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Apple, leading US publishers, charged with collusion

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The plaintiffs believe that Apple, about to release the iPad that it hoped with compete with the Kindle as an e-reader, and publishers, annoyed at Amazon's low prices, worked together to force Amazon to drive up prices. They did this by forcing Amazon to stop using discount pricing and start using the agency model.

The agency model allows publishers to set prices for their e-books, with the online store taking a portion of the price. Previously Amazon had bought e-books from publishers and set its own low prices. In the agency model, according to Ars Technica, Amazon would not be allowed to sell e-books at prices lower than those set by the publishers. Since the publishers in question supposedly control 85% of the popular books on Amazon, it was inevitable that Amazon would have to raise e-book prices – and it since has.

If the Hagens Berman claims are true, then Apple and five publishers are guilty of collusion and violating anti-trust laws by preventing free trade and driving up prices.

It sounds like a good argument, but where's the proof?

Unfortunately for Apple, there might be some. A conversation between Apple founder, Steve Jobs, and Walt Mossberg from The Wall Street Journal at the unveiling of the iPad was documented in The New Yorker, and shows evidence that Apple knew about Amazon's price hike before it happened, reports Ars Technica. Mossberg apparently asked Jobs why anyone would pay more for an e-book from Apple when they could pay less and get it from Amazon. Jobs said that the price difference would soon be eliminated because publishers were unhappy with Amazon's low pricing.

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