The U.S. Justice Department has alerted Apple and five of the biggest publishers in the U.S. on charges that they colluded to raise the price of ebooks.
Details of the potentially explosive case, were reported by the Wall Street Journal earlier today, which cited “people familiar with the matter” as its source.
The Justice Department has warned Apple and five of the biggest U.S. publishers that it plans to sue them for allegedly colluding to raise the price of electronic books, according to people familiar with the matter.
There have already been talks to try and settle the case among some of the publisher and Justice, the Journal reports, over what would likely otherwise become a very high-profile antitrust case. A settlement or judgement against Apple and the publishers would potentially lead to big changes in the ebook industry, not the least of which would be cheaper prices for consumers.
The five publishers in the potential suit are CBS Corp.'s Simon & Schuster; Lagardere SCA's Hachette Book Group; Pearson PLC's Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers, a unit of of Rupert Murdoch’s News Corp.
The Journal said all five publishers and Apple declined to comment.
A key aspect of the case is believed to center on Apple’s suggestion of a so-called “agency model” for ebooks detailed in the Steve Jobs biography.
"We told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway,'" Jobs was quoted as saying by his biographer, Walter Isaacson.
The publishers were then able to impose the same model across the industry, Mr. Jobs told Mr. Isaacson. "They went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books,' " Mr. Jobs said.
Apple, Google and other tech firms were also at the center of an earlier action by the Justice Department over hiring practices. In that case, back in 2010, the tech firms agreed to settle Justice Department allegations that they colluded to hold down wages by agreeing not to poach or higher each other’s employees.