Android takes a 14% bite out Apple's pie

Shipments of Apple iPads have declined 14% compared with Q2 2012 according to th latest market share data from analyst Canalys.

Apple's market share dropped to 43% while Samsung, Amazon, Lenovo and Acer each grew annually by over 200%, driven by increasing demand for smallscreen tablets. Canalys estimates that 68% of tablets shipped in Q2 had a screen size smaller than 9".

iPad.jpg
The analyst expected Apple would compete by bringing out cheaper tablet devices, as it did with the introduction of the iPad Mini. But the price of a smallscreen tablet is being driven down by low-cost Android devices.

Tim Coulling, Canalys senior analyst said the market for full-sized tablets has stalled.

“Microsoft’s inventory issues with the Surface have been well publicised. Heavily-discounted Surface RTs will fly off the shelves. Expect prices to continue to fall though, as the starting price of $350 is still too expensive to spark an HP TouchPad-style buying frenzy.”

iPad.jpg Canalys worldwide tablet shipments Q2 2013
According to Canalys Android still lags far behind iOS in the availability of fully-optimised tablet apps and tablet app downloads from the Apple App Store dwarf those from Google Play. However, the analyst expected Google to put more focus on high-quality Android apps in the Play App Store.

The analyst's Q2 2013 tablet market share data showed that over 34 million tablets shipped, a 43% year-on-year increase. Tablets now account for 31% of worldwide PC shipments.

Apple's smartphone market share drops to three-year low

Apple's share of the smartphone market dropped in the second quarter to its lowest level in three years, research firm Strategy Analytics said.

The share of the iPhone slipped to 13.6 percent in the quarter from 16.6 percent in the same quarter last year. The largest vendor Samsung Electronics, however, saw its share soar to over 33 percent from over 31 percent in the same period. Samsung shipped over two times the number of smartphones Apple did in the quarter, Strategy Analytics said.

Apple is at risk of being trapped between 3-inch Android smartphone models at the low end and 5-inch Android models at the high end, the research firm said Thursday. The market share of the iPhone in the second quarter was the lowest since the second quarter of 2010, it added. In contrast, Samsung saw strong demand in China and other countries for its flagship Galaxy S4 device, which helped increase volumes.

Sales of the iPhone hit 31.2 million in the April to June quarter, a record for the period, Apple said earlier this week. It had sold 26 million phones in the same quarter last year.

Overall, smartphone shipments grew 47 percent year-on-year to reach a record of 230 million units in the second quarter of 2013, Strategy Analytics said. LG had a share of 5.3 percent, while ZTE had 5 percent and Huawei Technologies had 4.8 percent of the smartphone market. The research firm listed other vendors as together having a share of 38.2 percent in the quarter.

IDC reported Thursday a 52.3 percent growth in the smartphone market with 238 million units shipped in the second quarter. Buyers may have postponed iPhone purchases expecting the launch of a next-generation device in the fall, it added. Apple's sales could accelerate globally if it launches a lower-cost iPhone and continues to penetrate prepaid markets in the quarters to come, IDC said.

The worldwide mobile phone market grew 6 percent year-over-year in the second quarter of 2013 to over 432 million units, according to IDC. Strategy Analytics said shipments reached 386 million units, an increase of 4 percent year-on-year.

The research firms did not immediately comment on the reason for the variations in their estimates.

Nokia's share dropped in the handset market to 15.8 percent as its shipments fell 27 percent to about 61 million in the second quarter, said Strategy Analytics. The Finnish vendor was hit by "fading Symbian smartphone volumes and lackluster feature phone demand," as it continued to struggle in the big three markets of China, U.S. and India, the research firm said.

Once more into the breach: How hackers compromise websites like Apple's

Unless you happen to call the proverbial rock home, you’ve probably heard that Apple’s developer websites were recently hit by a hacking attack. Though the developer site has been inaccessible since last week, the company didn’t announce the intrusion until Sunday; as of this writing, the site remains down. That outage has resulted in considerable inconvenience for app developers, not to mention the poor IT people in Cupertino who have been working around the clock to deal with the breach.

