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Are E-Book Prices Fixed? Investigation Begins

by Sean P. Aune | August 3, 2010August 3, 2010 8:00 am PST

The Connecticut Attorney General seems to be on the warpath against technology, and it is sure to be pure coincidence he is currently running for a Senate seat.

Connecticut Attorney General Richard Blumenthal seems to be making a career out of going after technology sites and tools. As Digital Daily points out that he has thus far gone after CraigslistGoogle and Topix, and now it appears he has set his sights on Apple and Amazon.

Amazon KindleThe concern is that publishers such as Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin have agreed to “most favored nation” (MFN) clauses in their contracts with Apple and Amazon.  This means that any special pricing offered to companies such as Barnes & Noble and Borders must also be offered to the companies with that status.

Mr. Blumenthal explains his reasoning as:

“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. “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.”

He has sent letters to both Apple (PDF link) and Amazon (PDF link) over the issue, and what I find disturbing is that he admits that MFNs are not legal or illegal, but instead of exist in a somewhat gray area of the law.  He also states that he is pursuing this because he read an article about it back in March, and has been following it with interest ever since, so this isn’t due to anyone complaining about it, he just happens to want to get into it.

Mr. Blumenthal is of course within his legal rights as an Attorney General to investigate things such as this, but the timing coinciding with his running for a Senate seat just seems a bit of opportunism.  Add in his interest in other technology situations and it all just seems a bit odd.

What say you?  Should Connecticut’s Attorney General be looking into this?


Sean P. Aune

Sean P. Aune has been a professional technology blogger since July 2007, but his love of tech dates back to at least 1976 when his parents bought...

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