US DoJ looking at Apple's iTunes for antitrust issues in music

Posted:
in iPod + iTunes + AppleTV edited January 2014
The US Department of Justice is looking into Apple's negotiating tactics with music labels related to sales and marketing within the iTunes Store.



According to report by Brad Stone published by the New York Times, DoJ staff members have started inquiries with music labels as part of a broad investigation of the online music market.



Stone cited "people briefed on the inquires," who said investigators have been particularly interested in allegations that Apple used its market power to seek to prevent the labels from participating in exclusive music distribution deals with rival Amazon.



Two months ago, Billboard reported that Amazon was seeking to obtain exclusive rights to sell new music a day earlier than everyone else, in exchange for special "MP3 Daily Deal" promotion of those songs on its website.



However, rather than focusing the investigation on Amazon leveraging its market power in online sales to gain exclusive distribution deals for music, the DoJ is reportedly looking at Apple for asking the labels to not participate in Amazon's promotion, and its refusing to provide marketing support for songs that were provided to Amazon first.



Apple's increasingly strong position in music



In music sales, Apple leads US online sales with 69 percent market share, according to NPD. Amazon is in second place with 8% share of online sales.



Among all music sales in the US, Apple has a first place position with 26.7% share, while Amazon claims 7% of total music sales. At the same time, Amazon also enjoys a leading 90% share of ebook sales, and a leading position in online book and merchandise sales, with 29 million customers.







The Times report pointed out that Apple created the first successful music marketplace in 2003, and "has since sold more than 10 billion songs, providing a significant source of revenue for the music industry," but that despite its role in persuading consumers to buy music rather than continuing to pirate it, "the music industry has chafed because Apple sets prices and controls the relationship to the music buyers."



It also noted that more recently, "Apple has encouraged new kinds of competition in the online music marketplace by allowing streaming music applications from companies like Pandora and Rhapsody onto Apple devices."



Investigating Apple's success



Apple is also among the tech companies being investigated by the DoJ over hiring practices that allegedly conspired to prevent competitors from hiring each other's employees. That investigation also involves Google, IBM and Intel.



Apple is also under investigation from the US Federal Trade Commission over new provisions of the iPhone SDK which limit developers from using tools other than those provided by the company. That inquiry was initiated by a complaint from Adobe Systems, which was thwarted from using its Flash Professional tools to generate iPhone apps for sale in Apple's iTunes App store.



The FTC was also investigating Apple's potential as a competitor to Google and AdMob in the emerging mobile ads market. It recently determined that Apple's market power in iPhone Apps was a factor in approving Google's bid to acquire AdMob.

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Comments

  • Reply 1 of 105
    SpamSandwichSpamSandwich Posts: 30,708member
    Hey, if they want to start an anti-trust investigation, start with Walmart. IMO, this is just another government-led shakedown.
  • Reply 2 of 105
    jwdavjwdav Posts: 36member
    So a music wholesaler has four customers, and he offers a sweet deal to one of them, while refusing to extend the same deal to the others.



    He is then seriously surprised to find out one of his customers is not supporting the marketing his products anymore?
  • Reply 3 of 105
    cwfrederickcwfrederick Posts: 171member
    what bull$hit. apple builds a successful business (being one of the very few companies with self-imposed integrity), with the music execs fighting them every step of the way, and now theyre complaining that apple is too powerful? i cant believe morons like this are going to be in charge of our healthcare, thanks obama. seriously, who in their right mind votes for democrats? oh, right, only delusional crazies who cant tell the difference between emotion and logic



    meanwhile, banks are given blank checks with no strings attached to sit on their ass and do nothing to kick start the economy. maybe apple needs to give obama 900k..
  • Reply 4 of 105
    cycomikocycomiko Posts: 716member
    lolz. If this was Microsoft under exactly the same situation, people would be having a field day about how they deserved it. Strangely, using your market leading position to prevent innovation/competition from other companies is bad.



