Apple's App Store policies for streaming music apps under FTC scrutiny, report says

Posted:
in iPod + iTunes + AppleTV edited July 2015
Apple's content and media operations are once again under scrutiny by the U.S. Federal Trade Commission, which is studying claims that iOS App Store policy is illegally stifling competition in the music streaming market, a report said Friday.




Citing three industry sources, Reuters reports government officials are looking at the effect Apple's usual 30 percent cut of App Store sales exerts over the streaming music industry, of which the company is now a player with Apple Music. Another concern is App Store rules that restrict companies from advertising billing services outside of iTunes and product availability on other platforms.

The FTC has not yet opened a formal investigation into the matter, but is meeting with interested parties, sources said.

With the launch of Apple Music in June, Apple instantly became a rival to the multitude of existing streaming companies that rely on the App Store, and iOS itself, to survive. Competition keeps the price of many subscription services -- including Apple Music -- to an unofficial $9.99 per month standard. Allegations claim Apple's 30 percent cut forces rivals to choose between raising prices for iOS users or absorb the profit loss as an overhead expenditure.

Earlier this week Spotify began sending out emails to encourage iOS subscribers to convert their accounts to Web-based billing, saying monthly charges would drop from $12.99 to $9.99. Spotify charges users who signed up through iOS an additional $3 per month to account for Apple's 30 percent in-app purchase fee.

As both owner of one of the world's two dominant mobile device platforms and operator of a service in direct competition with companies selling products through that platform, Apple is in a sticky situation.

Apple Music does indeed appear to be an especially ripe target for antitrust investigation, as evidenced by multiple government inquiries relating to Apple's streaming efforts. In May, reports claimed the FTC and Justice Department were exploring concerns Apple was using iTunes' industry sway to strike content deals that gave it an unfair advantage over soon-to-be rival streaming music firms.
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Comments

  • Reply 1 of 72
    adonissmuadonissmu Posts: 1,772member
    The government needs to stay out of it and let the free market sort this stuff out TBQH. I hate when the government gets involved in picking winners and losers with the interpretation of the law. Apple's 30% cut is standard retail practice. The maintenance of such a HUGE app ecosystem alone is a HUGE expensive undertaking. The 30% covers the cost and offers Apple what is at best a slightly above break-even proposition. Apple has not done anything wrong to Spotify other than offer up more competition in the music streaming market seeing as Spotify's efforts to get users to stream their music have been unprofitable for pretty much everyone involved.
  • Reply 2 of 72
    Apple is only "ripe" for an investigation because of their billions of dollars in cash, not because of anything they have done wrong.
  • Reply 3 of 72
    My guess is the Spotify et al will argue that Apple's 30% cut of in-app purchases forced them to charge more to get that 30% back but now that Apple has a similar streaming service will they similarly charge themselves a 30% fee for subscribers who subscribe in the app and if not that's undercutting the market and/or trying to create a monopoly by snuffing out the competition.

    Not saying Apple has done anything wrong here at all, just that that may be what Spotify will try to argue.
  • Reply 4 of 72
    adonissmuadonissmu Posts: 1,772member
    Quote:

    Originally Posted by Lord Amhran View Post



    My guess is the Spotify et al will argue that Apple's 30% cut of in-app purchases forced them to charge more to get that 30% back but now that Apple has a similar streaming service will they similarly charge themselves a 30% fee for subscribers who subscribe in the app and if not that's undercutting the market and/or trying to create a monopoly by snuffing out the competition.



    Not saying Apple has done anything wrong here at all, just that that may be what Spotify will try to argue.



    Yeah but it's a stretch because Spotify didn't build their business on their own. They had help from the big bad apple. Why shouldn't apple get a reoccurring cut of the pie since they did advertising even working with Spotify devs etc to prepare their app for launch on the Apple Store etc. Now they want to bite the hand that's been feeding them all this time. Apple is trying to help out the other platforms. Apple's entry into the streaming services made people go take a second look at Spotify's app so much so that it was Top 10 in the app store. 

  • Reply 5 of 72
    And yet no inquiries about Google matching policies in Google Play similar to the App Store.
  • Reply 6 of 72
    ecatsecats Posts: 272member
    The fact that Spotify can just send out the emails is testament to this not actually being as big of an issue as Spotify claims it to be.

    Spotify's problem is that it has a bad business model. Even in ideal circumstances they would be losing money. The core problem with Spotify is that there is very little reason to upgrade to a paid service, but their business model relies on the paid tier as the ads don't cover the expenses.

    You can't blame bad business decisions on competition, competition is a constant. Even without Apple (or indeed ANY OTHER PLAYER) Spotify would still lose money.
  • Reply 7 of 72
    Doesn't the government already have their man on the inside: Bromwich? Just ask him to harass Apple executives some more.
  • Reply 8 of 72
    irnchrizirnchriz Posts: 1,590member
    Apple are charging the same as other services but are paying higher royalties so have a worse deal than other services.

