Apple facing FTC probe following Music launch – report

Apple facing FTC probe following Music launch – report

13 JUL 2015

Apple is apparently facing a probe from the US Federal Trade Commission (FTC) following the launch of its Apple Music service, related to the way it treats competing products.

According to Reuters, the issue centres on the fact that Apple takes a 30 per cent cut of all in-app purchases made via its platform, including digital goods purchases – such as music subscriptions. This means that in order to compete with Apple’s $9.99 price point, rival services would have to take a hit on margins, which in many cases are already tight.

The alternative is charging more in the first place, which would make services less attractive in comparison.

The report said that while the FTC has had meetings with “multiple concerned parties”, it has not so far begun a formal investigation. Reuters said that lawyers it had contacted were divided on whether there were the makings for an antitrust suit.

While Google also has a music service, and charges a 30 per cent fee on Play Store sales, it was mooted that its terms and conditions place fewer restrictions on competing products.

Apple, in contrast, has guidelines which mean App Store vendors cannot state that apps are available on other platforms, cannot state that consumers can buy direct (bypassing Apple’s 30 per cent fee on vendors), and banning direct links to corporate websites.

In terms of the smartphone market as a whole, Apple’s share is small when compared to Google’s Android, meaning that the iPhone maker is not basing its actions on a monopoly position.

But it does keep a tight control of its ecosystem, shutting out alternative app stores – meaning there is no way to avoid Apple’s restrictions and fees on products.

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Steve Costello

Steve works across all of Mobile World Live’s channels and played a lead role in the launch and ongoing success of our apps and devices services. He has been a journalist...More

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