Back to Mobile View

Skip to Content

TUAW Deals

Department of Justice reportedly planning antitrust suit against Apple

According to a Wall Street Journal Report, the Department of Justice is threatening to sue Apple and five book publishers for artificially inflating the price of ebooks. The five book publishers include Simon & Schuster, Hachette Book Group, Pearson PLC's Penguin Group, Macmillan and HarperCollins Publishers, Inc.

The investigation centers on Apple's agency model pricing for ebooks in the iBookstore. Instead of a wholesale model that Amazon was using, Apple pushed for an agency model which let publishers set book prices and Apple would take a 30 percent cut.

Amazon, however, was using a wholesale model which let them sell books for $10 or less. This pricing model was upsetting to publishers who were concerned customers would get used to the low prices. Publishers used Apple's agency model agreement to strongarm Amazon into adopting the same pricing model and it agreed. As a result, ebook prices on Amazon's Kindle store increased.

© 2014 AOL Inc. All Rights Reserved.