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Apple e-book trial comes to a close

June 21, 2013|Andrew Tangel and Chris O'Brien
  • A digital book is displayed on an Apple iPad. The e-book case is among the biggest antitrust cases tried by the Justice Department over the last decade.
A digital book is displayed on an Apple iPad. The e-book case is among the… (Scott Eells / Bloomberg )

NEW YORK — Apple Inc. is a price-gouging, conspiratorial bully. Apple is a pro-consumer, innovative hero.

A federal judge now must decide which of those competing descriptions best fits one of the world's most valuable companies. Attorneys for Apple and the U.S. Department of Justice offered their closing statements Thursday in the government's e-book price-fixing trial.

Federal prosecutor Mark Ryan concluded the Justice Department's case by again declaring that Apple conspired with publishers to raise prices, offering them a way to fight back against Amazon.

"This is an old-fashioned, straightforward price-fixing agreement," Ryan said, noting that prices of new releases and bestsellers rose after Apple entered the market.

Not true, countered Apple attorney Orin Snyder.

"Apple did not conspire with a single publisher to fix prices in the e-book industry," Snyder said.

The e-book case is among the biggest antitrust cases tried by the Justice Department over the last decade. Any decision could have implications for Apple and other tech firms trying to strike deals for content such as music, video and books.

Both sides must now wait for a decision from U.S. District Court Judge Denise Cote, which may not come for several weeks. Although the judge offered no clues which way she was leaning Thursday, she indicated in a preliminary hearing several weeks ago that she believed it was likely the government would be able to prove its case.

Over the last three weeks executives from Apple, Amazon.com Inc. and Google Inc., as well as several publishing houses, have offered testimony at a federal courthouse in New York City. That testimony, coupled with a string of emails, including many from Apple co-founder Steve Jobs, provided a rare glimpse inside a firm that places a premium on secrecy.

The lawsuit grew out of Apple's dramatic entrance into the e-book market in 2010. Apple executive Eddy Cue, who negotiated the publishing deals, said Jobs was initially reluctant to enter the e-book market. But Cue was able to persuade Jobs that the iPad would offer the perfect platform.

In the scramble to secure e-book deals in the weeks before Apple unveiled the iPad, Cue was in contact via email and phone with representatives of the five major publishers who ultimately signed agreements: Penguin, HarperCollins, Simon & Schuster, Macmillan and Hachette Book Group.

The Justice Department believed this made Cue the "ringleader" of a cartel whose goal was to allow publishers to charge more for e-books.

"They want to set the price," Ryan said. "They don't want competition to set the price."

However, Snyder took issue with the government's portrayal of what he said were benign phone calls as something sinister or evidence of a conspiracy to fix prices. They were merely evidence of bilateral negotiations involving a business and its suppliers, he said. And there was no evidence that Apple knew of phone calls between publishers, he added.

Snyder closed his argument with an animated iPad graphic on a slide, complete with page curls, that read: "It is time to close the book on this case."

All five publishers have settled with the Justice Department, so Apple chose to fight on alone, to defend its reputation as much as anything. Chief Executive Tim Cook has called the case "bizarre" and said Apple refused to settle by admitting to something it did not do.

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andrew.tangel@latimes.com

chris.obrien@latimes.com

Twitter: @obrien

Tangel reported from New York and O'Brien from San Francisco.

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