|
 Apple recently launched a new music streaming service, Apple Music.
It also provides the App Store platform for competing streaming
services including Jango, Spotify, Rhapsody and others.
Apple takes a 30 percent cut of all in-app purchases for digital
goods, such as music streaming subscriptions and games, sold on its
platform.
While $9.99 has emerged as the going monthly rate for music
subscriptions, including Apple's, some streaming companies complain
that Apple's cut forces them to either charge more in the App Store
than they do on other platforms or erode their profit margins.
The Federal Trade Commission is looking at the issue but has not
begun a formal investigation, said the three industry sources, who
requested anonymity. The agency has had meetings with multiple
concerned parties, one source said. The agency meets with companies
routinely, and a formal investigation may not materialize.
Antitrust lawyers interviewed by Reuters were divided on whether
Apple's policies had the makings of an antitrust violation.
A spokeswoman for Apple declined to comment. The FTC also declined
to comment.
As all-you-can-eat music subscriptions become more popular among
listeners, a wave of companies have rushed in to cater to the
demand. Apple has long been a leader in digital music through its
iTunes Store, but it has been a relatively late entrant to on-demand
streaming.
Streaming services' chief grievances with Apple stem from the
company's 30 percent cut. To avoid it, customers can sign up for a
streaming service through their Web browser, but the streaming
industry sources argue that many consumers do not realize that is an
option.
Tyler Goldman, CEO for North America of the music streaming company
Deezer, said the bite that Apple takes out of his company's $9.99
U.S. subscription fee leaves little for Deezer.
"The margin in music is quite small, and the App Store diminishes
the margin."
"It will be an issue for the industry going forward. You can either
raise your prices and not be competitive with Apple's price, or you
can have no margin," he said, adding that he was unaware of whether
Deezer has talked to the FTC.
Two of the industry sources say that the antitrust concerns focus on
restrictions in the App Store. These include a prohibition on
advertising in the app that the company is on other platforms, a ban
on marketing in the app that consumers can also buy directly from
the company's website, and a ban on linking to a company's website
from within the app. These restrictions apply to all apps, not just
music streaming apps.
[to top of second column] |
Although Google also offers a music subscription service and charges
a 30 percent transaction fee in its app store, its policies for app
sales have drawn less ire from rival streaming services. Industry
sources say the company places fewer restrictions on those
transactions.
Although Apple dominates the digital music business primarily
through iTunes, its share of the global smartphone market is
relatively small. Google's Android operating system accounts for
78.9 percent, with Apple's iOS system clocking in at 17.9 percent,
according to research firm Gartner based on sales in the first
quarter of 2015.
Antitrust lawyers knowledgeable about the tech industry were split
on whether Apple's policies violated antitrust law. Apple is free to
charge whatever fee it likes for transactions in the App Store, some
argue, and companies do not have to sell their goods there.
It is legal to have a monopoly but it is not legal for monopolies to
use their clout to hurt competitors, said Jeffrey Jacobovitz of the
law firm Arnall Golden Gregory.
Apple's critics may be seeking to convince the FTC to use Section
Five of the FTC Act, which prohibits "unfair or deceptive acts or
practices," to pursue Apple, he said.
Since the Justice Department's successful prosecution of Apple for
colluding with publishers to push up the prices of ebooks, the FTC
may be inclined to take a closer look at Apple's involvement in the
music business, said Jacobovitz.
Another antitrust lawyer dismissed most of the concerns as companies
complaining about actions that were undoubtedly aggressive, but
still legal.
"They're (Apple) tough business people," said the lawyer, who spoke
on the condition of anonymity.
(Editing by Stephen R. Trousdale and Diane Craft)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
