US sues Apple, publishers for rigging e-book prices

New York: The US government filed an antitrust lawsuit against Apple Inc. and various major book publishers on Wednesday, saying the publishers conspired with Apple to raise retail electronic-book prices to limit competition. The lawsuit in US District Court in Manhattan said the effort was a response to the success Amazon had in selling e-books for just under $10. The lawsuit said the alleged conspiracy came as Apple was preparing to launch the iPad. It said the alleged conspiracy called for Apple to be guaranteed a 30 percent commission on each e-book it sold. [caption id=“attachment_272972” align=“alignleft” width=“380” caption=“The lawsuit said the alleged conspiracy came as Apple was preparing to launch the iPad. Reuters”] [/caption] “To effectuate their conspiracy, the publisher defendants teamed up with defendant Apple, which shared the same goal of restraining retail price competition in the sale of e-books,” the lawsuit said. Apple did not immediately respond to a comment request. At the heart of the e-book pricing debate is the industry’s ongoing concerns about Amazon.com. Publishers see the “agency model” as their best, short-term hope against preventing the online retailer from dominating the e-book market and driving down the price of books to a level unsustainable for publishers and booksellers. Since launching the Kindle in 2007, Amazon has made a point of offering best-sellers for $9.99. The discount is so deep from list prices of $20 and more that it’s widely believed Amazon is selling the e-books at a loss as a way of attracting more customers and forcing competitors to lower their prices. Amazon has also been demanding higher discounts from publishers, and stopped offering e-books from the Independent Publishers Group, a Chicago-based distributor, after they couldn’t agree to terms. When Apple launched the iPad two years ago, publishers saw two ways to balance Amazon.com’s power: Enough readers would prefer Apple’s shiny tablet over the Kindle to cut into Amazon’s sales and the agency model would stabilise prices. Apple’s iBookstore has yet to become a major force, but publishers believe the new price model has reduced Amazon’s market share from around 90 percent to around 60 percent, with Barnes & Noble’s Nook in second at 25 percent. The iBookstore is believed to have 10 to 15 percent. AP