Apple Inc. (AAPL): Did Eddy Get His Cue in E-book Price Fixing?

Apple Inc. (NASDAQ:AAPL) is starting to make its case in defense against allegations of price-fixing in the e-book marketplace  in a high-profile trial in New York against the U.S. Department of Justice, which brought up the allegations against Cupertino and five book publishers.

Apple Inc (AAPL)As is well-documented, the five e-book publishers all settled out-of-court with Justice to avoid a trial, but Apple Inc. (NASDAQ:AAPL)  – which Justice is trying to portray as the “ringleader” in the collusion – has held out and is wanting to make its case in court that it is innocent of the charges that it conspired with the -e-book publishers to artificially hike e-book prices  to undermine e-book retail sales leader, Inc. (NASDAQ:AMZN).

Much of the focus of Apple’s case  may hinge on complaints made by about the hike in e-book pricing and that it initiated the probe by Justice, which is trying to tie a change in the pricing model by the publishing houses to be consistent in timing with the publishing contracts the five publishing houses reached with Apple for its iBookstore.

The latest case in favor of Apple Inc. (NASDAQ:AAPL) took the stand Thursday, as longtime Steve Jobs confidant and Apple vice president Eddy Cue, who headed up negotiations with the book publishers, spoke about his role in the negotiations.

He maintained that his job was to work on a deal with the publishers to allow their e-books to be sold in the iBookstore. Not only did he deny any collusion or conspiracy charges as he went about his negotiations, but he claimed that he negotiated with each publisher separately and did not even know that the publishers had even talked to each other about book pricing or deals with Apple until after he had heard about the Department of Justice investigation into the price-fixing scheme.

Cue went on to say that the publishers talked with Apple about their “Amazon problem” during iBookstore negotiations, referring to the low price that, Inc. (NASDAQ:AMZN) was charging for e-books. “They expressed to us that they wanted higher prices,” Cue said. He worked out a deal with the publishers so that they would sell their e-books in the iBookstore for as much as $14.99, but insisted that late CEO Steve Jobs was “indifferent” to how the deals would affect Amazon as he paid close attention to Cue’s negotiations.

What are your thoughts? How do you think Apple Inc. (NASDAQ:AAPL) will come out at the end of this trial, and how do you think its reputation will be affected regardless of the result?  Give us your thoughts about this case in the comments section below.


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