There have been a lot of developments in the U.S. Justice Department's case against Apple in the trial's first two weeks. Check out our reporter's notebook for the latest.
Apple's e-book pricing trial has brought its fair share of funny moments and tense exchanges.
The Justice Department, which initially sued Apple and a handful of the nation's largest publishers slightly more than a year ago, contends Apple forced publishers to move to a model that artificially inflated the prices of digital books and hurt consumers. Apple has argued that it wasn't trying to change in the industry and that it was only trying to secure the best deal for itself.
With two weeks down and one week to go, most of the key witnesses have testified. There is no jury, so at the end of this coming week, Judge Denise Cote will have all the evidence to make her decision.
CNET has been there every step of the way, but in case you haven't followed every update, here's a recap of some of the trial highlights:
Documents, documents, and even more documents
The DOJ's case against Apple, as well as Apple's defense, largely hinges on e-mails and phone call records between executives at Apple, book publishers, and Amazon. Both sides have hundreds of documents that they're using to support their cases.
One government chart, casually referred to in court as the "spider web," shows the number of calls between book publisher CEOs in December and January, the time they were negotiating with Apple about its iBookstore. The DOJ has used the chart as evidence that the publishers were talking and working together to collectively change e-book pricing. The DOJ also made a similar chart to show calls between publishers and Eddy Cue, Apple's senior vice president of software and services. Apple, meanwhile, has argued various e-mails were taken out of context, and it has presented its own items to show Apple wasn't colluding with the publishers.
If there's one thing CNET has learned from this trial, it's never put anything sensitive in writing.
Opening arguments
The trial kicked off June 3 in the district court of lower Manhattan. In opening arguments, the Justice Department said it would prove that Apple was the ringleader in a scheme to push digital book publishers toward raising their prices and that the conspiracy forced Amazon to change its e-book sales model. Apple, meanwhile, argued that its executives simply were using standard negotiation tactics to secure the best possible deal for Apple and its users.
Both gave a glimpse into what they'd be talking about in the upcoming weeks.
The DOJ created a "spider web" showing calls between CEOs of book publishers.
(Credit: U.S. Department of Justice)
Has the judge already made up her mind?
Before the trial even started, Judge Cote offered to share her initial thoughts with Apple and the DOJ. Unfortunately for Apple, Cote said that based on the evidence submitted, she believed Apple to be at fault. Apple attorney Orin Snyder brought those comments up shortly after he started his opening statement, asking Cote to "hit the delete button on any tentative view that might exist in the court's mind today."
Cote almost immediately cut off Snyder, saying that she only gave the opinion because both sides agreed to it, and that she wouldn't consider any documents as evidence until they're officially submitted. She noted that Apple had months to think about whether it wanted a tentative view, and her view was just that -- tentative.
"This isn't a vote about whether I like Apple or anyone else does," Cote told both sides. "The deck isn't stacked against Apple. ... You have my firm commitment ... that I will do my very best to follow the law."
Cote in recent days in the trial seemed to be coming around to Apple's arguments that it didn't force publishers to change their deals with Amazon.
Publishing bigwigs
CEOs of some of the country's biggest publishers have taken the stand in the trial. Penguin Group USA CEO David Shanks, Simon & Schuster CEO Carolyn Reidy, Harper Collins CEO Brian Murray, Macmillan CEO John Sargent, and Hachette CEO David Young have all testified about negotiations with Apple, as well as their relationships with Amazon. (Note: Simon & Schuster is owned by CNET parent company CBS.)
All believed Amazon's $9.99 pricing to be too low, and all wanted a way to change it. The CEOs have testified that they didn't believe they did anything wrong, but each company reached a deal with the DOJ to settle the government's suit against them.
Eddy Cue, Apple's senior vice president of Internet software and services, arrives at court in Manhattan with an Apple attorney on Thursday.
(Credit: Sarah Tew/CNET)
Eddy Cue's "minion"
Perhaps the funniest moment of the trial came during testimony by Simon & Schuster's Reidy. The DOJ presented e-mails between Reidy and her boss, CBS CEO Les Moonves, that talked about Reidy's conversations with Apple. She had initially met with Eddy Cue, but his deputy, Keith Moerer, later handled many conversations. Reidy told Moonves, via e-mail, that "A representative of Apple (not the head guy, but one of his minions) came to New York at the end of week before last to meet with all of the major publishers." Moerer, Apple's corporate representative in the trial, was in the courtroom when the comments were discussed.
