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US Justice Department details Apple's e-book 'conspiracy' in opening arguments

The U.S. Department of Justice's opening statements in its antitrust lawsuit against Apple have been published online, laying the groundwork for what the government hopes will prove illegal collusion between Apple and book publishers that led to higher prices.

At the forefront of the government's case is Eddy Cue, Apple's senior vice president of Internet Software and Services, who is responsible for securing content-related deals for his company. As evidence of an alleged "conspiracy," the DOJ has shown phone calls and emails between Cue and representatives from major book publishers.

Opening statements for United States of America v. Apple, Inc. took place in court Monday morning, with DOJ co-counsel Larence Butterman arguing that Apple and book publishers violated the 1980 Sherman Antitrust Act. The DOJ highlighted its case with a series of 81 slides that were provided to CNet.

In one example, representatives from Simon & Schuster, Random House and Macmillan were all called on the same day within hours of each other. Cue also used identical verbiage in emails sent to those same representatives.


Other evidence claims to show that Apple provided information to publishers about what other publishers were willing to agree to. In one example, it was noted that Macmillan was only willing to offer enhanced content to tablets with color displays, which Amazon's Kindle lineup did not offer as of the debut of the first iPad in 2010.

Apple, meanwhile, saw its opening statement delivered by lead attorney Orin Snyder, in which Judge Denise Cote was asked to "hit the delete button" on earlier comments she had made at a pre-trial hearing, suggesting that Apple would likely lose the trial. Cue's dealmaking was just part of Apple's efforts to break into an e-book market that has been historically dominated by Amazon, Snyder argued on Monday, according to Apple 2.0.

Cue himself will testify in the trial, but he is not scheduled to take the stand until June 13.

In pre-trial court filings the DOJ accused Apple of being a facilitator in alleged collusion with major publishers to fix e-book prices. Apple, however, has denied the allegations, saying it drafted separate consumer-friendly agreements with each publisher.

The five largest publishers all came under federal scrutiny after they agreed to a so-called "agency model" pricing agreement with Apple. Under that deal, the publishers were allowed to set fixed prices for content — a change from the "wholesale model" preferred by online retailer Amazon, which allows booksellers to set their own prices and offer discounts.

Apple remains the lone holdout in the e-book antitrust case, making the trial a rare occurrence in which the defendant did not settle out of court with the government. But Apple's executives are adamant that the company did nothing wrong, which has prompted them to stand their ground and go to trial.

Speaking at the D11 conference last week, Apple Chief Executive Tim Cook dismissed the DOJ case as "bizarre," and said that Apple has taken a "principled position" on e-book pricing.