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Apple, publishers may face lawsuit from U.S. government over e-book price fixing

News by Dan Seifert on Thursday March 08, 2012.

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According to a report from the Wall Street Journal, the U.S. Department of Justice has warned Apple and five book publishers that it plans to sue for alleged price fixing of e-books. The DoJ says that Apple and the book publishers colluded to artificially raise the prices of e-books that are sold in the Apple iTunes Store.

The publishers expected to be named with Apple in the lawsuit are Simon & Schuster Inc., Hachette Book Group, Penguin Group, Macmillan, and HarperCollins Publishers Inc. The government apparently takes issue with Apple's agency model of pricing for e-books, where it would take a 30 percent cut of the selling price of the book, leaving 70 percent to the publishers. Prior to this, retailers would purchase books wholesale, and then set the price on their own. Since Apple forced publishers' hands into an agency model, Amazon and other e-book retailers have had to do the same thing.

The Justice Department alleges that Apple and the publishers acted together to raise prices across the industry. Before Apple got involved in selling e-books, it was common to find them on Amazon for $9.99 or less. Today most e-books start at $12.99 and can climb much higher.

Spokespeople for the publishing companies and Apple declined to comment on the matter, according to the Journal.

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About the author

Dan Seifert
Dan is MobileBurn.com's Editor-in-Chief. Based in Poughkeepsie in New York, Dan can be found on Twitter as @DCSeifert.

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