"Sorry, Mr. Moerer," Judge Cote said as people seated in the courtroom looked at Moerer and laughed.
"Yes, my apologies," Reidy said. "That's just what I was thinking, your Honor."
"We're all minions from some perspective, even me," Cote responded.
Publishers call Amazon a bully
It may be Apple on trial, but Amazon's name comes up nearly as often. The company dominated the e-book market at the time Apple was forming iBooks, and publishers were worried about Amazon's low pricing. After reaching deals with Apple, all of the publishers changed their terms to in what in the industry is known as an agency model, where they set the pricing. Under the previous wholesale model, Amazon had set the prices, which were at $9.99 for the latest books.
Apple CEO Steve Jobs, now deceased, announced the first iPad in January 2010.
(Credit: James Martin/CNET)
Those conversations with Amazon weren't easy, the publishers testified, and Amazon even threatened them. The publishers portrayed themselves as victims of Amazon, and Apple attempted to draw parallels between itself and Amazon, showing that the different nuances of their respective deals are par for the course in the industry, and not a conspiracy to inflate prices. "They yelled and screamed and threatened," Penguin's Shanks said during his testimony the first week of the trial. "It was a very unpleasant meeting."
And Simon & Schuster's Reidy said Amazon threatened to stop selling her company's physical books along with its digital books.
Amazon, meanwhile, portrayed itself as the victim, forced into agreements it never wanted.
Insight into content deal negotiations
Apple, Amazon, and other big tech giants are understandably tight-lipped about their deal-making process. The trial has provided unprecedented insight into their wheeling and dealing. Apple has tried to show its actions are normal steps that all companies take when negotiating deals, and it has said reaching deals with publishers wasn't easy.
Some notable insights we've learned about Apple's tactics:
Apple's e-book pricing trial has brought its fair share of funny moments and tense exchanges.
The Justice Department, which initially sued Apple and a handful of the nation's largest publishers slightly more than a year ago, contends Apple forced publishers to move to a model that artificially inflated the prices of digital books and hurt consumers. Apple has argued that it wasn't trying to change in the industry and that it was only trying to secure the best deal for itself.
With two weeks down and one week to go, most of the key witnesses have testified. There is no jury, so at the end of this coming week, Judge Denise Cote will have all the evidence to make her decision.
CNET has been there every step of the way, but in case you haven't followed every update, here's a recap of some of the trial highlights:
Documents, documents, and even more documents
The DOJ's case against Apple, as well as Apple's defense, largely hinges on e-mails and phone call records between executives at Apple, book publishers, and Amazon. Both sides have hundreds of documents that they're using to support their cases.
One government chart, casually referred to in court as the "spider web," shows the number of calls between book publisher CEOs in December and January, the time they were negotiating with Apple about its iBookstore. The DOJ has used the chart as evidence that the publishers were talking and working together to collectively change e-book pricing. The DOJ also made a similar chart to show calls between publishers and Eddy Cue, Apple's senior vice president of software and services. Apple, meanwhile, has argued various e-mails were taken out of context, and it has presented its own items to show Apple wasn't colluding with the publishers.
If there's one thing CNET has learned from this trial, it's never put anything sensitive in writing.
Opening arguments
The trial kicked off June 3 in the district court of lower Manhattan. In opening arguments, the Justice Department said it would prove that Apple was the ringleader in a scheme to push digital book publishers toward raising their prices and that the conspiracy forced Amazon to change its e-book sales model. Apple, meanwhile, argued that its executives simply were using standard negotiation tactics to secure the best possible deal for Apple and its users.
Both gave a glimpse into what they'd be talking about in the upcoming weeks.
(Credit: U.S. Department of Justice)
Has the judge already made up her mind?
