MMB Lagardere SA

By Jeffrey A. Trachtenberg and Dana Mattioli 

Connecticut is actively investigating how Amazon.com Inc. sells and distributes digital books, according to the state's attorney general, the latest of several state and federal probes into the tech giant's business practices.

The investigation is examining whether Amazon engaged in anticompetitive behavior in the e-book business through its agreements with certain publishers, Connecticut Attorney General William Tong said in a statement.

Connecticut asked Amazon to provide documents related to its dealings with five of the largest U.S. book publishers, according to a subpoena issued in 2019. The Tech Transparency Project, a nonprofit that investigates technology platforms, obtained the subpoena through an open records request and shared it with The Wall Street Journal.

Amazon declined to comment. A spokeswoman for Mr. Tong said the company has cooperated with the subpoena.

Connecticut has previously taken interest in the e-book business. In 2012, the U.S. Justice Department alleged in a civil antitrust lawsuit that five major publishers and Apple Inc. had worked together to raise e-book prices. Connecticut, along with Texas, led a similar legal effort by a group of states.

"Our office continues to aggressively monitor this market to protect fair competition for consumers, authors, and other e-book retailers," Mr. Tong said in a statement.

The publishers cited in Connecticut's Amazon subpoena include HarperCollins Publishers, which like The Wall Street Journal is owned by News Corp; Lagardere SCA's Hachette Book Group; Penguin Random House, a unit of closely held German media company Bertelsmann SE; Simon & Schuster, the book publishing arm of ViacomCBS Inc.; and Macmillan. Penguin Random House has agreed to acquire Simon & Schuster, pending regulatory approval.

All the publishers cited in the subpoena declined to comment.

The Connecticut investigation is one of several ongoing probes into the Seattle-based company's market power. In October, the House Antitrust Subcommittee completed a 16-month investigation into Amazon and other technology companies, concluding that Amazon has amassed "monopoly power" over sellers on its site.

The U.S. Justice Department in 2019 launched a broad investigation of the market power of large technology companies including Amazon, and the Federal Trade Commission has oversight of Amazon as part of a broader look into the business practices of big tech companies. In addition to Connecticut, investigators from California are looking into Amazon's business practices, the Journal has reported.

Amazon is the dominant U.S. e-book retailer, accounting for 76% of digital books sold in the U.S. in September, according to Codex Group LLC, a book audience research firm. Rival sellers of digital books include Apple, Alphabet Inc.'s Google and Barnes & Noble.

The e-book market has been controversial for years. Amazon kick-started the business when it introduced its Kindle e-reader in November 2007, a launch that offered digital bestsellers for $9.99. The discounted offering helped Amazon build market share, but publishers believed it hurt the industry.

A few years later, Apple entered the business as it launched the iPad, with deals that allowed publishers to set the retail prices of their books. That upended the old model, where publishers let retailers set prices for consumers, and effectively blocked discounting without publishers' approval.

The Justice Department subsequently filed its civil antitrust suit against Apple and five major publishers. The publishers settled. Apple went to trial but lost.

Write to Jeffrey A. Trachtenberg at jeffrey.trachtenberg@wsj.com and Dana Mattioli at dana.mattioli@wsj.com

(END) Dow Jones Newswires

January 13, 2021 18:57 ET (23:57 GMT)

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