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Steve Jobs, Rupert Murdoch email exchange harms Apple in price-fixing probe

The US Department of Justice this week made public a number of filings that paint Apple as the ringleader in its e-book price-fixing case, including an email conversation between late CEO Steve Jobs and News Corp's Rupert Murdoch.

The pre-trial documents provide details on a case that dates back to April 2012, when the DOJ sued Apple and five other publishers over an alleged "illegal conspiracy" involving e-book price fixing.

The publishers have settled with the government, but Apple is fighting the charges.

According to the 26 April filings, Apple admitted to meeting with publishing companies to craft agreements, but claims that each organisation decided, independent of Apple, to force Amazon to raise its e-book prices, Reuters reported.

In an 81-page document, Apple conceded that negotiations failed due to the company's demands.

"Early — and constant — points of negotiation and contention were over Apple's price caps and 30 per cent commission," the filing said. "After Apple sent draft agreements to each publisher CEO on 11 January, each immediately opposed Apples price tiers and caps."

But that's not how the Department of Justice tells the story.

In various April documents, the agency details meetings conducted between publishing executives and Apple honchos, including vice president of Internet services, Eddy Cue. The Department has built a case on arguments that Apple and the four defendants colluded to force Amazon to raise its prices, therefore knocking the online retailer off of its e-book throne.

"Apple set out to impose a new distribution model on e-books, a so-called agency model, under which [defendants Hachette Book Group, HarperCollins, Holtzbrinck Publishers, and Simon & Schuster] could set their higher consumer prices and then hand over the extra revenues to Apple," the DOJ said in a filing.

Those claims are backed up by email evidence published in the Department's documents. In one exchange between Apple co-founder Jobs and Murdoch, head of News Corp., the parent company of HarperCollins, Jobs told Murdoch that he had two options. He could either continue to let Amazon sell e-books for a low $9.99, or "throw in with Apple to see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99."

As noted in the document, Cupertino contends that the correspondence simply "reflects two executives wrestling with the realities of the e-books business." But the DOJ calls that unconvincing, citing Jobs's "acute awareness" of the defendants' unhappiness with the original pricing.

Apple did not immediately respond to our request for comment, but a spokesman told Bloomberg that "Apple did not conspire to fix eBook pricing."

Instead, he said, "We helped transform the eBook market with the introduction of the iBookstore in 2010 bringing customers an expanded selection of eBooks and delivering innovative new features. The market has been thriving and innovating since Apple's entry and we look forward to going to trial to defend ourselves."

The court battle between the Department of Justice and Apple will kick off on 3 June in a New York District Court.