Apple Facing New Antitrust Investigation

mantis2009 writes "After recent complaints of anti-competitive behavior, the US Department of Justice has opened an inquiry into Apple's business practices for selling music. Investigators have specifically asked whether Apple colluded with record labels to thwart Amazon.com's music download store, according to the ever-present anonymous 'people briefed on the situation.' Allegedly, Apple threatened to retaliate if any music label participated in Amazon's 'MP3 Daily Deal' promotion, which offered early access to some MP3 tracks." So it looks like the Justice Department won the DoJ vs. FTC fight for the regulation bully pulpit.

Comments

Bully?

[Anonymous Coward]

Since when is stopping companies from breaking the law bullying?

Re:Bully?

[Monkeedude1212]

Since the country was run by corporations.

Re:Bully?

[steelfood]

Engaging in anti-competitive practices is completely justified by the improvements in shininess of the next toy such a practice would bring if Apple's doing it.

Keep hating Microsoft though...

[Jackie_Chan_Fan]

As i've been ranting about for a while now... It's time to either let Microsoft run its business in the same manner Apple does... or force Apple to deal with the same nonsense all of you impose on Microsoft.

When will we end the hypocrisy? Leave Microsoft alone, and go after the real evil... Apple.

Re:Keep hating Microsoft though...

[dangitman]

But the only thing Apple has a monopoly over is Apple products. Microsoft had a monopoly that controlled an entire industry - other people's companies, not just Microsoft stuff. It would be different if Microsoft only made Windows for Microsoft computers.

Re:Keep hating Microsoft though...

[whisper_jeff]

Leave Microsoft alone, and go after the real evil... Apple.

Seriously, evil? We neuter words when we use them casually in a way they are not intended. We rail against politicians and marketers for bandying about certain words in the wrong situation while people here on Slashdot call Apple evil! You may not like them; you may not like their products; you may not like their policies; you may not like their procedures but, let's be serious, the company is not evil.

Gawd. "I don't like them" is not the same thing as "evil!"

I know. I know. I must be new here...

Re:Keep hating Microsoft though...

[tlhIngan]

That's right. Apple's simply better at it. They disguised their monopoly, and profited off it longer. Why do you think Apple's always pushed its elitist standard? To make it seem more niche, to avoid exactly what happened to Microsoft. There is absolutely no legitimate reason to lock an iPod or iPhone or iAnything to only use iTunes, except to promote hegemony. Sure, they could *optimize* their stuff to work best with their software. That's how it should be. But if I want to use Windows Media Player, or VLC, then I should be able to.

Actually, it is not illegal to have a monopoly. Natural monopolies aside, if someone is able to garner enough goodwill and purchasing power to be a monopoly in one area, it's not illegal. The only illegality comes when a monopoly is abused.

Microsoft took their Windows monopoly to put IE on the desktop. There was no need for any third-party browser now, and that desktop monopoly became an web browser monopoly as well, something we all are fighting to this day. IE6 will not die, and IE in general still holds a commanding share of web browser "marketshare".

Apple had a monopoly on selling music on iPods, but Amazon came up and took away that monopoly (because iPods play MP3s). In fact, the closest Apple had was when they were leveraging iPod sales and iTunes - this was why the EU was doing investigations into Apple. Now that Apple has gone DRM free, those concerns disappeared (because Apple sold music that only worked on iPods, thus limiting third party MP3 players from being able to play purchased music).

This case is that Apple is using it's "monopoly" on music sales to limit Amazon's ability to sell music. Namely, by demanding that the music labels cannot give preferential pricing to a third party without offering it on Apple's store as well. If a music label wants to make a track of the week 70 cents on Amazon, it also becomes 70 cents on iTunes.

Which seems bad, but remember that Apple and Amazon are also doing the exact same thing with each other on the ebook market. Apple gave publishers an option they liked better than Amazon's option, so publishers went with Apple, and Amazon relented. Apple's agreement with publishers is they don't give anyone but Apple preferential pricing. Amazon caved and went with the same agency model, and also demands that publishers cannot give preferential pricing to anyone else other than Amazon.

And Amazon's not exactly the innocent party as well - having "dealt with" publishers that refuse to go along with its pricing model by trying to "devalue" books from that publisher, or even worse, not offering to sell the book on its marketplace.

Apple's only real leverage is marketshare, and all it takes is someone to make a better iPod and all that advantage disappears. So Apple may have a monopoly on music sales, but it's far from a certain one and the iPod has to compete with everything else out there. Even music sold on Apple's store isn't locked to an iPod anymore, and modern MP3 players will play it just fine as well (say, Microsoft's Zune).

Re:I don't understand this FTA

[Monkeedude1212]

Or a friendly agreement not to snipe each other's talent, but on the other hand, it makes someone at Apple kind of trapped at Apple, since they might not be able to get a job at the other big corporations who would use them.

Bah- Music industry sour grapes

[acomj]

The Music industry is probably still mad that Apple fought their 0.30 $ increase in prices and has the leverage to do so.

This doesn't seem like a big deal. The barrier to entry in creating an online music store seems pretty low, plus the files are now DRM free and playable on any player. Apple just seems to not want Amazon to get music before it does.

Not the mention it was a minor miracle that Steve Jobs got the major labels to sell their music online in the first place. I think that head start put itunes music store in the position it is in today.

Re:Bah- Music industry sour grapes

[dangitman]

Not the mention it was a minor miracle that Steve Jobs got the major labels to sell their music online in the first place.

