A bookworm is eating at Apple. Today the Justice Department filed a civil antitrust lawsuit against the iPad-maker and a slew of major book publishers saying that they colluded to raise the price of e-books. Remember when it was Microsoft that was always getting kicked around for this kind of stuff?
The gist of the lawsuit is that, according to the feds, Amazon-fearing publishers teamed up with Apple to bump the price of e-books up from the online retailer's standard $9.99 price (which many argue Amazon only achieves by selling at a loss to hurt competitors) .
As Apple was preparing to launch the iPad the company reportedly conspired—in fancy Manhattan restaurants!—to institute the "agency model" in the industry, in which publishers set their own prices on e-books and retailers get a commission. The publishers named in the suit—Hachette Book Group, HarperCollins, Macmillan, Penguin Group USA and Simon & Schuster—are accused of working with Apple to fight Amazon by agreeing to agency pricing with a clause in their contracts which prohibited publishers from letting other retailers sell e-books for less than Apple's prices. After the iPad was released, and they'd all signed up with Apple, they then forced Amazon to let them move over to the agency model. Which the company did.
Not that the plan has really worked out exactly as the alleged conspirators hoped. Despite the popularity of the iPad, Amazon still dominates the e-book landscape with 60 percent of the market (though that is down from 90 percent a few years ago). It is followed by Barnes & Noble, with 25 percent, and then by Apple's iBookstore, which "is believed to have 10 to 15 percent." And many of its e-books still are cheaper than those of its competitors.
Meanwhile, the Times reports, "several publishers have agreed to a proposed settlement" in the suit. So this worm could get squished sooner rather than later.