According to the company, the attackers didn’t manage to get their hands on any sensitive information, but the fact remains that security hacks like this one happen with alarming frequency all over the Web, and one cannot help but wonder why websites seem to be so easy to break into.

Computers can be hacked using a variety of techniques, which typically fall into three categories: social engineering, software exploits, and hardware cracks.

Social engineering is the least technological member of this trio, although it’s by no means the least sophisticated. It works by extracting access credentials from an unsuspecting user, or acquiring them from an unscrupulous operator, such as a disgruntled employee. If you’ve been on the Internet for more than a day, you’ve probably been on the receiving end of a “phishing” email, which invites you to log on to a site that looks and feels like, say, your bank’s, but is in reality controlled by hackers who capture your username and password and then use it to help themselves to the money in your account.

These types of attacks, while very common against the general public, are hard to pull off against a website owner—particularly one as large and sophisticated as Apple. For one thing, IT personnel tend to be well acquainted with phishing attempts, and are usually on the lookout for them. In addition, the private nature of the internal systems that are used to manage a company’s network makes them hard to spoof, unlike a banking website, which is open to the public and can be easily replicated.

In practical terms, most successful attacks against websites tend to be software-based, and are often caused by the site’s developers making the wrong set of assumptions. For example, a very common class of attacks called code injections is caused by code that “trusts” data coming from the outside world, and thus doesn’t attempt to filter out any potentially malicious commands embedded in that data. Unchecked, this kind of bug can have catastrophic repercussions, allowing a third party to gain access and even delete information stored in the site’s database—such as username, emails, or passwords.

A more sophisticated vulnerability, known as cross-site request forgery, can be used to force a browser to surreptitiously navigate a target website without human intervention. If the user happens to be logged into a password-protected website, an attacker could perform unauthorized operations, including locking the real user out of his or her own account.

These are but two examples of dozens of possible vulnerabilities that can be caused by weak programming. And even when the website’s code itself is perfect—and we know how often software is perfect—there is still plenty that can go wrong: Regardless of the operating system on which a Web server runs, it typically also makes use of hundreds of different software components that take care of everything from delivering documents to keeping the system’s time. Since many of these programs have a network component, any defect in their code has the potential to become a possible entry point for a would-be hacker.

If this appears to paint a bleak picture of Web security, keep in mind that practically every potential attack can be mitigated—and almost always prevented—by using the right security measures.

In many organizations, for example, Web servers are usually kept behind firewalls—systems that are designed to be connected to the open Internet, and whose software is hardened in such a way as to prevent intrusion while simultaneously letting legitimate traffic through. In addition, larger companies employ sophisticated intrusion-detection software that can “sniff” network traffic and detect illicit activity before it becomes a problem; they also implement policies that that promote the development of secure software, for example by placing significant emphasis on data encryption and good programming practices.

Thus, while the occasional slip-up may still occur, it’s a safe bet that, the more important a Web-based system is, the more sophisticated the level of control over its operations. What happened at Apple appears to have been a lapse in network administration that allowed outdated software on a server to leak information about developers. While serious, this bug is unlikely to affect Apple’s consumer-facing services, like iTunes or iCloud, which are probably under much greater scrutiny from the company.

This is not to say that any website is absolutely secure. An old dictum in the security community is that the only computer that cannot be broken into is one that is unplugged from the Internet and turned off.

Indeed, hardware hacks have been used to pull off some rather remarkable stunts against systems that were thought to be hack-proof because they weren’t connected to any network, such as crippling Iran’s nuclear program with a USB key and even reading a computer screen through a wall by detecting its radio emissions.

Spy stories aside, this goes to show that the potential for intrusion is a byproduct of the very functionality that makes running a website possible. While the risk can never be completely eliminated, the right combination of expertise and care, mixed with a hint of paranoia, can greatly reduce its potential impact—and nowhere is this combination of skills more likely to come into play than in a company’s most important properties.

Site break-ins are serious threats that tend to get lots of publicity, but not all breaches are created equal. The kind of issue that afflicted Apple last week only involved a relatively small and obscure section of its operations, and appears to have left everyone’s really important data, like credit card numbers, uncompromised. If anything, in fact, it’s likely that what happened gave Apple’s IT department a reason to tighten its internal policies, which may well result in better security for its end users in the long term.

