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Apple, five major publishers accused of e-book collusion by DOJ

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Reuters

(Read caption) Apple and five major publishers are under fire from the Department of Justice. Here, a man holds an Apple iPad.

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On Wednesday morning, the Department of Justice filed a complaint in US District Court against Apple and five publishers, including Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster. The allegation: That Apple and the publishers conspired to raise the prices of e-books by as much as $5, in an effort to prevent Amazon, which prices many of its e-books at 10 bucks, from locking in what publishers believe is an artificially low price. 

"In recent years, we have seen the rapid growth – and the many benefits – of electronic books," Attorney General Eric Holder said at a press conference. "E-books are transforming our daily lives, and improving how information and content is shared. For the growing number of Americans who want to take advantage of this new technology, the Department of Justice is committed to ensuring that e-books are as affordable as possible."

Holder told reporters that three of the publishers – Hachette, HarperCollins, and Simon & Schuster – had agreed to a settlement. Apple, Penguin, and MacMillan, on the other hand, will likely fight back in court. "Macmillan did not act illegally. Macmillan did not collude," Macmillan CEO John Sargent told authors, illustrators, and agents in a recent letter, according to the Associated Press. 

The terms of the settlement, Holder said, required "the companies to terminate their anticompetitive most-favored-nation agreements with Apple and other e-books retailers."

Meanwhile, the attorneys general of 15 states are bringing their own complaints against Apple and the five publishers. The AP has reported that in Connecticut and Texas, Hachette and Harper Collins have agreed to pay $52 million in restitution to consumers, "using a formula based on the number of states participating and the number of e-books sold in each state." 

A surprising development, obviously. And not everyone is pleased. In an editorial today, the Los Angeles Times argues that the deals that are currently under fire helped foster competition in the e-book marketplace. 

"Amazon still has the lion's share of the e-book market, but new outlets are gaining traction," reads the editorial. "Meanwhile, the Kindle is no longer the presumptive king of the ebook readers, thanks to Apple's popular iPad and Barnes & Noble's Nook. These changes are good for consumers, which leads critics of the Justice Department to ask why it's scrutinizing the contracts that caused them."

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