    I just wish Amazon would get international stores working.
  • Reply 5 of 105
    They should be going after the RIAA mafia.
  • Reply 6 of 105
    anantksundaramanantksundaram Posts: 18,953member
    This is a tough one. Any company in Apple's position (as the third most valuable company in the US) would be on the radar screen constantly.



    Apple simply has to live with the fact that bigness -- and they are now humongous in many segments -- brings with it scrutiny that we (as Apple consumers and shareholders) are not used to. Indeed, scrutiny that Apple is not used to.



    The company has to learn to live with it, and watch its every step, it's every action, its every statement. It has to start second-guessing itself constantly. That is the new reality.
  • Reply 7 of 105
    elrothelroth Posts: 1,201member
    Quote:
    Originally Posted by cwfrederick View Post


    what bull$hit. apple builds a successful business (being one of the very few companies with self-imposed integrity), with the music execs fighting them every step of the way, and now theyre complaining that apple is too powerful? i cant believe morons like this are going to be in charge of our healthcare, thanks obama. seriously, who in their right mind votes for democrats? oh, right, only delusional crazies who cant tell the difference between emotion and logic



    meanwhile, banks are given blank checks with no strings attached to sit on their ass and do nothing to kick start the economy. maybe apple needs to give obama 900k..



    Congratulations on the most idiotic post of the month.
  • Reply 8 of 105
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by anantksundaram View Post


    This is a tough one. Any company in Apple's position (as the third most valuable company in the US) would be on the radar screen constantly.



    Apple simply has to live with the fact that bigness -- and they are now humongous in many segments -- brings with it scrutiny that we (as Apple consumers and shareholders) are not used to. Indeed, scrutiny that Apple is not used to.



    The company has to learn to live with it, and watch its every step, it's every action, its every statement. It has to start second-guessing itself constantly. That is the new reality.



    Exactly. Companies have to be very careful how they behave in markets they dominate. Contrary to what some believe, this is not "punishment" for their success, it is simply the operation of the law.
  • Reply 9 of 105
    nasseraenasserae Posts: 3,153member
    Quote:
    Originally Posted by anantksundaram View Post


    This is a tough one. Any company in Apple's position (as the third most valuable company in the US) would be on the radar screen constantly.



    Apple simply has to live with the fact that bigness -- and they are now humongous in many segments -- brings with it scrutiny that we (as Apple consumers and shareholders) are not used to. Indeed, scrutiny that Apple is not used to.



    The company has to learn to live with it, and watch its every step, it's every action, its every statement. It has to start second-guessing itself constantly. That is the new reality.



    It doesn't matter how careful Apple is. They will get harassed until they pay like everyone else. Apple is not paying enough.
  • Reply 10 of 105
    seafoxseafox Posts: 86member
    Quote:

    However, rather than focusing the investigation on Amazon leveraging its market power in online sales to gain exclusive distribution deals for music, the DoJ is reportedly looking at Apple for asking the labels to not participate in Amazon's promotion, and its refusing to provide marketing support for songs that were provided to Amazon first.



    It's not Apple's job to help the labels market their artists. That's what the label is supposedly doing to justify taking most of the profit from the sale of a product they had little creative contribution in.
  • Reply 11 of 105
    cwfrederickcwfrederick Posts: 171member
    Quote:
    Originally Posted by elroth View Post


    Congratulations on the most idiotic post of the month.



    your welcome



    p.s. i don't see a rebuttal
  • Reply 12 of 105
    wizard69wizard69 Posts: 12,692member
    Quote:
    Originally Posted by Dr Millmoss View Post


    Exactly. Companies have to be very careful how they behave in markets they dominate. Contrary to what some believe, this is not "punishment" for their success, it is simply the operation of the law.



    Haveing 24% of the market is not a trust. Besides if you don't believe this administration wouldn't use the law to achieve it's political goals you are grossly out of touch.