Advertising: Apple’s Move Into TV Relies on Cooperation With Industry Leaders

Now, as Apple tries to reimagine television, it is taking the partnership route again, collaborating with distributors like Time Warner Cable and programmers like the Walt Disney Company on apps that might
eliminate the unpleasant parts of TV watching, like bothersome set-top boxes or clunky remote controls.

Apple’s broader strategy — what its chief executive, Timothy D. Cook, recently called its “grand vision” for television — remains shrouded in secrecy, as everything Apple-related tends to be. Some analysts continue to predict, as they have for years, that the company will someday come out with a full-blown television set.

Whether or not an iTV ever materializes, the company’s more modest steps, like improving the $100 Apple TV box that 13 million households now have and adding access to cable channels through the box, suggest that its strategy stands in stark contrast to Google’s, which is contemplating an Internet cable service that would compete directly with distributors like Comcast and Time Warner Cable.


Reports emerged earlier this week that Google has held talks with several channel owners about licensing channels for such a service, but no content deals are within reach.


Apple weighed something similar years ago, but its executives concluded that it should work with the industry’s powerful incumbents, rather than against them.


“Apple’s probably going to have greater access to content by deciding to cooperate,” said Natalie Clayton, who oversees digital video research for Frank N. Magid Associates.


Case in point, Apple last month turned on HBO and ESPN apps for Apple TV owners, much to the delight of all involved. But those work only for people who have an existing cable or satellite subscription.

Coming next is an app from Time Warner Cable, allowing some of the company’s 12 million subscribers to watch live and on-demand shows without a separate set-top box. The app will effectively add an Apple layer on top of the TV screen, providing what its proponents say is a programming guide that is far superior to anything offered by Time Warner.


Apple has talked in-depth with other big distributors about similar apps, according to people involved in the talks. Its intent is to collect a fee from distributors in exchange for enhancing their television service and in that way, theoretically, make subscribers more likely to keep paying for cable.

“They’re trying to apply their software expertise, their user interface expertise,” one of the people said. (The people, both at distributors and programmers, insisted on anonymity because they said public comments would interfere with the private talks with Apple.)


Apple has sought support from programmers as well. It has proposed, for instance, an ad-skipping technology that would compensate networks for the skipped ads by charging users. While the idea is far-fetched, it intrigued some of the channel owners who were briefed about it and excited Apple followers when it was first reported by the technology writer Jessica Lessin earlier this week.


For Apple, further moves into television could neutralize some of the skepticism about the company’s future since the death of Steve Jobs in 2011. Investor concerns that the company might not have another iPhone- or iPad-level innovation on the way have dragged down its stock price, which topped $700 for the first time last September, but has recently hovered closer to $400.


For the time being, Apple TV is a small part of its business — something best suited to “hobbyists,” as Mr. Cook put it at the D: All Things Digital conference in May. At that time, he hinted at the opportunity Apple saw in the living room, calling traditional TV watching “not an experience that I think many people love” and “too much like 10 or 20 years ago.”


It is easy to see how Apple could help. Products like Apple TV and Roku, which connect TVs to the Internet’s wealth of streaming content, have proliferated because the set-top boxes that cable companies supply have not kept up with shifts in consumer behavior. But the streaming boxes remain a somewhat niche technology.


Apple could choose to market its box more heavily, especially as competition heats up from Amazon and other companies. Or it could eliminate the need for any box at all by building its own TV set. Reports this week that Apple may acquire PrimeSense, a maker of motion-sensing technology that could be used to control a TV without a physical remote, prompted a new round of guessing about that.


In Apple’s partnership approach, some see the company placing a multitude of bets, recognizing that television could evolve in any number of ways.


Through Apple TV, it is simultaneously supporting established distributors and programmers as well as a parallel universe of streaming TV, as represented by Netflix, Hulu and Amazon.


Last month, in a little-noticed move, the company approved an app for Sky News, the British-based cable news channel. Sky could already be streamed live free on the Web, but by creating an app for Apple TV, the channel gained access to the television sets in 13 million homes without the need for complex negotiations with cable companies.


The Sky News app is free, but the software that powers it, from a company called 1 Mainstream, also allows for à la carte subscriptions.


