U.S. Charges Apple, Publishers of Ebook Price Fixing [REPORT]

The United States Department of Justice (DOJ) has reportedly charged Apple and five publishers of colluding to keep ebook prices high.

There are some parties, of which details are not known, that met with the DOJ to settle the antitrust case, reports The Wall Street Journal, quoting “people familiar with the matter.” Report claims that a settlement of this kind could possibly lower ebook prices.

CBS Corp.’s Simon & Schuster Inc.; Lagardere SCA’s Hachette Book Group; Pearson PLC’s Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers, are the five publishers facing a potential lawsuit.

Apple could not be reached for immediate comment, while the representatives for the publishers – including Simon & Schuster, Hachette Book Group, Penguin Group, McMillan and HarperCollins – also refused to comment, said The Wall Street Journal.

According to Wall Street Journal, the DOJ’s major focus is on “agency pricing,” a plan that former Apple CEO Steve Jobs had used with publishers. Conventionally, book publishers sold hardcover books to retailers for almost half their cover price and allow retailers discount. However, with the introduction of ebooks, Amazon started selling books for $9.99 at a loss. However, Amazon still expected to create market share with that low price.

In Steve Jobs biography, Walter Isaacson stated that when Apple launched the iPad back in 2010, Jobs approached publishers with the agency model that offer Apple a 30% cut of each title sold in its iBookStore. The publishers getting a strong backing from Apple told Amazon that they won’t offer titles unless Amazon turned to agency pricing.

DOJ believes that both Apple and publishers are responsible for the increased ebook prices.  It is not only the U.S. Department of Justice that making an argument, the European Commission is also investigating the issue.

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