The United States Justice Department dropped a media bombshell this morning when it announced a lawsuit against Apple Inc and a number of major publishers. The accusation: Apple and e-book companies colluded to fix prices and gouge consumers.
In a press conference on Wednesday, Attorney General Eric Holder revealed details behind the alleged scheme, which also involved Amazon.com. According to Holder, over the past two years Apple and various publishers charged between $2 and $5 more than necessary for each e-book. Together, that means they bilked consumers out of about $100 million.
A number of major publishers have been named in the suit, including Macmillan, Penguin, and Holtzinbrinck.
Much of the media attention is focusing on Apple, however, and particularly on allegations by Department of Justice antitrust chief Sharis Pozen that the company’s late chairman, Steve Jobs, was up to his eyes in the fraud.
According to Pozen, Jobs told publishers that “the customer pays a little more, but that’s what you want anyway.”
Apple has yet to comment on the matter, but at least one publisher says it will fight the lawsuit. Macmillan chief executive officer John Sargent said his firm “did not act illegally,” and “did not collude.” Sargent added that it is “hard to settle a lawsuit when you know you have done no wrong.”
This is not the first time we’ve heard about e-book price fixing. Not long ago, the state governments of Connecticut and Texas reached settlements with publishers Hachette and HarperCollins, the result being $52 million in restitution to consumers.
Given the e-book market’s rising popularity, this new lawsuit should draw lots of media attention. Analysts predict that the e-book market will rise to $2 billion this year and $10 billion by 2016, meaning there’s a lot on the line for Apple, Amazon, publishers, and consumers alike.
Furthermore, the European Union is reportedly investigating e-book price fixing, meaning the issue could become a global one in the next six to twelve months.