Asked about the implications of the app, Rajeev Raman, the chief executive of 1 Mainstream, said: “It’s a learning year for Apple. And it’s a learning year for all of us, to say, O.K., what really does work?”

In effect the app is a more direct route to consumers for Sky News. Bloomberg TV, already available on cable, tried something similar earlier this year by cutting a carriage deal with Aereo, the streaming service backed by Barry Diller. But Aereo is antagonistic toward networks and existing distributors; Apple, at least for now, is positioning itself as a friend. 

Apple's TV ad-skipping proposition: If you can't beat 'em, pay 'em

TV ads: They’re loud, they’re intrusive, and, in this age of on-demand streaming from Netflix and its competitors, they’re increasingly anachronistic. And yet, the television industry has been sticking to its guns with a vehemence that would make Charlton Heston proud.

Apple may be looking for a way around that status quo, if a story from former Wall Street Journal writer Jessica Lessin is any indication: Cupertino has reportedly proposed to television companies a system whereby users of a hypothetical Apple television service would be able to skip ads, while the networks would be recompensed for those missed commercials.

Rumors and whispers of Apple’s forays into the deep end of the television pool have persisted for years now, but little progress seems to be made—publicly, at least. The ad-skipping plan is the latest in a long line of rumored back-room negotiations with the powers that broadcast.

While ad-skipping is nothing new, it’s a perfectly Apple suggestion. Though the company currently plays ball with a multitude of video providers for its Apple TV set-top box—more than a few of which show ads—it’s no stretch to believe that Apple sees the commercials a necessary evil.

It’s even a necessary evil that Apple itself has dabbled in, though the company has never been particularly successful at it. When Steve Jobs launched the in-app iAd program in 2010, the intent was to class up advertising—”We want to change the quality of the advertising,” the late CEO said at the time. As a result, the initial minimum buy-in for ads was $1 million, and was targeted at high-end, premium customers like car companies, fashion firms, and the like.
“Premium” might work great for the company when it comes to its products, but it didn’t pan out so well in advertising: These days, that initial buy-in is down to $50, even as Apple plans to expand its ad spots from just apps to its iTunes Radio music-streaming service, set to debut in the fall.

And television is an advertising stronghold that’s arguably harder to break, even as we increasingly skip commercials with our DVRs or totally ignore them by watching our shows streaming on Netflix, purchased from the iTunes Store, or even acquired from less-than-licit sources. The network-backed Hulu service does show ads (as do most of the networks’ own websites), but its owners are still having a hard time trying to figure out to make money from it. (Tip: Don’t make paying customers still watch ads and limit which shows they can see.)

Despite all this, ads still pay for television, and show ratings are used to set the prices that advertisers pay. That’s not to say there isn’t a better solution—after all, with on-demand and streaming you can theoretically tell exactly how many people are watching your show, rather than estimating based on a statistical sample. (I wonder if perhaps the networks’ worry is that the move away from sampling might make the bottom fall out of the ad market; hard data about what people are watching, and how they’re watching it could have a sobering effect on ad rates.)

What Apple is attempting to do with its ad-skipping plan, however, is bridge the stalemate: Don’t tick off consumer by making them watch the endless, annoying ads that they’re used to being able to skip or avoid and, at the same time, throw the broadcast networks a bone in the form of some revenue.

It’s roughly analogous to what Apple tried with its iTunes Match service: Sure, many users ended up with free, legitimate copies of songs that they’d acquired through—ahem—alternative means, but at $25-per-year, the record companies brought in money that they otherwise never would have seen.

The networks, of course, likely wouldn’t be bought off for a song (if you’ll pardon the expression)—they aren’t yet in as dire straits as the music companies, which is probably one reason that the television industry probably prefers to keep Apple at arm’s length. That may get harder and harder for the content providers, as recent figures show that the Apple TV accounts for more than half of set-top box sales.

But there’s still an attractive proposition here: After all, if there’s a cardinal rule to business, it’s that a little money beats no money every single time.

None of this is to say that this particular future will come to pass. Apple’s clearly been going back and forth with the networks for some time now, and this is only the latest tactic that’s made it to the public eye—there are certainly more issues to be worked out before any theoretical Apple television service becomes a practical one.

