Feeds

US Justice Department threatens Apple and publishers with court battle

Alleges firms conspired to push ebook prices up

Beginner's guide to SSL certificates

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. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Yes, yes, Steve Jobs. Look what I'VE done for you lately – Tim Cook
New iPhone biz baron points to Apple's (his) greatest successes
Lords take revenge on REVENGE PORN publishers
Jilted Johns and Jennies with busy fingers face two years inside
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Edward who? GCHQ boss dodges Snowden topic during last speech
UK spies would rather 'walk' than do 'mass surveillance'
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.