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Apple Inc. (AAPL): Justice Says This Scheme Was Steve Jobs’ Idea

Apple Inc. (NASDAQ:AAPL) is certainly no stranger to controversy or courtrooms. Its attorneys might even be on a first-name basis with U.S. government attorneys by this point. With the money that gets spent in legal proceedings like these, chances are pretty good that Apple would much rather settle than not. Unless, of course, your company honestly believes it is innocent of all charges. It may be worth it, then, to fight for reputation and possibly lose than to roll over and concede.

Examining Apple's Forward ValuationIn a case that has made its share of headlines lately, Apple Inc. (NASDAQ:AAPL) is the one left standing when others have conceded, and the U.S. Department of justice is describing Cupertino now as the leader of an e-book price-fixing scheme involving five major publishing houses and Apple’s online e-book store, which had wanted to compete directly against Amazon.com Inc (NASDAQ:AMZN) a few years back, when the late Steve Jobs still ran Apple.

Afer some saber-rattling by Justice, all five publishing houses – Penguin, HarperCollins, Hatchette, Simon & Schuster and Macmillan – all caved and settled with Justice, leaving Apple Inc. (NASDAQ:AAPL) alone to defend itself. The company is apparently planning to defend itself vigorously, as the trial is set to start in early June with no indication that Apple is blinking from this staring contest.

In the court filing submitted Tuesday by Justice, Apple Inc. (NASDAQ:AAPL), for the first time since the initial suit was brought a year ago, is being charged with being the mastermind of the price-fixing scheme, which Justice claims was a move to undermine Amazon.com Inc (NASDAQ:AMZN) and its dominant position in e-book selling.

The charge is that Apple convinced the publishing houses to change their pricing model in such a way that Amazon.com would be forced to sell its e-books for $12.99 and up instead of its uniform $9.99 price, which would have been consistent with the pricing model for Apple in its e-book store. Justice was submitting an e-mail as part of its filing that came from the late Steve Jobs which apparently had indicated a leadership role by Apple when it said in the e-mail to HarperCollins’ James Murdoch, “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.”

Apple Inc. (NASDAQ:AAPL) is also being accused of using strong-arm tactics to get the publishing houses on board with the scheme, alleging that some publishers were threatened with having apps rejected from the App Store if they didn’t cooperate with the idea, for example, Justice said in its filing. What do you think about the charges? Is Apple smart to take this case to trial? Give us your feedback in the comments section below.

DISCLOSURE: None

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