Amazon, Apple Targeted For E-Book Price Fixing

"Both Amazon and Apple have reached agreements with the largest e-book publishers that ensure both will receive best prices for e-books over any competitors -- contract provisions known as 'most favored nation' (MFN) clauses," said a statement released by Blumenthal's office Monday.

Blumenthal wants to hear from Apple and Amazon about their deals with Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin.

According to the statement, Blumenthal's office reviewed prices for e-books offered by Amazon, Apple, Borders and Barnes & noble and found them identical.

"These agreements among publishers, Amazon and Apple 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-readers will be among the holiday season's biggest electronic gifts -- warranting prompt review of the potential anti-consumer impacts."

Blumenthal is going after Amazon and Apple, according to the statement, because the companies "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."

Amazon launched its first Kindle e-reader in 2007, and subsequent releases like the Kindle 2, which debuted in February 2009, and the large-screen Kindle DX helped it vault to what, according to Forrester Research, was a 60 percent share of e-readers in the U.S. in 2009.

Amazon has worked to stay competitive -- including with the just-announced third generation Kindle, already sold out in pre-orders, and price cuts on Kindle 2 -- amid challenges from e-reader rivals like Barnes & Noble, Borders, Sony and other vendors.

Most e-reader vendors have had application versions of their devices and stores for use on platforms such as Apple's iPhone. Apple's iPad, however, gives Apple a device that can also provide an e-reading experience to compete with the Kindle and others, hence Apple's iBookstore and its bolstered presence in the market.