US to Go After Apple, Others Over E-Book 'Price Fixing'

Apple, publishers set up across-the-board prices: feds

By Mary Papenfuss,  Newser Staff

Posted Mar 8, 2012 1:15 AM CST

(Newser) – The US Justice Department has informed Apple and five top publishes that federal attorneys are ready to go to court to prosecute them on charges that they colluded to boost e-book prices, sources tell the Wall Street Journal. Some of the companies are already in settlement discussions with the feds, and a deal could have a profound impact on the cost of electronic books. The case centers on Apple's move to change the way publishers charged for e-books ahead of the introduction of its first iPad. Steve Jobs suggested an "agency model" in which publishers would set a book price, and Apple would take a 30% cut. Apple also insisted that publishers couldn't let rivals sell the book at a lower price.

"We told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway,'" Jobs was quoted as saying by his biographer, Walter Isaacson. The publishers then imposed that model across the board, according to Jobs. "They went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books,'" Jobs told Isaacson. Such a strategy amounts to collusion to raise prices across the industry and violates federal antitrust laws, according to federal officials. Publishers have denied they conspired to boost prices, and say the new pricing policy enhanced competition by allowing more electronic books.

An Apple employee demonstrates an interactive feature of iBooks 2 for iPad earlier this year.
An Apple employee demonstrates an interactive feature of iBooks 2 for iPad earlier this year.   (AP Photo/Mark Lennihan)
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