Amazon’s Kindle e-reader is the online retailer’s top-selling single item, and the company recently announced that its sales of e-books has outpaced sales of hardcover titles. Meanwhile, Apple has jumped into the e-book market with both feet, selling titles for reading on its iPad tablet computers. But now the Attorney General in Connecticut has launched an investigation into the pricing plans that both companies have hammered out with book publishers.
According to reports, both Amazon and Apple have made agreements with several of the largest publishers that guarantee the two e-tailers will never pay these publishers more for titles than any of their competitors.
The AG believes that — because no other e-book sellers can purchase titles at a lower price — this “Most Favored Nation” status afforded to Amazon and Apple effectively allows them to set the price for all e-book sellers.
Says the Attorney General in a statement:
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… The e-book market is set to explode — with analysts predicting that e-book readers will be among the holiday season’s biggest electronic gifts — warranting prompt review of the potential anti-consumer impacts.
Amazon and Apple combined will likely command the greatest share of the retail e-book market, allowing their most-favored-nation clauses to effectively set the floor prices for the most popular e-books. Such agreements — especially when offered to two of the largest e-book retail competitors in the United States — threaten to encourage coordinated pricing and discourage discounting.
The AG has sent separate letters to Apple and Amazon, inviting lawyers from the companies to meet with him to discuss the matter in more depth.