Apple's Eddy Cue speaks out on iBooks price fixing ruling: 'It's just not right'

Posted:
in General Discussion edited December 2014
Days before an appeals court will revisit Apple's iBooks price fixing case, the head of the company's digital content business has spoken out on why Apple continues to fight the government's antitrust allegations, calling it a "fight for the truth."

Summation
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court


In Eddy Cue's first-ever interview on the price fixing case, the iBooks chief spoke with Fortune about the upcoming Dec. 15 appearance before a federal appeals court. It's there that Apple hopes it will be able to overturn a verdict that found it and book publishers guilty of a price fixing conspiracy.

If Apple can win the appeal, it will pay no penalty. But if it loses, the iPad maker has agreed to a conditional settlement that will see it pay $450 million in damages and attorney fees.

Apple continues to fight the case because of principle, Cue said. Although Apple's deals with book publishers did cause some e-book prices to rise, he said that wasn't as a result of illegal collusion.

"We feel we have to fight for the truth," Cue said. "Luckily, (CEO) Tim (Cook) feels exactly like I do, which is: You have to fight for your principles no matter what. Because it's just not right."

Under negotiations led by Cue, Apple and book publishers opted to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform -- a "most favored nations" clause.

In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so.

Book publishers
Late Apple cofounder Steve Jobs introduces iBooks iPad app and partner publishers in 2010. | Source: Apple


Cue told Fortune that even before negotiations with Apple took place, publishers were openly saying they wanted to raise prices on books, which they felt were being sold for too little under the wholesale model. He also said that some book prices went down as a result of the launch of Apple's iBooks, because it resulted in more competition in the e-books market against Amazon's Kindle platform.

"Is it a fact that certain book prices went up? Yes," Cue said. "If you want to convict us on that, then we're guilty. I knew some prices were going to go up, but hell, the whole world knew it, because that's what the publishers were saying."

And when asked if he could rewrite history and do anything differently in his e-book negotiations, Cue said he'd still use the same approach.

"I'd just take better notes," the Apple executive quipped.

As a result of the U.S. government's ruling, Apple is saddled with an injunction that bars it from entering into any unsavory deals with publishers, and the company is under the watch of antitrust monitor Michael Bromwich. The iPad maker's appeal was formally filed in February of this year, asking for a dismissal or a retrial.

In its appeal, Apple has pointed out Amazon's continuing dominant position in the e-book market. At the time of the iBookstore's launch, Amazon accounted for nine out of every ten e-book sales.

Apple's agency model contracts were central to the Department of Justice's case. The government argued that Amazon's wholesale model was negatively impacted as a result of Apple's deals, which ultimately trickled down to consumers as the Internet retail giant was no longer able to compete on price.
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Comments

  • Reply 1 of 69
    Another thread designed to incite readers... Happy holidays, everyone!
  • Reply 2 of 69

    How’s about we go crash Amazon’s stock? :grumble:

  • Reply 3 of 69
    How’s about we go crash Amazon’s stock? :grumble:

    I'd like to know who is supplying Wall Street with the coke and hookers...does Amazon deliver those also?
  • Reply 4 of 69
    rogifanrogifan Posts: 10,669member
    Another thread designed to incite readers... Happy holidays, everyone!

    ...and please click away! :D
  • Reply 5 of 69
    Quote:

    Originally Posted by SpamSandwich View Post





    I'd like to know who is supplying Wall Street with the coke and hookers...does Amazon deliver those also?



    For free, if you're a member of Amazon Prime

  • Reply 6 of 69
    Quote:

    Originally Posted by Tallest Skil View Post

     

    How’s about we go crash Amazon’s stock? :grumble:


     

    Isn't that kind of happening already? It is heading the right direction this last year.

     

  • Reply 7 of 69

    In this case, I feel like Apple was trying to do what was best for everyone. I know some consumers only care that they get low prices and nothing else, but content producers do deserve to be compensated for their work. The ones who don't think so...well, if I think about that too much I'll be an angry wreck all day. <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

     

    Of course, they didn't do what was best for Amazon, so that makes it bad in the eyes of the DOJ. I'm getting ready to self-publish some books, and I hate that I'll have to sell them on Amazon if I want to reach a majority of the ebook reading audience. I'd love to stick with iBooks, Kobo, and direct sales.

