Apple Negotiator Denies Raising E-Book Prices

Apple is the "sole remaining defendant" in a lawsuit in which it is accused of fixing e-book prices and trying to "undo Amazon.com Inc.'s market control," according to Reuters. Eddy Cue, a veteran of Apple, headed talks with publishers before Apple launched its ibookstore and disputes that "Apple caused prices industry-wide to increase."

Cue claims that a deal needed to be completed before the release of the iPad, so that the bookstore could be released at the same time. Steve Jobs was also "near the end of his life" in early 2010, a factor that added urgency to Cue's negotiations. Initially, Cue testified that Apple was going for a wholesale model like Amazon, in which titles are bought from publishers and later priced by Apple itself. However, Apple went with a "so-called agency model," in which the publishers set prices and Apple receives a thirty percent commission.

This shift from a wholesale to an agency model pushed Amazon to do the same, and the government claims that Apple "encouraged this shift through a contract clause that would allow it to reduce prices on its bookstore if other retailers sold cheaper." This move increased prices of e-books and resulted in Amazon's market share dropping from ninety percent in 2009 to forty-five percent in 2012.

Cue denies that Apple was intentionally trying to shift Amazon off of its wholesale model, claiming that Apple was "indifferent" if other retailers wanted a wholesale model. Cue says publishers had "expressed unhappiness with Amazon and said they wanted higher prices from Apple."

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