    It would be one thing if Apple had a hammer lock on digital music but they don't. Not even close. Apple has been successful yes but that has a lot to do with the competition not getting it. The laws purpose is to protect the dumb or out of Touch. In this regard Apple gas done nothing to deserve this investigation.





    Dave
  • Reply 13 of 105
    SpamSandwichSpamSandwich Posts: 30,708member
    Quote:
    Originally Posted by cycomiko View Post


    lolz. If this was Microsoft under exactly the same situation, people would be having a field day about how they deserved it.



    One has to know where one's loyalties are.
  • Reply 14 of 105
    crimguycrimguy Posts: 116member
    I wonder what their angle is. Everyone I know buys from Amazon mp3.



    Quote:
    Originally Posted by AppleInsider View Post


    The US Department of Justice is looking into Apple's negotiating tactics with music labels related to sales and marketing within the iTunes Store.



    According to report by Brad Stone published by the New York Times, DoJ staff members have started inquiries with music labels as part of a broad investigation of the online music market.



    Stone cited "people briefed on the inquires," who said investigators have been particularly interested in allegations that Apple used its market power to seek to prevent the labels from participating in exclusive music distribution deals with rival Amazon.



    Two months ago, Billboard reported that Amazon was seeking to obtain exclusive rights to sell new music a day earlier than everyone else, in exchange for special "MP3 Daily Deal" promotion of those songs on its website.



    However, rather than focusing the investigation on Amazon leveraging its market power in online sales to gain exclusive distribution deals for music, the DoJ is reportedly looking at Apple for asking the labels to not participate in Amazon's promotion, and its refusing to provide marketing support for songs that were provided to Amazon first.



    Apple's increasingly strong position in music



    In music sales, Apple leads US online sales with 69 percent market share, according to NPD. Amazon is in second place with 8% share of online sales.



    Among all music sales in the US, Apple has a first place position with 26.7% share, while Amazon claims 7% of total music sales. At the same time, Amazon also enjoys a leading 90% share of ebook sales, and a leading position in online book and merchandise sales, with 29 million customers.







    The Times report pointed out that Apple created the first successful music marketplace in 2003, and "has since sold more than 10 billion songs, providing a significant source of revenue for the music industry," but that despite its role in persuading consumers to buy music rather than continuing to pirate it, "the music industry has chafed because Apple sets prices and controls the relationship to the music buyers."



    It also noted that more recently, "Apple has encouraged new kinds of competition in the online music marketplace by allowing streaming music applications from companies like Pandora and Rhapsody onto Apple devices."



    Investigating Apple's success



    Apple is also among the tech companies being investigated by the DoJ over hiring practices that allegedly conspired to prevent competitors from hiring each other's employees. That investigation also involves Google, IBM and Intel.



    Apple is also under investigation from the US Federal Trade Commission over new provisions of the iPhone SDK which limit developers from using tools other than those provided by the company. That inquiry was initiated by a complaint from Adobe Systems, which was thwarted from using its Flash Professional tools to generate iPhone apps for sale in Apple's iTunes App store.



    The FTC was also investigating Apple's potential as a competitor to Google and AdMob in the emerging mobile ads market. It recently determined that Apple's market power in iPhone Apps was a factor in approving Google's bid to acquire AdMob.



  • Reply 15 of 105
    lkrupplkrupp Posts: 6,686member
    Lawsuits and government investigations, and we pay for it all either through higher taxes or higher prices. It all sucks.
  • Reply 16 of 105
    mike fixmike fix Posts: 225member
    Quote:
    Originally Posted by cwfrederick View Post


    what bull$hit. apple builds a successful business (being one of the very few companies with self-imposed integrity), with the music execs fighting them every step of the way, and now theyre complaining that apple is too powerful? i cant believe morons like this are going to be in charge of our healthcare, thanks obama. seriously, who in their right mind votes for democrats? oh, right, only delusional crazies who cant tell the difference between emotion and logic



    meanwhile, banks are given blank checks with no strings attached to sit on their ass and do nothing to kick start the economy. maybe apple needs to give obama 900k..



