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Apple Inc. (AAPL), Amazon.com, Inc. (AMZN): A Few Things About This e-Book Trial You May Have Missed

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Apple Inc. (NASDAQ:AAPL) doesn’t become the largest and most valuable tech company in the world by having stupid people in charge. For those who might not think that Tim Cook is as clever, smart or shrewd as the late Steve Jobs, just might want to pay attention to the happenings in the company’s e-book price-fixing trial against the U.S. Department of Justice, which is in its second week this week.

Apple Inc. (NASDAQ:AAPL)

Yes, Mr. Cook may not be necessarily the most charismatic guy on the planet, and he certainly does not come across as the marketing genius that Mr. Jobs was, but if there is any doubt about Cook’s ability to run Apple Inc. (NASDAQ:AAPL), follow along with us to understand how Mr. Cook is no stupid man – in fact, he just might be one of the cleverest in the tech sector—underratedly so; here’s another underrated fact.

Amazon & the five publishers will play an essential role

In this scenario, Tim Cook just might be Sherlock Holmes and Amazon.com, Inc. (NASDAQ:AMZN) CEO Jeff Bezos is his Professor Moriarty. How does Amazon.com, Inc. (NASDAQ:AMZN) figure into a case between the Department of Justice and Apple Inc. (NASDAQ:AAPL)? Now that’s the clever part.

The Department of Justice pinned things on Apple Inc. (NASDAQ:AAPL) all along when the book publishers suddenly changed their pricing models so Amazon.com, Inc. (NASDAQ:AMZN) did not automatically have the lowest prices on e-books – the publishers were in control of the prices, not the retailers.  What was happening was something that is done in the book-publishing industry a lot. Sometimes retailers get to decide their prices, other times the publishers do.

Well in this trial, the U.S. Department of Justice made the five e-book publishers mentioned in the initial collusion settle their cases, and they the DOJ has been sending each one to the stand to testify against Apple Inc. (NASDAQ:AAPL). The five—Simon & Schuster, Hachette, HarperCollins, Macmillan and Penguin Group—are attempting to paint Cupertino as the one who arranged for this collusion to take place, which sabotaged the pricing and volume advantage that Amazon.com, Inc. (NASDAQ:AMZN) had enjoyed in the e-book space.

It may come down to “the email”

With all of that being said, however, it should be mentioned that the court would also have documentation of Steve Jobs’ infamous email to News Corp (NASDAQ:NWSA)’s James Murdoch (and HarperCollins, the “HC” in the letter) that contains the following points via AllThingsD:

As I see it, HC has the following choices:

1) Throw 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.

2) Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.

3) Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.

Maybe I’m missing something, but I don’t see any other alternatives. Do you?

Regards,

Steve

The most damning statement in this email is Jobs’ assertion that Apple Inc. (NASDAQ:AAPL) and the five publishers (assuming HC is on board) should “create a real mainstream ebooks market at $12.99 and $14.99,” with the word create being of focus here. If the government can prove that Apple’s aim was to artificially create this market, they’re in business, and Cupertino’s role as chief conspirator might get a bit clearer. But that’s not all.

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