updated 03:20 pm EDT, Mon August 2, 2010
Connecticut AG says Kindle, iBooks raise concerns
Connecticut Attorney General Richard Blumenthal on Monday launched an investigation into the legality of e-book deals reached by Amazon and Apple. The state is concerned that the no better price deals at the Kindle store and iBookstore may be anti-competitive as they prevent any other Internet bookseller from offering a better price. Blumenthal hopes to possibly require changes before the e-reader market gets too large and one or both companies get a majority stake.
"E-book readers will be among the holiday season's biggest electronics gifts -- warranting prompt review of the potential anti-consumer impacts," the Attorney General said. "This restriction blocks cheaper and competitive prices for consumers."
The state official has requested meetings with both Amazon and Apple but hasn't said whether plans were underway to talk with publishers, although major outlets such as Hachette, Macmillan, Penguin, Random House and Simon & Schuster were mentioned as being affected.
Both Amazon and Apple are understood to be in a heated battle over pricing as the two struggle to control the US digital book market. Amazon still dominates the category and, until recently, was deliberately selling books below wholesale to hit its $10 price point and squeeze out competition charging higher prices. Apple in many cases has matched Amazon, but its preference for an agency model that gives more control to publishers has raised the prices of some books to as much as $15. The deal gives books more profitability in the long term but has also raised the average price across multiple stores.