FTC explores Apple’s treatment of rival streaming apps

August 2015

Internet, technology



US government antitrust regulators are looking into claims that Apple’s treatment of rival streaming music apps is illegal under antitrust law. As

Apple have now launched its own Apple Music, FTC are interested in how the App Store platform operates for competing streaming services such asJango, 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. 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 US$9.99 U.S. subscription fee leaves little for Deezer. It emerged last week That Spotify was emailing users who subscribed to the service via its iOS app, and who are therefore paying the $3 premium, recommending that they cancel their current account and re-subscribe via spotify.com
Industry sources say that the antitrust concerns also 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.
Although Apple dominates the digital music business 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 recent figures.
The Federal Trade Commission is looking at the issues, but has not begun a formal investigation, Reports say that the agency has had meetings with multiple concerned parties. The agency meets with companies routinely, and a formal investigation may not materialize. The U.S. Justice Department’s successfully prosecuted Apple and five major book publishers in 2012 for colluding to push up the prices of ebooks.
CMU Daily reports (22.07.15) that the Federal Trade Commission in the US has now reportedly launched a formal investigation into the Apple tax, having previously been looking into the cut the tech giant takes from app-based subscriptions on a more informal basis. The investigation will likely focus less on the basic 30% commission Apple charges and more on the various rules that surround in-app purchases, and also other limitations the tech giant applies that restrict the offers app makers can offer. The Verge says the FTC has already issued subpoenas to various services in a bid to gather more information.
http://www.theverge.com/2015/7/21/9009881/apple-ftc-investigation-music-streaming-30-percent-tax http://www.channelnewsasia.com/news/business/us-ftc-exploring-apple/1976950.html

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