    Obviously you were asleep when Bush was handing out the bailout checks.



    Also, the reason Apple is focused on by the DoJ is because of the large share of Apple controlled music sales. The labels don't want that, just as much as Apple's competition. Music execs believe that if Apple didn't have a stranglehold on them, they could charge more for their music and increase their profit margin. Which, as a Republican, I'm surprised you're not supporting.
  • Reply 17 of 105
    Quote:
    Originally Posted by Mike Fix View Post


    Obviously you were asleep when Bush was handing out the bailout checks.



    Also, the reason Apple is focused on by the DoJ is because of the large share of Apple controlled music sales. The labels don't want that, just as much as Apple's competition. Music execs believe that if Apple didn't have a stranglehold on them, they could charge more for their music and increase their profit margin. Which, as a Republican, I'm surprised you're not supporting.



    25% is hardly a monopoly, and of course the labels don't want that, they're clearly a cooperating oligopoly (who i'm guessing does a lot more lobbying than apple). and i don't give a crap what bush did, it doesn't make it better when obama does it, repeatedly, after it's proven not to work over and over. not to mention the fact that obama "mr. transparency" is a complete hypocrite. how gullible are you? orwell tried to warn you.. obama is just another pig, and the writing on the barn wall keeps changing. keep baaing.. and give the gov more power, they clearly deserve it, just ask them.





    edit: continuing off topic rant, apologies in advance: dems/libs seem to have a delusional propensity for splitting. they are the robin hoods, and anybody with success (except for them cause they're the good guys) is the evil, dirty sheriff of nottingham. if you want to help, allow people to be self-autonomous, without needing the governments help, and give to CHARITY where your money is well spent instead of going towards some idiot bureaucrat's six figure pension when he retires at age 50.
  • Reply 18 of 105
    hill60hill60 Posts: 6,989member
    Apple should j

    threaten to relocate to the Caymans or another Tax haven to avoid paying any taxation in the US and tell the government to go f*ck themselves.
  • Reply 19 of 105
    str1f3str1f3 Posts: 573member
    Quote:
    Originally Posted by cycomiko View Post


    lolz. If this was Microsoft under exactly the same situation, people would be having a field day about how they deserved it. Strangely, using your market leading position to prevent innovation/competition from other companies is bad.



    I just wish Amazon would get international stores working.



    You may know more than me, but how is this the equvialent of MS who controlled almost 95% of all PC's at one time and use that weight to keep a browser and PC monopoly?



    What Apple seems to be accused of here is nothing more than standard business tactics. The idea of them setting a price is hilarious considering the RIAA wanted higher prices per song.
  • Reply 20 of 105
    str1f3str1f3 Posts: 573member
    Quote:
    Originally Posted by cwfrederick View Post


    25% is hardly a monopoly,



    edit: continuing off topic rant, apologies in advance: dems/libs seem to have a delusional propensity for splitting. they are the robin hoods, and anybody with success (except for them cause they're the good guys) is the evil, dirty sheriff of nottingham. if you want to help, allow people to be self-autonomous, without needing the governments help, and give to CHARITY where your money is well spent instead of going towards some idiot bureaucrat's six figure pension when he retires at age 50.



    This is not about total music sales. Apple has 70% of all revenue of all online music sales. That is bordering on monopoly status just like Google is with search and online ad revenues. It is even worse with Google because they seem to abusing that monopoly status.



    Why bring politics to this? Are your political leanings so heavy that you can't manage to bring any sort objectivity into this matter. You're embarrasing yourself. You mention Robin Hood. Do you feel the same about Medicaid & Social Security?



    I'm wondering if you're one of those souherns who chanted "Drill, baby, Drill". If so, then you got what you deserved. Instead of thinking about just your immediate self-interests you should get some knowledge about what's really going on and find out who's been destroying your way of life.



    Hint: It's both parties but moreso Republicans. If you bring politics into this, you had better know what you're talking about.
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