Apple’s Cue to testify in Day 2 of antitrust case

Adam Jeffery | CNBC The Apple flagship store on 5th Avenue in New York.

Adam Jeffery | CNBC
The Apple flagship store on 5th Avenue in New York.

It’s Day 2 of the Apple antitrust trial in Oakland, California, and sparks could fly on the witness stand.

Apple is fighting allegations that it violated antitrust laws between 2006 and 2009. The case hinges on this question: Was an iPod update in 2006 a legitimate product improvement or an illegal anticompetitive move?

Apple says it was perfectly legitimate, as the update made movies as well as album art available on the iPod for the first time, and included important security upgrades.

Plaintiffs lawyers disagree, saying the purpose of the update was to stifle competition. After that update, music from rivals like RealNetworks would not play on Apple devices.

They say Apple’s executives were trying to maintain and expand their monopoly on the portable digital media player market. By 2004, according to the plaintiffs, Apple controlled 70 percent of that market.

In some ways, this trial is a walk down memory lane. The iPod is not the premiere product it one was for Apple. It accounted for less than 1 percent of the company’s total revenue in its latest reported quarter.

Still, there is a lot of money at stake. Plaintiffs estimate damages at $350 million, but that penalty could triple if antitrust violations are proven.

In court Wednesday, Apple’s Eddy Cue, who oversees iTunes, is expected to take the stand. Cue’s challenge is to convince the jury that the iPod update was a legitimate and genuine product improvement, and not a method of maintaining monopoly power. A video interview of the late Steve Jobs six months before his death is expected to be used as evidence Thursday, and Apple’s SVP of marketing Phil Schiller is also scheduled to testify.

Cue’s testimony is critical for Apple, with the tech titan potentially on the hook for $1 billion.

Read More What threatens Apple? Here’s what pros think

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