Testifying in the Department of Justice’s antitrust lawsuit against Apple on Thursday, company executive Eddy Cue said the company “didn’t care” what price publishers set for e-books. “I didn’t raise prices,” he testified.
Eddy Cue said he was not surprised when publishers increased prices for new and best-selling titles after Apple entered the e-books market in 2010, but he disputed that Apple caused prices industry-wide to increase.
Apple is the sole defendant in a lawsuit in which the government accuses the company of colluding with five major U.S. publishers to fix e-book prices and wrench control of the market away from online book seller Amazon. The five publishers Apple is accused of colluding with have all reached settlements with the U.S. government, leaving Apple to fight alone.
Cue was the primary negotiator with the publishers in December 2009 and January 2010 while Apple was setting up its iBookStore. The Justice Department has attempted to present Cue as the “chief ringleader” of the alleged conspiracy.
In a bit of emotional testimony, Cue said he had felt “tremendous” pressure to get a deal in place with publishers as quickly as he could after former CEO Steve Jobs gave him approval in late 2009 to create the iBookStore for the still under wraps iPad.
Saying Jobs, who died in 2011, was “near the end of his life” as the January 2010 unveiling of the iPad approached, Cue testified, “I wanted to get it done in time for that as I wanted to get it done for him.”
Amazon controlled almost 90% of the e-book market in 2009, and was pricing new and bestselling e-books at $9.99, often below cost.
Cue said Apple initially planned to adopt the wholesale model Amazon used, buying titles from the publishers, and setting prices itself. However, after talking with publishers, Apple adopted the “agency model,” where publishers set the price, and Apple would receive a commission on sales.
Publishers then pushed Amazon to also adopt the agency model, a move the government contends that Apple encouraged.
Cue went on to testify that Apple was not attempting to shift Amazon from the wholesale approach, and merely wanted to ensure that the company could effectively compete with its rivals. “I didn’t care what deals all the publishers got with Amazon, Barnes & Noble or anyone else.”
Cue also stated that he didn’t know of any calls publishers made amongst themselves during negotiations, saying, “If they were working together, I assume I would have had much easier time negotiating.”