- Sarah Palin responds to Martin Bashir’s resignation, praises media
- Obama to send 2 Gitmo terror suspects back to Algeria
- Paul Walker secretly bought $9K wedding ring for Iraq vet
- Mystery sign poster hits Washington state town: ‘It’s OK to say Merry Christmas’
- Pope Francis forms commission to advise on sex abuse
- Anthony Weiner on radio? Cumulus says, ‘Never, ever’
- Executive order: Obama ups green-energy mandate on feds to 20 percent
- GOP launches candidate training: How to talk to women
- N.Y.’s Rockefeller Center lights up, as Bloomberg flicks on 76-foot Christmas tree
- Northern Ireland turns to ‘Game of Thrones’ to draw in tourists
Feds: Apple fixed e-book prices
Antitrust suit also says 5 publishers colluded
The Justice Department’s antitrust division on Wednesday filed a lawsuit against Apple Inc., maker of the iPad, and five e-book publishers. It charges that Apple colluded with Simon & Schuster, HarperCollins, Hachete, Penguin and Macmillan to limit competition and fix the prices of e-books sold on the company’s wildly popular iPad and other e-readers.
“As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles,” Attorney General Eric H. Holder Jr. said in a statement. “We allege that executives at the highest levels of these companies - concerned that e-book sellers had reduced prices - worked together to eliminate competition among stores selling e-books, ultimately increasing prices for consumers.”
The case sets up a legal clash between the government and Apple, one of the nation’s most successful and internationally admired companies.
The outcome could also have major impact on the longstanding business model for the publishing industry as it seeks to adapt to the explosion of digital publishing options.
Jeff Kagan, a wireless and telecommunications industry analyst based in Atlanta, said the case shows how traditional publishers have struggled to adapt to the rapidly changing digital market.
“E-books should be selling for much less, but they’ve gone up in price,” he said. “The traditional publishers that are moving into the e-book business are moving in with their old [print] model, when they should move in with the new model.”
According to the lawsuit, the collusion began in the summer of 2009, before the first iPad was sold. Amazon, the prominent online book retailer at the time, had forced the price of most e-books down to $9.99.
The government charges that publishers, concerned that prices were too low, turned to Apple to create a new business model, known as the “agency model,” under which the publishers, rather than the retailers, set the prices. Most popular e-books now sell for $12.99 or $14.99.
According to the government’s case, the illegal scheme gave Apple a 30 percent commission on all sales through its iBookstore. The company was also guaranteed that no other retailer would be allowed to sell for less through an anti-competitive agreement known as “most-favored-nation.”
Apple said in email that it would not comment on the suit.
The Justice Department on Wednesday reached settlements with three of the companies, including CBS Corp.’s Simon & Schuster, Lagardere SCA’s Hachette Book Group and News Corp.’s HarperCollins.
“If approved by the court, this settlement would resolve the department’s antitrust concerns with these companies, and would require them to grant retailers - such as Amazon and Barnes & Noble - the freedom to reduce the prices of their e-book titles,” Mr. Holder said. “The settlement also requires the companies to terminate their anti-competitive most-favored-nation agreements with Apple and other e-books retailers.”
Amazon cheered the pending settlement.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
About the Author
Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at firstname.lastname@example.org.
- 'Momentous day' for in-debt Detroit
- Cyber Monday, Gray Thursday reflect sales shift
- Bye, bye American pie? China wants in on the U.S. apple market.
- Deal with Iran can mean lower prices at gas pump
- Obama administration nears trade agreement with Asia
Latest Blog Entries
- CURL: 'Mission Accomplished' for Obamacare
- Hack attack: 2 million Facebook, Twitter passwords stolen
- NAPOLITANO: Pope Francis should be saving souls, not pocketbooks
- Democratic infighting erupts over 'we can have it all' fantasy on entitlements
- 'Hunger Games' delivers Obama's message on income inequality
- American teacher shot and killed at Benghazi international school
- Obama returns to class warfare as poll numbers plunge
- HARPER: 'Knockout game' not a myth to liberal Sharpton
- Inside China: Nuclear submarines capable of widespread attack on U.S.
- Pentagon may give recruits 'a shot to start over' after shameful social media posts
Independent voices from the The Washington Times Communities
A collection of reader guest articles, thoughts and opinions by Communities writers and breaking news and information.
The cold hard truth about politics in America today and the state of this once great nation.
Politics, economics, and business from a real world perspective.
Life, liberty and the pursuit of happiness from the carpool lane.
White House pets gone wild!