John Paczkowski

Recent Posts by John Paczkowski

DOJ Misfires on Jobs Email in Apple E-Book Case — It Was a Discarded Draft

Correction, June 13: An earlier version of this post stated that the Steve Jobs email entered into evidence by Apple on Wednesday was sent to Eddy Cue. It was not. It was simply another draft of the same message.

fudd_shotgunSo that seemingly smoking gun email from Apple CEO Steve Jobs to SVP Eddy Cue in the Department of Justice’s e-book price fixing case against Apple? The one that appeared to undermine the company’s argument that it was indifferent to the pricing model publishers used with other retailers like Amazon?

According to new evidence submitted by Apple, it’s hardly warm, let alone smoking. The document cited by the government is simply a draft message that was never sent. What Apple entered into evidence late Wednesday appears to be a more complete version of that message, the one that was actually sent to Cue, and it differs significantly from that apparently damning draft.

Crucially, it does not contain any language suggesting publishers need to push Amazon to the agency model Apple wanted for its own e-book store. Indeed, it expressly acknowledges that publishers might continue their wholesale pricing arrangements with Amazon.

Jobs_Cue_Final“I can live with this,” Jobs wrote, “as long as they also agree to the other thing you told me you can get: The retail price they will set for any book will be the LOWER of the applicable “iTunes” price below OR the lowest wholesale price they offer the book at to anyone else, with our wholesale price being 70% of such price. For example, normally our retail price for a $26 book will be $12.99 and we will pay 70% of that, or $9.10. However, if they offer the same book to Amazon for a wholesale price of, say $12.50, then our retail price for the same book shall be set at $12.50 and we will pay 70% of that price for the book.”

That’s a very different message from the unsent draft showcased by the DOJ earlier today. It’s much more fully thought out; it shows Jobs concerned only about Apple potentially being discriminated against on price; it outlines the Most Favored Nation (MFN) agreements Apple would ultimately strike with publishers that ensured it would always be able to sell e-books at least as cheaply as rivals; and it omits the phrase that the DOJ presents as damning: “I can live with this as long as they move Amazon to the agent model too for new releases for the first year.”

Apple and its lead counsel Orin Snyder are undoubtedly going to have a field day with this in court tomorrow, as it speaks to their argument that the DOJ is unfairly twisting the words of Apple’s founder to build its case. As Snyder argued in his opening, “There’s something inherently unfair and uncomfortable about placing such reliance on the out-of-court statements of someone who’s not here to explain them or place them into context — particularly when in almost every instance the government either omits key language to draw an inference, or blatantly mischaracterizes what the statements mean.”

Now the DOJ may well argue Jobs’s draft speaks to intent. Presumably, that was its rationale for surfacing it today. But again, this is a message that was never sent. And the alternate draft entered into evidence by Apple, the version that was actually transmitted to Cue, contains nothing untoward.

Apple and the DOJ have not yet responded to a request for comment.

Correction, June 13: An earlier version of this post stated that the Steve Jobs email entered into evidence by Apple on Wednesday was sent to Eddy Cue. It was not. It was simply another draft of the same message.

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