As expected, the Department of Justice launched an antitrust lawsuit against Apple and several of the major book publishers on Wednesday, alleging collusion and price-fixing behavior on e-books as a result of the “agency pricing” model. As my colleagues Jeff Roberts and Laura Owen have reported, three of the publishers named in the suit have decided to settle while two have chosen to fight the charges, and the states have jumped into the fray as well.
The argument from publishers is that they need to be able to set prices on e-books, because otherwise Amazon will increase its monopoly and decimate the book industry. So who should we be rooting for, the giant electronic retailer or the giant publishing houses?
As Jeff has explained before, this case revolves around an agreement that Apple struck with five of the “big six” book publishers — namely Macmillan, Penguin, Hachette, HarperCollins, and Simon & Schuster — when it was planning the launch of the iPad. Since Apple was coming into the e-book market late and was trying to mount an attack on Amazon’s entrenched market share, the deal with publishers to institute what is known as “agency pricing” seemed like a good idea: It gave Apple plenty of content (plus 30 percent of the revenue from each book sold), and the publishers got to control the price of their books, something they weren’t allowed to do with Amazon.