Apple e-book “smoking gun” may be damp squib

Prosecutors have shown an e-mail that they claim is proof that Steve Jobs was in on a plot with publishers to force Amazon to change the way electronic book pricing works. But there’s a mystery about whether the e-mail was ever sent.

It’s all part of the ongoing trial in which Apple is accused of leading an unlawful joint action by publishers to use their power as suppliers to force Amazon to adopt the agency model, in which the publisher (not the retailer) sets the price and the retailer takes a fixed percentage. Prosecutors argue that such collusion removed the possibility of price competition between retailers and thus unfairly raised prices.

Last week Apple lawyers argued that Amazon was thinking about adopting the agency model anyway, something that was discredited by the CEO of one of the publishers, Penguin, who said Amazon “screamed” against the idea.

This week Apple lawyers argued that Steve Jobs and company had been “indifferent” to whether or not Amazon adopted the model. That prompted prosecutors to unveil an e-mail from Jobs to Eddy Cue, the Apple representative in negotiations with publishers in the run-up to the iPad launch. Responding to the idea of allowing publishers to charge higher prices, Jobs wrote:

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

Prosecutors argued that this proved Jobs certainly was not indifferent to Amazon’s pricing policy. On the face of it the e-mail also shows that Apple was creating a situation where the Apple-publisher agreement was dependent on the publisher-Amazon agreement. That could significantly help the prosecution argument that Apple wasn’t just involved in an unlawful market collusion, but was leading it.

The problem is that it appears this e-mail was only a draft. A second e-mail, which does appear to have been sent, makes no mention of the agency model and instead deals with a most favored nation idea, with Jobs saying he’d make a deal as long as the wholesale price offered to other retailers had to match or exceed the retail price through iTunes store — in other words, if any other e-book retailer wanted to undercut Apple, they’d have to take a loss to do so.

To make things more confusing, this second e-mail is time-stamped 90 seconds earlier. It’s unclear yet if this is a glitch, or if there’s a particular reason Jobs appears to have considered demanding the agency model and then changed his mind.

Apple denies any wrongdoing in the case. The five publishers involved have reached settlements with the Department of Justice and agreed to change the way they do future deals with retailers, but have not formally admitted any wrongdoing. The Apple case hearing continues next week.