Apple e-book trial begins with focus on Jobs’s role

Kimihiro Hoshino/AFP/Getty Images - Then-Apple CEO Steve Jobs, shown in 2011.

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’s 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.

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But Jobs can’t be questioned to put his e-mails into context, Apple’s attorneys said. The court would be left to guess what Jobs was thinking in his comments to journalists and in e-mails 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’s 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 e-mail 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 e-mail was selectively chosen and, in context of the full letter, does not show wrongdoing. In another part of the e-mail, one of 15 e-mails 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 11 / 2 hours presenting e-mails, 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 e-mail to her chief executive, Carolyn Reidy, calling Jobs’s 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.”

In a pretrial opinion, Cote gave a tentative view, saying that the Justice Department had a strong case. Apple, during opening statements, expressed concern about the judge’s remark.

Cote responded: “The deck is not stacked against Apple unless the evidence stacks against Apple.”

The question of how heavily the court can consider Jobs’s comments and e-mails may weigh on the three-week proceeding, antitrust experts said.

E-mails are widely accepted as strong evidence, said Keith Hylton, an antitrust expert and professor at the Boston University School of Law.

“In the Microsoft lawsuit, Justice built a large part of its case of e-mails from Bill Gates and other people. So this is really common stuff,” he said. “But the key question is how do you interpret what Jobs said. That is a fair question.”

 
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