Eddy all cued up
Eddy Cue, a top Apple executive and the government’s key witness in its e-book price fixing case, had no idea publishers were sharing info about how to price books on the iPad, he testified yesterday.
Peppered with questions from Justice Department lawyers all morning, Cue said he “struggled and fought” with the publishers to agree to Apple’s agency model of pricing.
“If they were talking to one another, I would assume I would have had a much easier time getting those deals done,” Cue told a packed courtroom in Manhattan federal court.
Cue is the highest-ranking Apple executive to testify.
The right-hand man of company founder Steve Jobs for over a decade, Cue fielded questions from Justice lawyer Lawrence Buterman about Jobs’ feeling about rival Amazon and about book pricing.
While Cue’s answers were sometimes embarrassing, it was hard to determine if they helped prove the government’s case that Apple conspired with five major publishers to set e-books prices.
Cue was asked about a January 2010 e-mail to Jobs about pricing.
“I can live with this, as long as they move Amazon to the agent model too for new releases for the first year,” Jobs wrote in a draft response.
“If they don’t, I’m not sure we can be competitive …”
At the time, Amazon controlled 90 percent of the e-book market. They bought books from publishers wholesale and priced recent releases at $9.99.
Publishers hated the model, and so, apparently did Apple.
Jobs and Cue concocted an agency model — where publishers would set prices, at $12.99 to $14.99.
Jobs also insisted on a most-favored nation clause in its contract with publishers.
That is, Apple’s iBookstore would get the best available retail price offered.
Apple insists it did nothing wrong and is fighting the charges. The five publishers have settled.
At one point Judge Denise Cote interrupted Buterman’s questioning of Cue.
The judge asked what moved him to insist that the industry move to an agency model and add a “Most Favored Nation” clause.
“It wasn’t a legal question,” responded Cue. “I came to the conclusion what if they don’t all sign, what if it isn’t effective, not successful … I can’t force them to sign it.”
Buterman picked up the ball and noted that the MFN clause doesn’t appear in other Apple contracts.
“Do you care about your consumers?” asked Buterman, looking to knock Cue.
“They were protected,” he responded.
Buterman hammered the point home, asking Cue if he received thank you(s) from customers about prices of e-books going up.
The Justice Department spent much of yesterday portraying Cue at the center of a “spiderweb” of calls to push publishers into agreements.
That argument was demolished by Apple outside counsel Orin Snyder, who pointed out that calling potential partners is usually what you do to begin a new business.
The case continues on Monday.
catkinson@nypost.com