Before the trial even started, Judge Cote offered to share her initial thoughts with Apple and the DOJ. Unfortunately for Apple, Cote said that based on the evidence submitted, she believed Apple to be at fault. Apple attorney Orin Snyder brought those comments up shortly after he started his opening statement, asking Cote to "hit the delete button on any tentative view that might exist in the court's mind today."
Cote almost immediately cut off Snyder, saying that she only gave the opinion because both sides agreed to it, and that she wouldn't consider any documents as evidence until they're officially submitted. She noted that Apple had months to think about whether it wanted a tentative view, and her view was just that -- tentative.
"This isn't a vote about whether I like Apple or anyone else does," Cote told both sides. "The deck isn't stacked against Apple. ... You have my firm commitment ... that I will do my very best to follow the law."
Cote in recent days in the trial seemed to be coming around to Apple's arguments that it didn't force publishers to change their deals with Amazon.
Publishing bigwigs
CEOs of some of the country's biggest publishers have taken the stand in the trial. Penguin Group USA CEO David Shanks, Simon & Schuster CEO Carolyn Reidy, Harper Collins CEO Brian Murray, Macmillan CEO John Sargent, and Hachette CEO David Young have all testified about negotiations with Apple, as well as their relationships with Amazon. (Note: Simon & Schuster is owned by CNET parent company CBS.)
All believed Amazon's $9.99 pricing to be too low, and all wanted a way to change it. The CEOs have testified that they didn't believe they did anything wrong, but each company reached a deal with the DOJ to settle the government's suit against them.
(Credit: Sarah Tew/CNET)
Eddy Cue's "minion"
Perhaps the funniest moment of the trial came during testimony by Simon & Schuster's Reidy. The DOJ presented e-mails between Reidy and her boss, CBS CEO Les Moonves, that talked about Reidy's conversations with Apple. She had initially met with Eddy Cue, but his deputy, Keith Moerer, later handled many conversations. Reidy told Moonves, via e-mail, that "A representative of Apple (not the head guy, but one of his minions) came to New York at the end of week before last to meet with all of the major publishers." Moerer, Apple's corporate representative in the trial, was in the courtroom when the comments were discussed.
"Sorry, Mr. Moerer," Judge Cote said as people seated in the courtroom looked at Moerer and laughed.
"Yes, my apologies," Reidy said. "That's just what I was thinking, your Honor."
"We're all minions from some perspective, even me," Cote responded.
Publishers call Amazon a bully
It may be Apple on trial, but Amazon's name comes up nearly as often. The company dominated the e-book market at the time Apple was forming iBooks, and publishers were worried about Amazon's low pricing. After reaching deals with Apple, all of the publishers changed their terms to in what in the industry is known as an agency model, where they set the pricing. Under the previous wholesale model, Amazon had set the prices, which were at $9.99 for the latest books.
(Credit: James Martin/CNET)
Those conversations with Amazon weren't easy, the publishers testified, and Amazon even threatened them. The publishers portrayed themselves as victims of Amazon, and Apple attempted to draw parallels between itself and Amazon, showing that the different nuances of their respective deals are par for the course in the industry, and not a conspiracy to inflate prices. "They yelled and screamed and threatened," Penguin's Shanks said during his testimony the first week of the trial. "It was a very unpleasant meeting."
And Simon & Schuster's Reidy said Amazon threatened to stop selling her company's physical books along with its digital books.
Amazon, meanwhile, portrayed itself as the victim, forced into agreements it never wanted.
Insight into content deal negotiations
Apple, Amazon, and other big tech giants are understandably tight-lipped about their deal-making process. The trial has provided unprecedented insight into their wheeling and dealing. Apple has tried to show its actions are normal steps that all companies take when negotiating deals, and it has said reaching deals with publishers wasn't easy.
Some notable insights we've learned about Apple's tactics:
- Apple's dealmakers -- Cue, Moerer, and attorney Kevin Saul -- had only a couple of months to reach deals with publishers for iBooks. Cue testified he got the go-ahead from Jobs for iBooks in November 2009, and he had to have the deals done by the late-January iPad announcement.
- Apple commonly tells companies that "the train is leaving the station" to get them to sign deals. It often says how many companies have already signed on, and it will tell companies who else it's talking to.
- Apple typically pursues similar deals with all companies, saying it wants to give big and small companies