Apple and book publishers to be sued over iBooks?

Justice Department after Apple for 'price rigging'

Despite having launched the brand-new iPad, Apple may have to keep the champagne on ice as the U.S. Justice Department wants to sue them..

According to sources close to the matter, Apple and five major US publishers are going to be sued by the US Justice Department on the grounds of 'price rigging' concerning the iBooks store found on Apple's iPad tablet and iPhone.

The Wall Street Journal reports that according to these sources the Justice Department will be sueing Apple, Simon & Shcuster Inc, Hachette Book Group, Penguin, Macmillan and HarperCollins Publishers Inc.

It's believed that when Apple first launched the iPad and iBooks the company came to an agreement with these publishers which would effectively 'strong arm' every other disbriutor to follow the rules set out by Apple.

Believed to be concerned that if by joining Apple their books would go the same way as iTunes with songs being cheap and standardised the publishing companies demanded an alternative.

Apple's answer was very simple, they would move to the 'Agency Model' where the publishers would set the price and Apple would take a straight 30 per cent cut.

Of course Apple were happy with this but only on one condition, that no other distributor would then be able to undercut them. This in turn then forced the publishers to demand 'The Agency Model' with the likes of Amazon's Kindle Store.

The Justice Department will aim to prove that this action was taken with both Apple and the publishers in full knowledge of the consequences.

Both parties have denied collusion and have argued that by raising prices across the board they have allowed the industry to thrive making booksellers more successful.

It's not known when the Justice Department will make its move, or indeed if it will at all however all eyes will be turned to Apple, who recently had to change another aspect of their iBooks eco-system when it came to their iBooks Author app.

Source: WSJ