Apple 2.0

Covering the business that Steve Jobs built

The Justice Department finally catches up to Steve Jobs

March 8, 2012: 9:52 AM ET

Warns Apple and five book publishers that they are about be sued for collusion

The iBookstore on an iPad

The late Steve Jobs was never one to worry much about antitrust laws.

He made a casual agreement with Google (GOOG) in 2008 not to poach one anothers' top employees that U.S. regulators saw as an illegal attempt to hold down wages. In early 2010 he devised a subscription model for iPad magazines that put draconian restrictions on what publishers could and couldn't do. And around the same time, he offered book publishers a deal that would finally break Amazon's (AMZN) tightening grip on the e-book market.

As he described it to biographer Walter Isaacson:

"We told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway.

"They went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books.' "

The European Commission knew collusion when it saw it, and it announced last December that it had launched a probe of Apple (AAPL) and five publishers for alleged antitrust behavior.

According to several reports, the U.S. Justice department is now following the EC's lead. Apple and the five publishes have been warned that they are about to be sued for that 2010 agreement. The race to find a settlement has begun.

For a good backgrounder on the case, see the Thomas Catan and Jeffrey Trachtenberg's story in today's Wall Street Journal.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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