Feeds

US Justice Department threatens Apple and publishers with court battle

Alleges firms conspired to push ebook prices up

High performance access to file storage

The US Justice Department has warned Apple and five big publishing houses that they may be seeing the inside of a courtroom for allegedly inflating the prices of ebooks if they can't settle the issue between themselves.

People familiar with the matter went whispering to the Wall Street Journal saying that some of the parties were holding talks to try to avoid a court battle. However, if they do settle, it could push the price of ebooks down across the sector.

Apple is in the firing line along with the publishing houses Simon & Schuster, Hachette Book Group, Penguin Group, Macmillan and Harper Collins, none of whom felt like chatting to the WSJ.

The US probe of pricing comes after the EU's antitrust body said in December last year that it would be looking into the same publishers, or their subsidiaries or parents, and Apple over alleged price-fixing in the sector.

The European Commission said it was opening a formal investigation over whether the five publishers and Apple had restricted competition by colluding on ebook pricing.

Regulators are concerned about ebook pricing because the new pricing models which ebook retailers used effectively forced the publishing industry to shift its own policies accordingly. Before the advent of digital novels, publishers would sell a book to shops for around half of the recommended retail price and the shops could then sell the book at whatever price they liked, leaving them free to add discounts as they wished.

When Amazon first came on the scene, it was selling new books at a tiny profit margin over the publisher's price or even at a loss to get folks interested in its Kindle readers – which the publishers weren't happy about at all.

Then Apple started building the iPad and suggested that ebook pricing should move to an "agency model", where the publishers set the price of the book and the retailer takes a 30 per cent cut. The problem was that Apple also said that publishers couldn't then let rival ebook shops sell the same book at a lower price.

Happier with this model, publishers pushed it out across the sector, insisting that other ebook retailers like Amazon accept it.

The US Justice Dept is accusing Apple and the publishers of acting together to push prices up, and therefore threatening to sue them for antitrust violations, the people familiar with the matter said.

The publishers say they didn't act together to set prices and anyway moving to the agency model of pricing had increased competition. ®

Combat fraud and increase customer satisfaction

More from The Register

next story
Putin tells Snowden: Russia conducts no US-style mass surveillance
Gov't is too broke for that, Russian prez says
Lavabit loses contempt of court appeal over protecting Snowden, customers
Judges rule complaints about government power are too little, too late
Don't let no-hire pact suit witnesses call Steve Jobs a bullyboy, plead Apple and Google
'Irrelevant' character evidence should be excluded – lawyers
EFF: Feds plan to put 52 MILLION FACES into recognition database
System would identify faces as part of biometrics collection
Edward Snowden on his Putin TV appearance: 'Why all the criticism?'
Denies Q&A cameo was meant to slam US, big-up Russia
Record labels sue Pandora over vintage song royalties
Companies want payout on recordings made before 1972
Ex-Tony Blair adviser is new top boss at UK spy-hive GCHQ
Robert Hannigan to replace Sir Iain Lobban in the autumn
Judge halts spread of zombie Nortel patents to Texas in Google trial
Epic Rockstar patent war to be waged in California
Reprieve for Weev: Court disowns AT&T hacker's conviction
Appeals court strikes down landmark sentence
German space centre endures cyber attack
Chinese code retrieved but NSA hack not ruled out
prev story

Whitepapers

SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.