EU clears Apple and labels of colluding against free streaming music services, turns eye to App Store fees
A European Commission inquiry found no evidence that Apple colluded with major record labels to impede free-to-stream services as part of the company's Apple Music business strategy, a report said Friday.
Sources familiar with the matter said the EU antitrust watchdog was looking for evidence that Apple colluded with labels to stifle competition from the likes of Spotify, but ultimately determined the dealings to be in the clear, reports Re/code. While it did not find evidence of illegal activity, the European Commission will continue to monitor the streaming industry.
Word of EU involvement first came in April when the Commission sent out questionnaires asking record labels and digital music companies to divulge details regarding potential streaming deals struck with Apple. The inquiry was initiated before Apple Music was officially announced in June.
Today's report notes the EU has since turned its attention to iOS App Store policies and is asking streaming music companies like Spotify about Apple's mandatory fees, restrictions and other potentially anti-competitive guidelines.
In July, the U.S. Federal Trade Commission began its own investigation into allegations that Apple is leveraging its iOS platform advantage and strict App Store policies to artificially stifle competition.
Apple takes a 30 percent cut of all App Store transactions, meaning rival streaming music services selling in-app subscriptions through their iOS apps have to either charge more or absorb the profit loss to stay competitive. This creates a problem for a relatively low margin industry in which companies charge a de facto $9.99 standard monthly rate based in large part on content royalties paid out to record labels.
The problem is compounded by rules restricting the advertisement of billing services outside the App Store, such as Web-based charges. A few companies have tried to thwart App Store regulations to varying success. Spotify, for example, sent out emails notifying iOS subscribers that a switch to Web-based billing would save them $3 per month. Subscribers who signed up to Spotify's paid tier through their iOS app pay a 30 percent premium to offset App Store fees.