  • Reply 8 of 69
    In this case, I feel like Apple was trying to do what was best for everyone. I know some consumers only care that they get low prices and nothing else, but content producers do deserve to be compensated for their work. The ones who don't think so...well, if I think about that too much I'll be an angry wreck all day. :lol:

    Of course, they didn't do what was best for Amazon, so that makes it bad in the eyes of the DOJ. I'm getting ready to self-publish some books, and I hate that I'll have to sell them on Amazon if I want to reach a majority of the ebook reading audience. I'd love to stick with iBooks, Kobo, and direct sales.

    Let us know when your book goes on sale, I enjoy your comments.
  • Reply 9 of 69
    Quote:

    Originally Posted by SpamSandwich View Post





    Let us know when your book goes on sale, I enjoy your comments.



    As for when, it depends on my motivation. :) I don't want to stop writing new stuff, but I need to go back and fix some continuity and flow errors in the completed stuff. I'll get to it soon though, it won't be too bad as there aren't any grammar or spelling mistakes to correct.

  • Reply 10 of 69
    rob53rob53 Posts: 1,901member
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    In this case, I feel like Apple was trying to do what was best for everyone. I know some consumers only care that they get low prices and nothing else, but content producers do deserve to be compensated for their work. The ones who don't think so...well, if I think about that too much I'll be an angry wreck all day. <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

     

    Of course, they didn't do what was best for Amazon, so that makes it bad in the eyes of the DOJ. I'm getting ready to self-publish some books, and I hate that I'll have to sell them on Amazon if I want to reach a majority of the ebook reading audience. I'd love to stick with iBooks, Kobo, and direct sales.


    I agree that everyone should be paid a reasonable amount of money for the work they do. Of course, many think their work is worth a whole lot more than other's so while they should be paid a ton, they should be able to get what they want for free. 

     

    As for publishing your own book, why not just take a stand and publish your book on the site you want to, then watch to see if Google scans it for free and gives it away. Then you can go after them. Also wait for someone to copy it and publish it through Amazon then go after them. What's you book about? Maybe I'll take a stand and pay for it.

     

    --Will the appeal be made before the same corrupt judge that Amazon paid for or someone different? Will it only be made before a judge or before a jury? If a jury then I want to be on that jury. Time to force the judicial system to follow the law for everyone, not just against Apple.

  • Reply 11 of 69
    Quote:
    Originally Posted by rob53 View Post

     

    I agree that everyone should be paid a reasonable amount of money for the work they do. Of course, many think their work is worth a whole lot more than other's so while they should be paid a ton, they should be able to get what they want for free. 

     

    As for publishing your own book, why not just take a stand and publish your book on the site you want to, then watch to see if Google scans it for free and gives it away. Then you can go after them. Also wait for someone to copy it and publish it through Amazon then go after them. What's you book about? Maybe I'll take a stand and pay for it.

     

    --Will the appeal be made before the same corrupt judge that Amazon paid for or someone different? Will it only be made before a judge or before a jury? If a jury then I want to be on that jury. Time to force the judicial system to follow the law for everyone, not just against Apple.


     

    1. Yes they do, but let them charge their insane price, and when people don't buy it, oh well. They'll rant about how the plebes don't understand them, and we can be happy without their overpriced stuff.

     

    2. I'm thinking about that. It's not like I expect this to be a best seller, so I may go about different routes of publishing. It's nothing exciting, just an action novel.

     

    3. I believe the appeal is before a different court, but I'm not sure if a jury is involved or not.

  • Reply 12 of 69
    Quote:
    Originally Posted by TheWhiteFalcon View Post

     

    In this case, I feel like Apple was trying to do what was best for everyone. I know some consumers only care that they get low prices and nothing else, but content producers do deserve to be compensated for their work. The ones who don't think so...well, if I think about that too much I'll be an angry wreck all day. <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

     

    Of course, they didn't do what was best for Amazon, so that makes it bad in the eyes of the DOJ. I'm getting ready to self-publish some books, and I hate that I'll have to sell them on Amazon if I want to reach a majority of the ebook reading audience. I'd love to stick with iBooks, Kobo, and direct sales.