But TV watchers won’t stand still forever. Every minute that the television networks hold out on moving forward is another minute that competitors like Netflix and Amazon—both of which are now producing their own original (and semi-original) series—scoop up television viewers. Because if there’s another key rule of business, it’s this: If you don’t move, someone else is going to make you move. 

Fallout From Apple’s Loss on E-Books

A federal judge on Wednesday said that some of Mr. Jobs’s words helped persuade her that Apple had violated antitrust law in conspiring with publishers to raise prices of e-books. Although it appears unlikely that the ruling will have an immediate effect on the book-buying public, it could affect how Apple cuts deals with media companies that provide the music, books and movies that help make its iPhones and iPads compelling.

Charles E. Elder, an antitrust lawyer at Irell & Manella, said that the ruling could lead Apple and other technology companies negotiating with media companies to “proceed with extreme caution” to avoid any appearance of collusion.

On Wednesday, Apple continued to assert it had done nothing wrong, and said it would appeal the decision. A trial to determine damages will follow.

“Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations,” Tom Neumayr, an Apple spokesman, said. “When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry.”

In her ruling, Denise L. Cote of United States District Court in Manhattan said Apple had taken advantage of the publishers’ “fear of and frustration” over Amazon.com’s control of e-book pricing, and the tight window of opportunity in the weeks leading up to the iPad’s introduction in 2010, to get the publishers to agree to its terms. “Apple seized the moment and brilliantly played its hand,” she wrote.

Five major publishers had also been named in the suit, but they all settled before the trial. Apple continued to fight the charges despite what increasingly looked like uphill odds. Publicly, the company said it refused to settle as a matter of principle because it had done nothing wrong.

The Justice Department said the judge’s decision was a victory for people who buy e-books.

“Companies cannot ignore the antitrust laws when they believe it is in their economic self-interest to do so,” the Justice Department said in a statement. “This decision by the court is a critical step in undoing the harm caused by Apple’s illegal actions.”

The main reason e-book prices will probably not move sharply in the near term is that the publishers who settled are operating under the settlement’s terms, which prohibit publishers from restricting a retailer’s ability to discount books.

“The changes to the industry have already happened,” said Mike Shatzkin, the founder and chief executive of the Idea Logical Company, a publishing consultant.

Since those settlements have gone into effect, prices on many newly released and best-selling e-books have gone down. One New York Times best-seller, “And the Mountains Echoed,” by Khaled Hosseini, is sold on Amazon.com for $10.99. But other e-books seem to have held closer to presettlement prices: “The Ocean at the End of the Lane,” by Neil Gaiman, is listed for $12.80 on Amazon.com.

The antitrust suit underscored the turmoil in the book industry as readers shift from ink and paper to electronic devices like tablets and smartphones, where they can buy books with the push of a button. The publishers want to embrace new media, but they are also trying to protect their profits and retain control of their businesses.

A recent survey of the publishing industry revealed that in the United States, e-books account for 20 percent of publishers’ revenue, more than $3 billion, up from 15 percent the year before. Amazon.com dominates the e-book market.

The outcome will probably inflict some damage to Apple’s reputation. The judge’s decision casts Apple as a cold and manipulative bully whose actions have harmed consumers, contrary to the way the company markets itself, as a maker of products that improve people’s lives.

After closing arguments, Apple's fate in e-book antitrust case goes to judge

“Word games,” an “overreaching narrative” and a “case of inferences” were a few choice phrases used by attorney Orin Snyder Thursday in closing arguments for Apple in the U.S. Department of Justice’s antitrust, ebooks price fixing case against the tech giant.

 

The DOJ brought the case against Apple and five of the largest book publishers in the U.S. for allegedly conspiring to limit price competition and raise prices in the ebook market in 2010 in an effort to stop Amazon from pricing their best-selling electronic books at $9.99 each.

 

Both the DOJ and Apple are making their closing arguments Thursday before Judge Denise Cote, who will decide the outcome of the antitrust suit. The five large publishers also named in the DOJ suit have already settled for a cumulative $164 million, leaving Apple to defend its practices in court. Cote presided over the three-week, non-jury trial in the U.S. Southern District Court of New York in Manhattan.

