Apple, publishers targeted in e-book price fixing lawsuit

Apple (NASDAQ:AAPL) is in the crosshairs of a new class-action lawsuit alleging the company conspired with publishers HarperCollins, Hachette Book Group, Macmillan, Penguin and Simon & Schuster to increase e-book prices in an plot "to boost profits and force e-book rival Amazon.com to abandon its pro-consumer discount pricing."

The suit, filed earlier this week in California district court by law firm Hagens Berman on behalf of plaintiffs Anthony Petru and Marcus Mathis, contends Apple and its e-book publishing partners "colluded... to illegally fix prices" and that they are "in violation of a variety of federal and state antitrust laws." The suit essentially targets the so-called agency model, which gives the publisher--not the retailer--the right to determine e-book pricing, alleging that publishers "feared" Amazon's push to price e-books at $9.99, far lower than traditional hardcover book sales. Amazon's approach "threatened to disrupt the publishers' long-established brick-and-mortar model faster than [they] were willing to accept," the suit adds, noting e-book prices have increased as much as 50 percent since the switch to the agency model.

Hagens Berman believes Apple was directly involved in the pricing scheme, alleging that Apple believed it needed to neutralize Amazon's Kindle e-reader when it entered the e-book market with its iPad tablet. Hagens Berman also says Apple fears Amazon might someday expand the Kindle platform beyond e-books to include digital movies and music. The firm seeks damages for e-book purchases, an injunction against applying the agency model to e-book pricing and forfeiture of profits received by the defendants as a result of their conduct, which could total tens of millions of dollars.

The lawsuit arrives as e-book sellers like Amazon.com are overhauling their retail strategies across Apple's iOS platform. Earlier this year, Apple mandated that all content providers and publishers must remove any buttons or external links from iOS applications enabling consumers to purchase media via channels other than Apple's App Store. Amazon and rival e-book retailers Barnes & Noble and Kobo responded by deleting e-book purchase options from their respective iOS apps--earlier this week, Amazon unveiled Kindle Cloud Reader, an HTML5-based e-reader application enabling consumers to read digital books instantly via the web browser, with no software download or installation required.

For more:
- read this Guardian article

Related articles:
Amazon launches HTML5-based Kindle Cloud Reader for iPad
PayPal says publishers 'outraged' over Apple's subscription demands
Publishers balk at Apple's App Store subscription terms
Apple rolls out App Store subscription plans
In-app purchases overtake mobile ad revenues on iOS