Apple's book sales investigated

iBooks logoApple is facing an investigation into its e-book sales for possible price fixing. The European Union has said it may have co-operation from the company (not ruling it out, not ruling it in). It all centres around the way books are sold in the iTunes store, with Apple taking an "agency" cut for a set price. Elsewhere book selling doesn't work this way.
Essentially Apple has an arrangement by which its store acts as an "agent" rather than a standard retailer when it sells iBooks for iPads, iPhones and indeed its computers. This means the publisher sets the price and Apple takes a percentage.

Amazon - which I mention purely because of its size but most retailers operate like this - buys in bulk after agreeing a knock-down price per unit and then sells for what it feels like. It may use some books or other products as loss-leaders to attract people in, it might charge the full retail price or it might make a steady discount. Nobody tells it what to do.

Price fixing?

The problem from Europe's point of view is that the Apple sales model allows the publisher to set the price. This makes for a less free market and might qualify as price fixing.

Europe's authorities will have a lot to think about, not least of which is that if I don't like the Apple price for a book on my iPad I can go and get it on the Kindle app on the same device. This means there is definitely competition - but only because I've bothered to download the extra software and know a little of how to get at books from elsewhere.

There's an argument that says anyone can find this out, which is reasonable enough. There's another argument that says if Apple has preinstalled software for one particular e-book standard then it's predisposing the market to opt for that one so more people are bound to go for it - and that's the one in which Europe is investigating the price fixing.

It would be wrong to try to pass judgment on a legal case before the experts have commented. AOL Money will keep you informed as the situation develops.
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