 

For Apple’s summation, Snyder characterized the interactions that Apple had with the five publishers as typical conversations and negotiations that accompany any business agreement. At no point did Apple try to coordinate the activities of the publishers in an attempt to fix the prices of electronic books for the market. “The evidence does not show this,” Snyder told the court, arguing that the DOJ made this case solely on “overreaching” interpretation of electronic documents.

 

Snyder focused on the timeline between December 2009 and January 2010 to rebut the DOJ’s assertions over what took place between Apple and the publishers. He noted that at the time there was “turmoil” in the ebook market and that Apple executives, who had no prior knowledge of this market, were speaking with publishing heads just to hear their concerns. He also offered multiple examples of disagreement between Apple and the publishers over the proposed contracts, this contention serving as proof that the parties were not acting in unison to fix retail prices.

 

The case stems from contracts that Apple made with the publishers in 2010, just before the company launched its iPad mobile computing device. In January of that year, each publisher—HarperCollins, Penguin, Hachette, MacMillan, and Simon & Schuster—agreed to let Apple sell their electronic books in a relatively novel business model, one in which Apple would sell their books at the prices the publishers had set, and reap 30 percent of the retail price.

 

This approach, called the agency model, differed from the standard decades-old wholesale model of book selling, in which the retailer, not the publisher, set the book prices. With the new agency approach, retailers “lost their ability to compete on price, including their ability to sell the most popular ebooks for $9.99 or for other low prices,” charged the DOJ in its complaint.

 

According to the testimony of Apple Senior Vice President Eddy Cue, publishers immediately expressed a desire to move electronic book sales to the agency model when he initially approached them in December 2009 to secure electronic book rights for the iPad.

 

The publishers saw the agency model as the solution to the issue of Amazon pricing the electronic versions of best selling books for $9.99, less than what the online retailer paid for these titles in many cases. The publishers worried that Amazon, which enjoyed a 90 percent share of the electronic book market in 2009, was lowering the perceived price point of books in consumers’ eyes, as well as laying plans to cut publishers out of Amazon’s book sales altogether and to deal with authors directly. The publishers had met throughout 2009 to discuss the issue, according to Apple.

 

Cue proposed the agency model to then Apple CEO Steve Jobs, who liked the idea, given that Apple was already using the agency model for its iTunes media store and the company’s App store. So, in early January, Apple proposed an agency model agreement with all the publishers, in which Apple would in effect get a fixed 30 percent commission for each sale.

 

Apple also added a number of additional provisions to the contract. It established a tier of price points for books. Best sellers, for instance, could be priced at $12.99 and $14.99 and, later at the publishers’ insistence, $16.99 and $19.99. Apple mandated caps, or limits to how much publishers could charge for electronic books. It prohibited publishers from both withholding best-selling titles from electronic release, and delaying the release of some titles in electronic form, a practice known as windowing.

 

Finally, Apple added what it called a “most favored nation” (MFN) clause. The MFN stipulated that the publishers must offer their electronic books to Apple at 70 percent of the lowest price offered on the retail market elsewhere. In this way Apple could match the lowest price of ebooks elsewhere and still make its 30 percent cut.

 

The DOJ had argued that MFN was proof that Apple was trying to set the prices for ebooks not just for itself, but for the entire industry. Snyder argued Apple was only looking out for its own best interest. Apple did not care what prices the publishers would charge, as long as Apple got its 30 percent cut. “If books were sold at $1.99, we’d make a ton of money,” he said.

 

Snyder also pointed out that after Apple settled on the idea of including an MFN in its contract, it had no preferences as to whether the book publishers signed other retailers such as Amazon to an agency model. He showed a number of different pieces of correspondence that Cue and Jobs had had with publishers to back this point.

 

Five of the six largest book publishers all signed Apple agency contracts within a few days of one another in January (the sixth and largest publisher, Random House, abstained). Over the next few months, the publishers had set up other agency agreements with other retailers as well, such as Amazon.

 

Immediately after the contracts took effect in April 2010, and publishers moved all their retailers to the agency model, and prices of electronic books offered by both Amazon and Barnes & Noble increased by almost 20 percent, the DOJ calculated.

