Are Amazon and Apple getting an unfair price advantage from e-book publishers? Connecticut Attorney General Richard Blumenthal said Monday he will look into Apple and Amazon's e-book dealings to determine whether price fixing is going on. According to Blumenthal, his office has made requests to meet with both Apple and Amazon and discuss their deals with five of the country's biggest e-book publishers.
"Both Amazon and Apple have reached agreements with the largest e-book publishers that ensure both will receive best prices for e-books over any competitors -- contract provisions known as 'most favored nation' (MFN) clauses," said a statement released by Blumenthal's office Monday.
Blumenthal wants to hear from Apple and Amazon about their deals with Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin.
According to the statement, Blumenthal's office reviewed prices for e-books offered by Amazon, Apple, Borders and Barnes & noble and found them identical.
"These agreements among publishers, Amazon and Apple have already resulted in uniform prices for many of the most popular e-books -- potentially depriving consumers of competitive prices," Blumenthal said. "The e-book market is set to explode -- with analysts predicting that e-readers will be among the holiday season's biggest electronic gifts -- warranting prompt review of the potential anti-consumer impacts."
Blumenthal is going after Amazon and Apple, according to the statement, because the companies "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."
Amazon launched its first Kindle e-reader in 2007, and subsequent releases like the Kindle 2, which debuted in February 2009, and the large-screen Kindle DX helped it vault to what, according to Forrester Research, was a 60 percent share of e-readers in the U.S. in 2009.
Amazon has worked to stay competitive -- including with the just-announced third generation Kindle, already sold out in pre-orders, and price cuts on Kindle 2 -- amid challenges from e-reader rivals like Barnes & Noble, Borders, Sony and other vendors.
Most e-reader vendors have had application versions of their devices and stores for use on platforms such as Apple's iPhone. Apple's iPad, however, gives Apple a device that can also provide an e-reading experience to compete with the Kindle and others, hence Apple's iBookstore and its bolstered presence in the market.
