Law & Apple: Government Case Crumbling in Wacky eBook Trial

As the Department of Justice eBook trial against Apple enters it's third, and likely final, week, two themes consistently emerge: one, the entire DOJ case seems built on a flimsy house of cards that continues to get knocked down; and two, Amazon was a major player in making this lawsuit happen. It seems reasonable to many that Apple will walk away from this case vindicated and victorious. Maybe. Will Apple prevail and, if not, what happens next? Read on.

DOJ vs. Apple

This case, which we've already labeled as bizarre, has just moved to a deeper circle of cray cray. 

In the past week, the prosecution brought their most damning witness to the stand, Apple senior vice president Eddie Cue, only to have him completely shred every one of their arguments. The DOJ spent three hours attempting to pin him down as the "ringmaster" but ultimately was unable to shake the unflappable Cue. After establishing himself quickly as a calm and credible witness, Cue repeatedly stated, "No, that is not correct." to government accusations, and then clearly stated the correct version. By the end of the questioning, the prosecution was frustrated.

Then, the prosecution spent a day and half dissecting a "smoking gun" email from Steve Jobs to Eddie Cue, only to be forced to admit that the email was never sent to anyone. Ultimately, even Judge Cote was joking about the absurdity of the testimony, and the relevancy of the devastating email was seriously called into question.

Finally, Apple brought the maker of a competing tablet to the stand as a witness. Barnes & Noble's VP of digital content, Theresa Horner, testified on behalf of Apple that before Apple, the eBook market was a hot mess; under Amazon's wholesale model, Amazon would pay $13 per eBook and sell them for $9.99, absorbing the loss as a way to encourage more Kindle sales. Horner stated that this model became quickly unsustainable for anyone but Amazon, and that B&N was already pitching an "agency model" months before Apple came onto the scene. This dovetailed nicely with Eddie Cue's previous testimony that Amazon's agency model never would have worked for Cupertino because "Apple doesn't go into new businesses to lose money."

When you consider these developments alongside earlier testimony in this case from Amazon, testimony that detailed how it was Amazon that wrote the Federal Trade Commission to investigate Apple in the first place because it did not want to move from wholesale pricing to agency pricing (and then switched to agency pricing anyway), you have to wonder if the right company has been on trial here all along. 

Eddie Cue, leaving the courtroom, where he can't be faded. (image/LA Times)

Either way, it seems like the DOJ has been outclassed and should seek a quick exit strategy, right? Not so fast, kemosabe. Judge Cote gets to rule on this case without a jury, and could easily rule for the DOJ for a number of reasons that don't make sense to anyone but her.

If that happens, you should expect this issue to become a high-profile case before the Supreme Court. For better or worse, SCOTUS is a very business-friendly court, and the likelihood of a Cupertino win on the big stage is strong. Regardless of what happens in this trial, certain facts can no longer be denied: Amazon's old model of selling eBooks was crushing the industry and led to a 90 percent market share; other eBook readers were pursing this "agency model" before Apple; Amazon itself switched to the agency model; the eBook market is significantly more robust with more consumer choice today than ever.

If Judge Cote chooses to ignore these facts and gift-wraps Amazon the ruling they are wish-listing for, Apple will be more than happy to make the same arguments to the Supreme Court. On Thursday Apple will be making summations, and then we'll just have to wait and see exactly how Judge Cote decides to rule.

Follow this writer, Adrian Hoppel, on Twitter and App.net as @aphoppel.