an embarrassing loss in 2004 when it failed to stop Oracle from acquiring PeopleSoft. In the case of the Apple ebook case, which involves allegations that Apple colluded with five big publishers to fix prices, the Justice Department has been playing an aggressive PR game — sending out documents and press releases to pump up its case.

Following this morning’s session, the government sent out slides intended to highlight the nature of the alleged conspiracy.

My colleague, Laura Owen, will have full details of this morning’s proceedings shortly. In the meantime, here’s some screenshots from the slides that the government is using to argue for Apple’s guilt. The government’s strategy appears intended to suggest that where there’s smoke, there’s fire — and that Apple must be at the end of the alleged conspiracy. Keep in mind this is just one side of the story, but here are slides showing communication between Apple SVP of Internet Services Eddy Cue and top publishing execs:

Apple ebook consipriacy DOJ

DOJ apple screenshot

DOJ Apple screenshot

DOJ Apple screenshot

You can see the whole set of Justice Department’s “bad Apple” slides here:

U.S. v. Apple Et Al Opening Slides 6-3-2013

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One Response to “Justice Department releases slides showing alleged Apple ebook conspiracy”

  1. Dan Meadows

    Apple’s absolutely worried about MFN clauses being struck down. And to those saying Apple gave publishers the ability to set prices where they wanted, no they didn’t. They set specific price tiers for publishers that were higher than Amazons $9.99. The MFN clause guaranteed that every retailer had the same price, also known as retail price maintenance which is highly illegal in almost every incarnation and is extremely damaging to competition. This is a cartel of publishers who controlled upwards of 80% of bestsellers getting together to fix retail pricing of the biggest sellers at their preferred higher levels to slow ebook adoption and protect their print dominance. Say what you want but this was intended to eliminate or flatten retail competition in ebooks to protect their long standing market power. Its the same kind of thing Microsoft got smacked down for in web browsers. That is illegal. Amazon selling under cost is irrelevant. Virtually every business on the planet sells some goods as loss leaders, and Amazon sells a lot more than just ebooks. There hasn’t been one single recorded instance of a monopoly successfully forming due to that practice. To top it off, Amazon’s market share wasn’t a result of monopolistic practices at all, they were essentially the only player on the field and laid the groundwork for the entire market, largely because publishers didn’t even see it as a viable market until Amazon started raking in big dollars. Its neither surprising nor illegal that they had such a marketshare early in the game. Their percentage would have naturally declined as more competitors were attracted to the money rolling in. Apple entered the field not trying to earn their share but to level retail price competition which would have given them an advantage due to their strong position in the device market. But the only way it works is if all the big publishers combined to pressure retailers to accept it, which is exactly what happened at Apple’s leadership and behest. ‘We needed to illegally collude today because we were trying to stop a theoretical Amazon monopoly somewhere in the future’ is not a compelling defense.