Is Apple in Trouble?

 Apple didn't get to bask in the glory of its new iPad for long. The Justice Department has warned the company—along with five of the biggest U.S. publishers—that it plans to sue them for allegedly colluding to raise the price of electronic books, sources tell The Wall Street Journal.



The case alleges that just before the release of the first iPad, Apple worked with publishers to adopt a retail model in which the publishers set a price and Apple took a 30 percent cut of sales. The move was a reaction against Amazon, which had frightened publishers by selling e-books at $9.99.

 

After Apple adopted the pricing model, the publishers were able to demand a similar one from Amazon.