Feds look deep into eBook and Antitrust : Apple on the hit-list

by Manju Chandra on March 9, 2012


eBook readers could see some action finally on the recent increase in eBook prices, as Department of Justice reviews a Five Big publishers if they did have a deal with Apple’s Steve Jobs.

In the past one year, if you’ve bought an eBook, you would found that prices have drastically increased over most categories. An ebook selling at $9.99 earlier now sells as $14, which is a phenomenal increase, with some books even costing more than paper backs and hardcover version. While most eBook fans could not do much about it, except rave and rant on forums, their voice seems to have been finally heard by people who matter. The increasing number of complaints has attracted antitrust investigators to begin a probe.
News trickling in from Wall Street Journal on Thursday last, says that the Justice Department will move the courts and penalize Apple and five big publishers, who include, Penguin Group USA, Hachette Book Group, HarperCollins, Macmillan, and Simon & Schuster.
The cause for the dramatic rise in eBook costs was due to a secret Agency Model that Apple and the five publishers mentioned earlier, apparently contracted. In Steve Jobs own words as quoted by his autobiographer says that, Jobs intention was to kill Amazon’s flourishing eBook sales/consumption. Besides the five publishers, being perhaps the top-5 publishers in the world, felt threatened by Amazon’s eBook sales and colluded with Jobs to get into a secret pact, where publishers could name any price they wanted. Apple would only take 30-percent of it. This is in effect, allowed publishers a handle in the entire eBook space. At Amazon on the other hand, retailed eBooks at non-profit prices, if need be, so as to move its eReader Kindle sales. After the understanding with Apple, apparently the publishers persuaded Amazon too to adopt the Agency Model and this set the tills ringing for the Big-5 publishers while readers now had to pay a fancy price, while the hardcover and paperback versions were available at lesser prices.
EBooks is a space that needs to be watched as Dept. Of Justice moves into action anytime soon.
[via Wall street Journal]

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