Connecticut's attorney general on Monday penned a letter to Amazon and Apple, expressing concern that the companies' e-book deals with publishers might be anti-competitive.
Negotiating a price floor for e-books would prevent competitors or new entrants to the market from offering discounts on certain e-books, according to AG Richard Blumenthal.
"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," Blumenthal said in a statement. "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."
Blumenthal referenced a March article from The New York Times, which said that Amazon threatened to stop selling e-book versions of books from publishers unless they agreed to a list of terms that included a three-year contract and a promise that no other competitor will get a lower price or better terms.
This came after Amazon temporarily removed books from publisher Macmillan in January after a battle over e-book pricing. Books from Penguin were also unavailable for almost two months amidst a similar argument; that issue was resolved in late May.
Of greater concern to Blumenthal, he said, "is the potential broader anticompetitive impact of Amazon's demand that the largest e-book publishers agree to provide Amazon with a 'guarantee' that no other competitor will obtain lower prices."
This guarantee, most as a most-favored nation (MFN) clause, is "not per se illegal under our antitrust laws, [but] MFN's are not per se legal either," Blumenthal wrote in letters to L. Michelle Wilson, Amazon's general counsel, and Bruce Sewell, Apple's general counsel.
When the Kindle debuted, Amazon sold new releases and bestsellers for $9.99 per e-book. When the Apple iPad made its debut, Apple took a so-called agency approach and let publishers set the prices – usually between $12.99 and $14.99. Blumenthal said Monday that he has been told that Amazon has now shifted to incorporate the agency model for the six largest book publishers in the U.S.
"I am concerned that Apple and Amazon's decision to use the agency pricing model, coupled with the MFN, has already resulted in achieving or maintaining uniform prices for e-books, to the ultimate detriment of the consumer," Blumenthal wrote.
Blumenthal asked Amazon and Apple officials to meet with him to discuss the issues in greater detail.
An Apple spokesman said the company had no comment. Amazon did not respond to a request for comment.
Blumenthal, a Democrat, is currently running for the Connecticut Senate seat being vacated by departing Sen. Christopher Dodd. He recently kicked off a 38-state investigation into Google's Wi-Fi data sniffing, and has been vocal in his opposition to the adult content allowed on Craigslist.