Department of Justice to Sue Apple Over Fixed eBook Prices
UPDATE: The U.S. has officially filed an antitrust lawsuit against Apple as well as publishers Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster. - via Bloomberg
UPDATE 2: The Department of Justice has released a PDF of their complaint. It's a really interesting read!
The Department of Justice plans to launch an antitrust lawsuit against Apple and five major publishers for alleged price-fixing. In March the The Wall Street Journal reported that the U.S. Justice Department warned Apple and the publishers that it planned to sue them for raising the price of electronic books. The Justice Department believes that Apple violated federal antitrust laws by jointly raising the prices with the five publishers.
"The Justice Department is investigating alleged price-fixing by Apple and five major publishers: CBS Corp’s Simon & Schuster Inc, HarperCollins Publishers Inc, Lagardere SCA’s Hachette Book Group, Pearson and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH. A lawsuit against Apple, one of the parties not in negotiations with the Justice Department for a potential settlement, could come as early as Wednesday but no final decision has been made, the people said."
According to the WSJ Apple allegedly violated federal antitrust laws in 2010 when it launched the first iPad. Publishers were worried that retailers such as Barnes & Noble would not be able to compete with Amazon's prices for eBooks. The late Steve Jobs then "suggested moving to an 'agency model,'" where publishers could set the price of a book. Apple would then take 30% and publishers would not allow other retailers to sell the same book at a lower price.
"[The publishers] went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books,' " Steve Jobs was quoted as saying by his biographer, Walter Isaacson.
The Justice Department believes that Apple and the publishers worked together to jointly raise the prices of eBooks across the industry. The publishers have denied violating any laws.