AppleInsider Staff
Apple's content and media operations are once again under scrutiny by the U.S. Federal Trade Commission, which is studying claims that iOS App Store policy is illegally stifling competition in the music streaming market, a report said Friday.
Citing three industry sources, Reuters reports government officials are looking at the effect Apple's usual 30 percent cut of App Store sales exerts over the streaming music industry, of which the company is now a player with Apple Music. Another concern is App Store rules that restrict companies from advertising billing services outside of iTunes and product availability on other platforms.
The FTC has not yet opened a formal investigation into the matter, but is meeting with interested parties, sources said.
With the launch of Apple Music in June, Apple instantly became a rival to the multitude of existing streaming companies that rely on the App Store, and iOS itself, to survive. Competition keeps the price of many subscription services — including Apple Music — to an unofficial $9.99 per month standard. Allegations claim Apple's 30 percent cut forces rivals to choose between raising prices for iOS users or absorb the profit loss as an overhead expenditure.
Earlier this week Spotify began sending out emails to encourage iOS subscribers to convert their accounts to Web-based billing, saying monthly charges would drop from $12.99 to $9.99. Spotify charges users who signed up through iOS an additional $3 per month to account for Apple's 30 percent in-app purchase fee.
As both owner of one of the world's two dominant mobile device platforms and operator of a service in direct competition with companies selling products through that platform, Apple is in a sticky situation.
Apple Music does indeed appear to be an especially ripe target for antitrust investigation, as evidenced by multiple government inquiries relating to Apple's streaming efforts. In May, reports claimed the FTC and Justice Department were exploring concerns Apple was using iTunes' industry sway to strike content deals that gave it an unfair advantage over soon-to-be rival streaming music firms.
Charles Martin
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72 Comments
The government needs to stay out of it and let the free market sort this stuff out TBQH. I hate when the government gets involved in picking winners and losers with the interpretation of the law. Apple's 30% cut is standard retail practice. The maintenance of such a HUGE app ecosystem alone is a HUGE expensive undertaking. The 30% covers the cost and offers Apple what is at best a slightly above break-even proposition. Apple has not done anything wrong to Spotify other than offer up more competition in the music streaming market seeing as Spotify's efforts to get users to stream their music have been unprofitable for pretty much everyone involved.
Apple is only "ripe" for an investigation because of their billions of dollars in cash, not because of anything they have done wrong.
My guess is the Spotify et al will argue that Apple's 30% cut of in-app purchases forced them to charge more to get that 30% back but now that Apple has a similar streaming service will they similarly charge themselves a 30% fee for subscribers who subscribe in the app and if not that's undercutting the market and/or trying to create a monopoly by snuffing out the competition. Not saying Apple has done anything wrong here at all, just that that may be what Spotify will try to argue.
My guess is the Spotify et al will argue that Apple's 30% cut of in-app purchases forced them to charge more to get that 30% back but now that Apple has a similar streaming service will they similarly charge themselves a 30% fee for subscribers who subscribe in the app and if not that's undercutting the market and/or trying to create a monopoly by snuffing out the competition.
Not saying Apple has done anything wrong here at all, just that that may be what Spotify will try to argue.
Yeah but it's a stretch because Spotify didn't build their business on their own. They had help from the big bad apple. Why shouldn't apple get a reoccurring cut of the pie since they did advertising even working with Spotify devs etc to prepare their app for launch on the Apple Store etc. Now they want to bite the hand that's been feeding them all this time. Apple is trying to help out the other platforms. Apple's entry into the streaming services made people go take a second look at Spotify's app so much so that it was Top 10 in the app store.
And yet no inquiries about Google matching policies in Google Play similar to the App Store.