Apple and Amazon called in over antitrust deals

Apple and Amazon have been given a slap on the wrist by Conneticut’s Attorney General, who thinks the two are entering into anti-competitive e-book pricing deals with publishers.

Attorney General Richard Blumenthal now wants representatives from the two companies to attend meetings in his office so that he can discuss the pricing problems and allay concerns. He also wants to investigate whether the two are making deals with publishers in order to thwart the market.

“Both Amazon and Apple have reached agreements with the largest e-book publishers that ensure both will receive the best prices for e-books over any competitors”, he said.

Amazon has deals with book publishers to sell digital versions of works for its Kindle electronic readers while Apple has struck similar business partnerships to provide titles for iPad tablet computers.

Last year Amazon used its Kindles popularity as a means to sell best selling books for $9.99 each, which at the time angered publishers who complained this  was too low. And last month authors had their grumble with eBook companies hitting back at restrictive publisher’s ebook policies

Mr Blumenthal said he read an article in the New York Times, called “A Rift at Amazon on eBook prices”, which refers to both Apple and Amazon’s deals with book publishers such as Macmillan and Simon & Schuster.

It also highlighted Apple’s policy to offer publishers a 70 per cent royalty while keeping 30 per cent to cover the costs of running its iBookstore. This, he said, means that publishers are required to guarantee that prices elsewhere will not be higher than those charged by Apple.

He also said he was concerned that there was no difference in price for digital versions of New York Times best-seller list books at Amazon, Apple, Borders, and Barnes & Noble.

“These agreements among publishers, Amazon and Apple appear to have already resulted in uniform prices for many of the most popular e-books — potentially depriving consumers of competitive prices,” he said in open letters to Apple and Amazon.

“The net effect is fairly obvious, in that Most Favoured Nation (MFNs) will reduce the publisher’s incentive to offer a discount to Amazon if it would have to offer the same discount to Apple, leading to the establishment of a price floor for ebooks offered by the publisher.”