    The issue with your argument is that your confusing the retail price that Amazon was charging with the wholesale price they were paying.   Amazon was regularly paying 12-15 dollars per book, and discounting to 9.99.   Now they are charging 12-15 per book set by the publisher, and they take a 30% cut of the price.   So in many cases the authors are actually making less.  What the publishers were worried about was not author compensation, they were worried about the effect on the hardback sales as well as amazon getting too large a share of the market.   And while I was an early adopter and loved my 9.99 new releases, I understand the publishers concerns with amazon gaining too much power(IE, their recent hardball tactics with a major publisher)

  • Reply 13 of 69

    If their lawyers ask the judge to recuse himself, instead of making cocky presentation, Apple doesn't have to fight anymore. 

    Seriously, I think that's a textbook example. 

  • Reply 14 of 69
    jungmarkjungmark Posts: 6,548member
    Keep fighting, Eddy. It's still amazing that the DOJ allows Amazon to operate as a monopoly.
  • Reply 15 of 69
    jungmark wrote: »
    Keep fighting, Eddy. It's still amazing that the DOJ allows Amazon to operate as a monopoly.

    If Apple isnt a monopoly (and they aren't), then Amazon certainly isn't a monopoly, HOWEVER Apple should be completely allowed to implement their own sales model unimpeded.
  • Reply 16 of 69
    ceek74ceek74 Posts: 316member
    Quote:

    Originally Posted by SpamSandwich View Post





    If Apple isnt a monopoly (and they aren't), then Amazon certainly isn't a monopoly, HOWEVER Apple should be completely allowed to implement their own sales model unimpeded.

    But that would be capitalism and "free" market and we (Amazon + DOJ) can't have that.

  • Reply 17 of 69
    Quote:

    Originally Posted by SpamSandwich View Post





    If Apple isnt a monopoly (and they aren't), then Amazon certainly isn't a monopoly, HOWEVER Apple should be completely allowed to implement their own sales model unimpeded.

    In the ebook space, Amazon is and operates as a monopoly.  

  • Reply 18 of 69
    tundraboytundraboy Posts: 1,580member
    Quote:

    Originally Posted by CanukStorm View Post

     

    In the ebook space, Amazon is and operates as a monopoly.  




    And with government protection!  No other company in the US can claim that privilege.  Which is why this case is so egregious and should be appealed all the way to the supreme court if necessary.  We cannot have this precedent where the DoJ stepped in, took legislation meant to prevent against monopolistic abuse, and standing the legislation on its head, used it to actually restore and protect a monopoly that had been torn down by a new entrant!  When did antitrust legislation metastasize into monopoly-protection legislation?  How could the DoJ let that happen?  

  • Reply 19 of 69
    Quote:

    Originally Posted by tundraboy View Post

     



    And with government protection!  No other company in the US can claim that privilege.  Which is why this case is so egregious and should be appealed all the way to the supreme court if necessary.  We cannot have this precedent where the DoJ stepped in, took legislation meant to prevent against monopolistic abuse, and standing the legislation on its head, used it to actually restore and protect a monopoly that had been torn down by a new entrant!  When did antitrust legislation metastasize into monopoly-protection legislation?  How could the DoJ let that happen?  


    "How could the DoJ let that happen?"

     

    It's called lobbying and Amazon does a boat load of it.  But I agree with what you say.

  • Reply 20 of 69
    tundraboytundraboy Posts: 1,580member
    Quote:

    Originally Posted by CanukStorm View Post

     

    "How could the DoJ let that happen?"

     

    It's called lobbying and Amazon does a boat load of it.  But I agree with what you say.




    Well it's lobbying by Amazon and stupidity by the DoJ.  I'm amazed that nobody at the DoJ looked at the big picture and said "Hey guys, you realize what we're doing here, right?  We're putting back together a monopoly that had been decimated by new competition.  I don't think that is something that aligns with our department's mission."  Instead, after the verdict, I read news stories of the prosecutors congratulating themselves for a job well done.

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