 

In his summation, Snyder made the case that the publishers, and even other retailers such as Barnes & Noble and Google, were already considering the use of the agency model before meeting with Cue. He noted for instance that Barnes & Noble had also approached the publishers in January 2010 with an agency model to sell ebooks for its Nook reader. This was proof, he asserted, that the whole industry was about to undergo a transformation in how electronic books were sold to retailers.

 

While the DOJ had highlighted the many talks Cue had with publishing executives as evidence that they were coordinating activities, Snyder asserted that these meetings were simply introductory meetings and, later, individual contract negotiations. Snyder cast doubt on the idea of a price fixing conspiracy given that the publishers had already been in talks for more than a year about dealing with Amazon. “How can Apple be a ringmaster before the iBookstore was even a twinkle in Apple’s eyes,” he rhetorically asked, referring how up until late December 2009, Jobs wasn’t even interested in entering the electronic book market.

 

At one point, Cote asked Snyder if Apple was aware that the publishers may have been colluding among themselves. “We don’t have an opinion on that. It’s not our burden” to disprove that type of assertion in court, he responded. He also pointed out that the contract negotiations between Apple and the publishers were far too contentious to be considered collusion. As of mid-January Apple didn’t have any agreements with the publishers and each publisher had taken issue with different parts of the proposed agreement, such as the MFN clause, or the price caps. If there was a secret agreement already in place, the negotiations would have gone far more smoothly, he asserted.

 

When making its case, the DOJ had to prove anticompetitive behavior in a number of ways. It had to show that the publishers had conferred with one another in order to set up a new cross-publishing company pricing model that would limit retailer price control, and that Apple helped exchange information among the publishers. It also had to show that the publishers had attempted to conceal their communications. In addition, it had to show that consumers were harmed by this collusion.

 

Whether the DOJ has made its case sufficiently to Cote remains to be seen. Early reports indicated that she believed that the government had a strong case. Thus far, the DOJ has compiled a copious amount of email and other electronic documentation that it feels points to how the different parties worked with one another.

 

Legal observers, however, have doubted that the DOJ documentation is sufficient, and that its case relies too heavily on inference.

 

For the government's summation, DOJ director of litigation Mark Ryan challenged Snyder's idea that difficult negotiations between Apple and the publishers constituted proof there was no conspiracy.

 

"Sure, there was some dispute ... about what the price should be," he said. "But disagreement among a cartel doesn't mean there isn't a cartel." He urged the court to look beyond the discussion of the agency model, MFN and other details, and to focus on how book prices immediately changed after the agency agreements went into play.

 

Ryan described the events of early 2010 as "the publishers acting as a group, and Apple bringing that group along." There was a "fairly brazen price-fixing element to this," he said.

 

He discounted the fact that Apple was a new entrant -- and not yet a powerhouse -- in the e-book market, asserting that the Sherman Antitrust Act, the law on which the suit is based, made no distinctions for new entrants. "There is no court decision saying that because you are new you can organize the suppliers of the market. This is not a defense," Ryan said.

 

Ryan also noted that Apple, in its talks with book publishers, stressed how moving to the agency model would solve "the industry's" problems with Amazon. Less often did Cue and Jobs talk about how it would help an individual publisher.

 

Cote asked if Apple, in talking about the Amazon issue, wasn't just making a sales pitch. Perhaps Apple recognized the difficulties publishers were having and proposed a solution like any new business might, she posited. Ryan countered that part of Apple's pitch was to help all the publishers confront Amazon in unison, which was an antitrust violation.

 

Apple put the MFN in place with one goal in mind, Ryan argued: to get Amazon to move to the agency model. Without Amazon doing so, Apple could not compete on price. But it was essential for the major book suppliers to act in unison to get Amazon to agree to an agency model, or so the publishers thought at the time. In a free market, Ryan said, each publisher would work out their issues with Amazon independently.

 

It was the "collective force" of the publishers that prompted Amazon to adopt the agency model and stop offering $9.99 best sellers, Ryan said.

 

"Apple was simply indifferent to customers paying higher prices," Ryan said.

 

Cote is expected to reach her decision within a few weeks.