Apple is experiencing the nightmare of a PR own goal based on its own arrogance and stupidity. The company has been dragged into court by the US Department of Justice – charged with illegally running a pricing cartel with some of the big publishers.
It is hard to see how the company can escape. Not only have the publishers admitted running a pricing cartel, Apple’s messiah Steve Jobs boasted about it in his biography. The evidence against Apple is so overwhelming that the DoJ has not had to call in the biographer as a witness. It reportedly has piles of emails penned by Apple’s senior executives where they say something similar.
Yet, for some reason, Apple insists it has done nothing wrong and will fight to the last bullet to defend its actions. The only reason for this is that it arrogantly believes its own line.
Jobs’ logic was that by running a pricing cartel and pushing the price up on ebooks the publishers were sticking one to Amazon. The relationship between Amazon and the book publishes is tricky at best, and they all wanted to take some of the control away from the retailer. Jobs’ alliance of the major book publishers based around his iToys was seen as a way forward. At the time, ebooks were just starting to take off.
Apple conspired with publishers to raise the price of e-books in a scheme costing consumers “hundreds of millions of dollars,” a US government lawyer, Lawrence Buterman, said.
As the case opens, the DoJ is seriously damaging the view held by many Apple fans: that the company cares about its users. It is forcing open a closet which contains more skeletons than the Capuchin Church of the Immaculate Conception.
The trial has three weeks and quotes like “Apple told publishers that Apple – and only Apple – could get prices up in their industry” could tarnish Cupertino’s image.
What is even stranger is that Apple could have settled. All the DoJ wants is for Apple to sign an agreement saying that it will not fix the price in the future. It seems that Apple believes that it, not government, makes those sorts of decisions.
Orin Snyder, an attorney for Apple, insists that the case is “bizarre”. He said that Apple acted in its own business interests in negotiating deals with publishers in the run up to the debut of its iPad in January 2010. He claims that the government wants to reverse engineer a conspiracy from a market effect.
Well, that is sort of what a price cartel is, and what it does. Apple insists the DoJ has its tinfoil hat on, seeing conspiracies where there are none. However, in this case, it is as if the conspiracy theorists have got the signed confessions of the CIA, FBI, Cuban government, the Mafia and Lee Harvey Oswald all admitting they were acting under orders of alien lizards to form a world government with the Queen at its head.
What’s worse, Apple is going into this trial with Judge Denise Cote offering a “tentative view” at the last hearing that the government will prove Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books.