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Higher prices? Customers might not have noticed, top Apple exec

Apple, Inc. (AAPL) stands accused of costing customers "millions of dollars" by entering into secret deals with eBook publishers, rewarding them for blacklisting Apple's competitor Amazon.com, Inc. (AMZN).  In an apparent mea culpa, most of the publishers quickly settled with the U.S. Department of Justice (DOJ) -- but Apple has defiantly chosen to fight the feds in court.

In court today the feds grilled Apple's president of internet software and services, Eddie Cue. Cue tried to deflect the price fixing accusations saying he was working "24/7" on the deal and "felt tremendous pressure" to close it.  He recalls, "You have to understand that Steve [Jobs] was near the end. I wanted to get [the ebook deal] done for him."

Eddy Cue confirmed that "early on" (during Steve Jobs' final stretch as CEO) Apple was considering a potentially illegal deal to pitch to Amazon, in which Apple would agree to stay out of the digital book market if Amazon agreed to stay out of the digital music market.

Eddy Cue
Eddy Cue [Image Source: AP]

Court reporters called the morning testimony a win for the DOJ.  DOJ attorney Lawrence Buterman pushed Mr. Cue hard asking, "Do you think your customers cared?  Who protected Apple's customers from the higher prices?"

Mr. Cue responded, "I did."

But pushed, Mr. Cue appeared to concede that his company's deals later drove up e-book prices from the former de facto rate of $10 to $15.  Asked if Apple (or Amazon) customers complained about the highe prices, he commented, "They may or may not have, I can't recall."


In court Eddy Cue said Apple customers might have not cared about higher prices.

Mr. Buterman drove home his point, reversing the question and remarking, "Did your customers thank you for raising prices?"

Things aren't going very well so far for Apple in the case.  Federal Judge Denise Cote of the U.S. District Court for the Southern District of New York already submitted a preliminary ruling of guilt on grounds that Apple would lose a trial on account of the strong paper trail the DOJ had accumulated showing Apple willfully colluded with publishers to damage Amazon.


If Apple loses the trial, it will likely be on the hook for damages in 30 states and be required to pay substantially more than the "slap on the wrist" that the publishers who settled received.  Analysts say that a loss would also damage Apple's reputation, much as the court case against Microsoft Corp. (MSFT) in the late 90s hurt the Windows brand.

Source: The Verge





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