This is one of the most fascinating things in recent tech/media history to me. I believe the labels' thinking at the time was that this was a test, and experimental roll-out. Because this new-fangled iPod and iTunes was a Mac-only thing at the time, and Macs had a tiny share of the computer market. So, they'd see if it worked. If it failed, no big deal, it's only a few Mac users. But to everybody's surprise, the iPod was insanely successful and Apple made the unprecedented move of releasing iTunes for Windows and adding USB support (early models were Firewire-only).

Basically, what the labels thought was a minor experiment turned into the future of their industry.

Re:Cartel

[99BottlesOfBeerInMyF]

They weren't leveraging their dominance against the RIAA, they were leveraging their dominance OF the RIAA against potential competitors.

Allegedly, Apple threatened to retaliate if any music label participated in Amazon's 'MP3 Daily Deal' promotion, which offered early access to some MP3 tracks.

Which is great and all, except Amazon is already being charged differentially less than Apple in music royalties by the RIAA as a way of intentionally decreasing Apple's market share so they have less influence compared to the RIAA. Amazon is a stalking horse as much as a competitor here.

Go to hell, DoJ

[Rogerborg]

Apple used its dominant market position to persuade music labels to refuse to give the online retailer Amazon.com exclusive access to music about to be released.

If that's all there is to the accusation, then Apple deserve kudos - in this one isolated instance - for forcing wider access to the works. Exclusive is the antithetis of the purpose of copyrights.

Some facts, some figures, and some hypocrisy

[hellfire]

Just from a quick google search on itunes music market share:

According to Wikipedia, as of 2006 Stevie said iTunes had 88% of the market for downloadable music
According to Cnet, that percentage was 70% in 2009.

Okay so Apple appears to have market dominance in downloadable music. Confirm monopoly stamp.

Now, from the article:

"But people briefed on the inquiries also said investigators had asked in particular about recent allegations that Apple used its dominant market position to persuade music labels to refuse to give the online retailer Amazon.com exclusive access to music about to be released."

So... Amazon got first and only dibs to specific songs, thus restricting competition, and Apple is using monopoly power to tell music distributors not to do that?

*brain explodes*

I'm sure I'm going to sniff some RIAA lobbiest involvement in this once I reassemble my head.

Re:Maybe

[MobileTatsu-NJG]

Reminds of Forest Gump when Forest says he invested in a "fruit" company that turns out to be Apple. If people invested their money into Apple right after that movie came out, they'd be living like Gump themselves right now.

It's just mind-blowing what you could do if you had 20 years of hindsight 20 years ago.

Re:I don't understand this FTA

[russotto]

Protection of trade secretes, protection of each companies expensive talent.

Hold on there, pardner. The trade secrets belong to the company, but the talent belongs to the employees.

Re:Maybe

[Anonymous Coward]

Amazing. Apple hasn't been found guilty of anything yet. DOJ is opening an investigation. Apple didn't tell the labels not to sell to amazon, it allegedley pressured them to not give exclusives to Amazon. I see a big distinction there. If Apple has a monopoly, it is in music marketing (but walmart and amazon are still pretty formidable) and in music players only. RIM is still a bigger player than Apple in Smartphones so no monopoly there. Microsoft still holds the monopoly on Desktop operating systems, and in office productivity software. And Microsoft was not found guilty of being a monopoly but of using monopoly power to squeeze competitiors out. It's a long reach to put Apple in the same place. Or even as bad as what Intel did to AMD.

Riiiiight!

[TRRosen]

So now its uncompetitive for Apple to complain about other companies trying to gain an unfair advantage. Amazon's program gave Amazon a monopoly since they would be the only ones selling the tracks early. I can only imagine what a sh*t storm Amazon would throw if Borders was able to sell select books a week before them or anyone else. Personally I feel all retail exclusivity agreements should be illegal. Including Cell phones and album/tracks. The only stuff that should be "available only at wal-mart" is bad taste and bad judgment.

Re:Riiiiight!

[eliotw]

TRRosen is on topic. Amazon wants to be able to sell content "exclusively" before anyone else can. Apple isn't happy with that and can you blame them. It seems like Apple is saying to the record companies "if you give preference to Amazon over us, then we'll do the same and give preference to other labels over you" That sounds pretty fair to me. If it were Apple asking for the exclusivity then it would be a different story.

Re:Apple also needs to open osx to all pc's

[dangitman]

Apple also needs to open osx to all pc's as well. As it they get bigger then M$ they they may be forced to.

That's a very strange logic, because if Apple licensed the Mac OS to generic hardware manufacturers, that would put them at greater risk of becoming an actual monopoly, because it would increase other companies' dependence on Apple.

If you could easily (and more importantly, officially) run Mac OS on cheap generic hardware, Windows might actually face a significant decline in marketshare, putting Apple in the same position that got Microsoft slapped with anti-trust suits.

Seems like a strange way to fight a supposed monopolist, by making it more monopoly-like.

Re:Maybe

[AmigaMMC]

It will get to that, for example: According to European law, people have the right to remove the batteries off a device and buy 3rd party... something Apple is not kin to do as they make way too much money in battery and replacement service.

Re:Maybe

[Strudelkugel]

Apple has a lot to fear because you never know what will happen in court, if it gets to that. Judge Jackson considered the drive space used by IE DLLs an example of monopolistic behavior, because consumers were deprived of the use of that space, no matter how minuscule it was. He had a number of other reasons that were quite questionable, too. Didn't matter though.

A good prosecutor could have a field day with Apple's marketing tactics in music, books, hardware and software sales. Probably the app store, too. No doubt they are smart enough to settle, but who knows what DoJ might demand. If they decide to go to court, anything can happen.