Apple shift on e-books may draw regulatory scrutiny

Apple Inc. is changing its approach to how e-books can be sold and accessed via its iPhone and iPad devices — a move that may get the attention of regulators, one analyst said.

The company said that if rival e-book vendors such as Inc. and Google Inc. want to use the iPhone and iPad to sell books, they will have to offer them through Apple’s iTunes store.

Previously, when users of Amazon’s iPhone app wished to buy a book, the e-commerce company routed the customer to its own site, circumventing Apple’s internal sales process for which it takes a 30% cut of the purchase price. The new policy came to light Monday when Sony Corp. said Apple had rejected the latest version of its e-reading app for the iPhone over the sales issue.

James McQuivey, an analyst at Forrester Research, saw the move by Apple as a way to force more transactions to be funneled through its app store, where it can monitor sales more closely, in addition to taking its percentage.


“One way to look at this is that Apple is leveraging its monopoly power” over the iPad and iPhone platforms,” McQuivey said. “One could argue that Apple is simply maximizing shareholder value by leveraging its platforms.”

But McQuivey cited two potential drawbacks to Apple’s approach.

By dictating where digital books can be sold, Apple may be squelching innovation, he said. Secondly, the restrictions could be interpreted as restraint of trade, which is frowned upon by federal regulators such as the Federal Trade Commission.

“I wouldn’t be surprised if phones were ringing at the FTC today about this,” McQuivey said.

Sony, which submitted its app to Apple in early December, declined to go into detail on why its reading app was rejected.

“We opened a dialog with Apple to see if we can come up with an equitable resolution for both companies as well as our consumers but reached an impasse at this time,” Sony said in a statement Tuesday.

Google, which also sells books via an iPhone/iPad app, said in a statement Tuesday that its app still worked as it had before, and did not require going through iTunes.

The company did not respond to a question about whether it would be changing its book-purchasing app.

Messages to an Amazon representative were not returned. In the meantime, Sony said it was “working on other solutions” in regard to selling books to iPhone and iPad users.