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FTC Officials Looking Into Apple's Streaming Business Model, Say Sources
Apple may have a bigger business problem than displeasing Taylor Swift with its new Apple Music service; According to Reuters, U.S. regulators are said (by anonymous sources) to be looking into Apple's treatment of music-streaming rivals, now that the company has gone from selling only downloadable music to competing directly with alternatives like Spotify and Pandora. A slice:
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.
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This could be a cut-and-dry case. There has already been a lot of history with providers that also distribute. Typically you cannot put your competitors in a position where they cannot compete by controlling distribution. Of course, the details will determine the outcome; but, we've disallowed power companies selling electricity to dip into the profits of their electricity selling competitors by charging exorbant fees to use their power lines.
Yes, the power line fees are still there, but the companies that maintain the were forced to spin off the distribution network as a separate company, with independent management. I'd love to see the Apple Store do just that. It would separate all of the times when Apple abuses it's store front to put their products first at the expense of what people want.
It doesn't seem surprising that the FTC would be nosing around. Apple got caught with their hand in the cookie jar, pretty damn seriously, in their 'negotiations' with book publishers(apparently Steve doesn't know not to commit illegal conspiracy over email...); and now they have an arrangement where they specifically forbid any of their competitors from doing anything in-app that would circumvent Apple's 30% cut(apps that can only be signed up for online are OK; but such apps are forbidden to link to the signup page in-app; either no sign-up information, or Apple-provided payment mechanism only); which more or less assures that they'll be able to undercut their competitors on iOS, unless some miracle has made the labels 30% or more more generous in their dealings with that competitor.
The barring a successful claim that iOS doesn't actually have market power; which seems unlikely, I'm not sure why this would pass scrutiny now that Apple has a direct competitor in the water.
Apple just needs to have the streaming music division pay the appstore division the same fees as everyone else to level the playing field. The fact that they own both competing divisions then becomes a moot point, legally.
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