Apple, as well as several e-book publishers, are facing a potential lawsuit from the U.S. Justice Department over allegations that they worked together to artificially raise the price of digital books.
The DOJ launched an investigation in late 2012 into whether or not Apple and e-book publishers fixed pricing for Apple’s iBookstore. Along with Apple, the agency looked into the pricing practices of Simon & Schuster, Hachette Book Group, Penguin, Macmillan, and Verlagsgruppe Georg von Holzbrinck.
Apparently the DOJ found enough evidence to justify a lawsuit since insider sources have now told the Wall Street Journal that all of the companies have been warned that the agency is prepping its legal action.
The investigation focused on Apple’s efforts to change the way publishers and distributors charge for books, moving to what’s known as an agency model where publishers set a book’s selling price instead of resellers. That change led to higher book prices, and the DOJ thinks that was an intentional move.
After adopting the agency model for Apple’s iBookstore, publishers were able to force the same pricing model onto other e-book resellers including Amazon.com. Previously, Amazon sold many ebooks below cost, undercutting its competition and upsetting publishers in the process.
While the DOJ has warned Apple and e-book publishers that it is ready to file a lawsuit, that doesn’t mean a court date is a sure thing. Apparently all of the parties have been involved in negotiations and may be able to reach a settlement.
“A settlement is being considered for pragmatic reasons but by no means are we close,” one publishing executive said.