Apple 2.0

Covering the business that Steve Jobs built

The Apple e-books trial takes a detour into the absurd

June 18, 2013: 8:36 AM ET

Shouldn't there be a law against beating a piece of evidence to death?

Jobs introducing the iBookstore in 2010.

Jobs introducing the iBookstore in 2010.

FORTUNE -- What started as a small "gotcha" moment last week in the cross examination of a mid-level Apple (AAPL) executive grew into a federal case -- literally -- on Monday, the ninth day of testimony in U.S.A. v. Apple.

The latest McGuffin in the Department of Justice's antitrust case against Apple is an e-mail signed by Steve Jobs and addressed to Eddy Cue -- the Apple senior vice president whom the government alleges was the ringleader of a conspiracy to raise the price of e-books in 2010.

The evidence was first sprung on Keith Moerer, the head of Apple's iBookstore, by Dan McCuaig, a DOJ attorney, in the last hour of the sixth day (last Tuesday). Moerer and his colleague Kevin Saul had both testified that Apple was "indifferent" to what kind of agreement the publishers signed with Amazon (AMZN), then the dominant e-book seller with a 90% market share. But in an e-mail in response to some price cap changes proposed by Eddy Cue, Jobs had written on Jan. 14, 2010:

"I can live with this as long as they move Amazon to the agent model too for new releases for the first year. If not, I'm not sure we can be competitive..."

The

The "smoking gun." Click to enlarge.

Does that, McCuaig asked Moerer, reflect "indifference"?

"No," Moerer reluctantly admitted.

Orin Snyder, Apple's chief counsel, wasted no time trying to disarm the new evidence.

"Are you aware," he asked Moerer, "that the e-mail was never sent?"

The government immediately objected, and the judge ordered the question stricken from the record. See Did Steve Jobs give the DOJ an antitrust smoking gun?

But you knew it wasn't going to end there.

Snyder came back to the topic the next day, introducing a longer version of the e-mail stamped with the same date, suggesting that the e-mail the government had shown the court was a discarded draft. See Did the DOJ pull a fast one?

The government returned to topic last Thursday. With Eddy Cue on the stand. Larry Buterman, another DOJ attorney, asked him what it meant and whether he'd ever received it. Cue said he hadn't and Buterman -- apparently lacking proof that he had -- had to accept Cue's word for it.

Then, on Monday, things got a bit out of control.

The five versions, in time-stamp order. Click to enlarge.

The five versions, in time-stamp order. Click to enlarge.

Synder started the ball rolling by introducing five different versions of the Jobs e-mail. In four of them the "move Amazon to agent model" language had disappeared. In its place were variations of the price-matching clause that ended up in Apple's contract. The strong implication was that Jobs' thinking had evolved in the process of drafting the e-mails. The problem for Snyder -- which he skipped right over -- was that the version the government had introduced was time-stamped later than the other four.

The government wasn't going to let Apple's lawyer get away with that. In his re-cross, the DOJ's Buterman had Cue read the time stamps one by one, demonstrating that the "smoking gun" version was dated five minutes after the first.

Snyder in his re-re-cross got Cue to testify that time stamps didn't prove anything. If you have several windows open on the screen of a Mac, Cue said, the last window you close will have the latest time stamp.

Buterman in his re-re-cross pointed out that the government's preferred version not only had the latest time stamp, but was the only one that Jobs had signed in his usual manner: "Steve."

When the two attorneys had finally run out of questions for Cue, U.S. District Judge Denise Cote -- who will decide the non-jury trial -- picked up the ball.

"So you probably don't want to see those five documents again," she began. She then proceeded to subject Jobs' words to the kind of close textual analysis an English major might lovingly perform on an Emily Dickinson poem. When Cue pointed out that the signed version of the e-mail -- the one with the last time stamp -- contained a remnant of an earlier version, she responded (from the transcript):

THE COURT: "Believe me, I've noticed, and that one first appeared on [Plaintiff's exhibit] 687, the second version. And, well, I shouldn't say that. It first appeared on the first version, 688, but as part of the paragraph, part of the text, and then for the second version it's like he hit a return and it ended up like the beginning of a new paragraph, and then he started completing the sentence and then never deleted. Anyway, so it's like hanging down there just sort of riding at the bottom of the e-mail for the rest of the chain, which, to me, is additional confirmation that this is the last in the series.
CUE: I agree with you, your Honor.

So it was determined, at least in the mind of the person who matters most in this case, that the government's version was indeed the last one.

Judge Cote had several theories about what that meant. Perhaps Jobs hadn't made a mistake, as Cue had suggested, when he used the word "wholesale" when he should have used "agent." Or perhaps he was concerned that Apple couldn't turn a profit on e-books if it had to match Amazon's prices.

Cue and Jobs. Photo: EU

Cue and Jobs. Photo: EU

No and no, Cue responded. And then, speaking as someone who was closer to Jobs on the iBookstore project than anyone, Cue explained what he thought had happened in a way that seemed to satisfy Judge Cote:

CUE: He's writing that first one, he's confused about it because he wasn't clear about wholesale, retail, agency, non-agency. And then he changes it to this, but realizes, you know what, I don't really know what the right thing is, and that's why he never sent the e-mails to me... Based on my experience with Steve over the 17 years, I can tell you I'm a hundred percent positive that's what happened because Steve would never have sent an e-mail if he was not sure about it.
THE COURT: Thank you.

What made the whole detour into the provenance of Jobs' e-mail so absurd was that the thing wasn't really a "smoking gun" at all. Cue had already testified that he and Jobs had originally planned to get the publishers to move Amazon from the wholesale model (where Amazon was selling New York Times bestsellers for $9.99) to the agency model (where the book publishers could set their own, higher prices).

The critical testimony on that point was the explanation Cue gave last Thursday about why he abandoned the "move Amazon to the agent model" language that appeared in an e-mail from Jobs written the week Cue changed his mind. See The DOJ's last best chance has passed.

If Judge Cote accepts Cue's explanation, Jobs' unsent e-mail is irrelevant.

For a drawing of Judge Cote questioning Eddy Cue about Jobs' e-mail, see Elizabeth Williams' courtroom illustration.

For background on the case, see:

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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