But government attorneys presented a handwritten note by Reidy about a phone call between herself and Murray which appeared to be notes (“close to Amazon, two issues left” the notes said) about Apple negotiations over e-book prices. Reidy has testified under oath that she did not talk about S&S’s negotiations with Apple or her plans about moving to the agency model “with anyone in the publishing industry,” during a period from late 2009 to early 2010 (when negotiations between the Big Six and Apple were going on) and she reaffirmed her testimony under questions from the government. On the charts you could see spikes in calls based on dates and events and in one chart Reidy was shown to have to talked most frequently during the period to Hachette CEO David Young and Penguin’s David Shanks, and less frequently to Macmillan’s John Sargent and HarperCollins' Brian Murray. At one point, Judge Cote asked for the display of two large charts showing both the number of calls between all the Big Six CEOs that were tied to the dates of the Apple negotiations as well as a visual representation of the quantity of calls between certain CEOs. The government also focused on Reidy’s contact with other Big Six CEOs. Apple’s not the whole market,” and she explained that Apple did not want “a great disparity” between high and lower e-book prices, “there would still be some price competition but across the whole of the catalog.” She was quick to emphasize that S&S welcomed Apple into the book market and saw their entry as a new and powerful retail platform for selling books as well as a chance to take back control of S&S e-book pricing. Though when asked if Apple believed they could stop price wars, Reidy said, “it’s more complicated than that. Responding to a question about retail price wars, Reidy was forthright, emphasizing that retail price wars devalue the product and agreed they “don’t make sense” in the words of the government attorney. Reidy made it clear that during that initial meeting she wanted even higher prices on e-books than Apple was projecting (“I wanted prices to go up even more,” she said) and was initially in favor of a minimum price maintenance agreement, “but I made the connection that the agency model would give us what we wanted,” she said. “The MFN made us want to do it ,” Reidy said, “it was an option, we didn’t have to but as a practical business matter it made sense.” Reidy debated the government attorney over whether the MFN “forced” publishers to move all resellers to the agency model, in the governments phrasing, or whether moving resellers to agency was “needed” and a “practical business decision,” in her view, a seeming semantic variation on the established notion that the move was inevitable under the circumstances. Indeed Reidy and the government butted heads over the interpretation of the MFN’s impact. Among their first items presented as evidence was a handwritten note by Reidy from an initial meeting with Apple detailing projected pricing of $12.99 to $14.99 for e-books as well notes about “mininum price maintenance,” Apple’s “price tiers” (charts tying the price of e-books to physical books) and notations that Apple had met with all of the Big Six.Īs they had done with Shanks, the government pressed Reidy on the nature of Apple’s Most Favored Nation clause and their contention that the MFN is a key element in the alleged price-fixing conspiracy and a cover for the Big Six to move all their retail partners to the agency model in a concerted effort to raise e-book prices above the $9.99 price point. Much like they had done during Shanks’ time on the witness stand, government attorneys quickly presented a series of e-mails, handwritten notes, phone logs and other documents detailing contact and meetings between Reidy, S&S staff and then-Apple executive Eddie Cue, Apple associate general counsel Kevin Saul and others. Late in the day, Amazon v-p of Kindle content Russ Grandinetti also took the stand facing stiff scrutiny from Apple’s lawyers who seem fixated on Amazon’s demands for contract parity with the iBookstore during negotiations with the Big Six publishers to establish terms for the new agency pricing model. Following Penguin’s David Shanks to the witness stand in the Apple e-book price fixing trial, S&S CEO Carolyn Reidy was feisty and contentious, often challenging the intent of the government’s questions or offering unsolicited interpretations of its language and phrasing.
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