Apple, Inc. and five of the nation’s largest book publishers were accused on Wednesday of conspiring to raise the price of e-books, according to a newly-filed civil antitrust lawsuit. The Justice Department alleged that the CEOs of the publishing companies met regularly to discuss how to impose high prices on retailers of e-books.
Amazon E-Book Discounts Get the Cold Shoulder
In the civil antitrust lawsuit filed this week, five of the nation’s largest publishers along with Apple, Inc., were accused of meeting regularly to discuss how they should respond to steep discounting of their e-books by retailers like Amazon.
After Apple released its first iPad tablet in early 2010, the company reportedly negotiated with book publishers to offer their books in its new iBookstore, but didn’t want to match Amazon’s “wretched $9.99 price point,” according to the suit. The CEOs allegedly called and emailed each other regularly to craft a solution to hike up the cost of e-books.
In their meetings, they arranged to lift the price of many best-selling e-books to $12.99 or $14.99, then banded together to impose the new model on Amazon since no individual publisher would succeed at the task on its own.
As a result, said Attorney General Eric Holder, “we believe that consumers paid millions of dollars more for some of the most popular titles.”
Sneaky Apple, Inc. Price Jump Halted by Lawsuit
According to reports, three of the book publishers — Hachette, HarperCollins and Simon & Schuster — have agreed to settle the lawsuit by terminating their agreement with Apple, Inc. and allowing Amazon and other retailers to continue discounting e-books, though they say the decision to give e-book retailers control over costs could harm consumers in the long run.
Amazon, on the other hand, called the settlement a victory for consumers and users of its Kindle e-reading device. It promises to renew discounting, which could pressure rivals like Barnes and Nobles to reduce their prices as well.
Apple and two publishers — Macmillan and Penguin Group — chose not to settle and plan to face the government in court. Apple, Inc. reportedly denied any wrongdoing in the case.
There are also reports of a settlement from a separate suit filed on Wednesday by 16 states and U.S. territories. So far, HarperCollins and Hachette have agreed to provide more than $51 million in restitution to e-book buyers.
The state-based suit was also filed against Apple, Macmillan, Penguin and Simon & Schuster; however, there is no word on whether they plan to settle.