DOJ Reportedly Threatens to Sue Apple for Antitrust
Amazon has capped the price of popular e-books at a cheap $9.99, a level disliked by publishers
By: Maureen O'Gara
Mar. 9, 2012 08:45 AM
The Justice Department has told Apple and five price-pinched publishers that it's going to sue them for colluding to raise the price of e-books according to the Wall Street Journal.
The story broke hours after Apple unveiled its latest iPad, a device that may not be quite as popular for reading books as Amazon's Kindles.
Amazon has capped the price of popular e-books at a cheap $9.99, a level disliked by publishers and hard for conventional booksellers to compete with.
When the first iPad arrived, Apple let publishers set their own price and took 30% provided the book wasn't sold elsewhere cheaper. The publishers then went to Amazon and insisted on the same deal, known as the agency model.
The Journal says the DOJ "believes that Apple and the publishers acted in concert to raise prices across the industry" and is ready to sue them for antitrust violations.
The paper says some but not all of the parties have had settlement talks and that they've been at it for some time.
The publishers were identified as Simon & Schuster, Hachette, Penguin, Macmillan and HarperCollins, which is owned by News Corp, which also owns the Journal.
They have reportedly denied acting in concert and claim agency pricing is pro-competitive, allowing more electronic booksellers to survive. The alternative would result in Amazon gaining more market share. Before agency pricing Amazon would often sell best-selling e-books for less than it paid for them.
E-books sales reportedly doubled last year in the US to $970 million.
The DOJ has previously threatened to sue Apple for colluding with other Silicon Valley firms like Google and agreeing not to poach each other's staff. The government claimed it held down wages.
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