    Spotify etc do not need to sell their subscription through the APP but can offer the APP with the free service and do what Amazon Prime video does which is have a banner stating how do I get the premium access visit our website for details. Don't post a URL or anything just have that statement. Problem solved.

    It must be difficult to be a successful company with a huge bankroll in a country with a trillion dollar debt. You have to keep a look over your shoulder for them eying up your cash and trying to get it by any means possible.
  • Reply 9 of 72
    konqerrorkonqerror Posts: 685member
    Quote:

    Originally Posted by irnchriz View Post



    It must be difficult to be a successful company with a huge bankroll in a country with a trillion dollar debt. You have to keep a look over your shoulder for them eying up your cash and trying to get it by any means possible.

     

    The US has a lower debt-to-GDP ratio (72.5%) than the UK (90%), France (89.9%), Germany (79.9%), Canada (84.1%), and Japan (226%). Except for Russia, as you recall went bankrupt in 1998 and defaulted on its debt, the US has the lowest debt-to-GDP in the G8.

     

    Enjoy your 20% VAT.

  • Reply 10 of 72
    irnchrizirnchriz Posts: 1,590member
    [VIDEO]'[/VIDEO]
    konqerror wrote: »
    The US has a lower debt-to-GDP ratio (72.5%) than the UK (90%), France (89.9%), Germany (79.9%), Canada (84.1%), and Japan (226%). Except for Russia, as you recall went bankrupt in 1998 and defaulted on its debt, the US has the lowest debt-to-GDP in the G8.

    Enjoy your 20% VAT.

    USA National debt as % of GDP is 105.06% you actually have a higher debt per capita than Greece.

    http://www.statista.com/statistics/264647/national-debt-of-selected-countries-in-relation-to-gross-domestic-product-gdp/
  • Reply 11 of 72
    konqerrorkonqerror Posts: 685member
    Quote:
    Originally Posted by irnchriz View Post



    'USA National debt as % of GDP is 105.06% you actually have a higher debt per capita than Greece.



    http://www.statista.com/statistics/264647/national-debt-of-selected-countries-in-relation-to-gross-domestic-product-gdp/



    Your point is completely wrong. Your poorly sourced ad-filled junk site uses gross debt which is meaningless. The reason is that the US has assets in trust funds, particularly Social Security, because it usually runs at a surplus. Basically, the government is using extra money it has by "borrowing" it for other purposes. Net debt is the correct number because it represents debt that is held externally from the government.

     

    Greece's net debt is 155% GDP, so you're even wrong there. Greece's net debt is less than their gross debt because the government raided their own assets to pay foreign creditors.

     

    Debt per capita and per GDP are unrelated concepts. Doesn't mean anywhere close to the same thing.

     

    See Wikipedia for all of the numbers with proper sources:

    https://en.wikipedia.org/wiki/List_of_countries_by_public_debt

  • Reply 12 of 72
    radster360radster360 Posts: 540member

    I think this is now getting out of hand. Whatever happened to free market economy in this country ? I think government is stepping beyond their bounds now. Any business Apple gets into, government is finding issue. Why aren't get after all those oil companies that has unfairly done price grouching? What about Amazon? What about cable companies? 

     

    Oh! And they claim they are doing to protect consumer! That is total bull. Apple is the late comer in many of the businesses and still the existing products/services will large marketshare are a victim? Again - Nonsense.

  • Reply 13 of 72
    mdriftmeyermdriftmeyer Posts: 7,300member
    irnchriz wrote: »
    [VIDEO]'[/VIDEO]
    USA National debt as % of GDP is 105.06% you actually have a higher debt per capita than Greece.

    http://www.statista.com/statistics/264647/national-debt-of-selected-countries-in-relation-to-gross-domestic-product-gdp/

    Far more interesting charting:

    http://www.tradingeconomics.com/united-states/external-debt
  • Reply 14 of 72
    tmaytmay Posts: 3,937member
    Quote:

    Originally Posted by mdriftmeyer View Post





    Far more interesting charting:



    http://www.tradingeconomics.com/united-states/external-debt

    The dollar is so strong against the Euro now that there are great deals to be had in purchasing products out of the EU; certainly doesn't help the U.S. balance of trade, and makes American products more expensive for others.

  • Reply 15 of 72
    MacProMacPro Posts: 18,367member
    Apple is only "ripe" for an investigation because of their billions of dollars in cash, not because of anything they have done wrong.

    Exactly. Where were these investigators in all the years artists have been screwed by recording company contracts? I was listening to the Jim Croce story on NPR a while back, now there is a classic example of this.
  • Reply 16 of 72
    applesauce007applesauce007 Posts: 1,621member

    Spotify sends a letter asking their clients to cancel their subscriptions on iTunes and re-register on Spotify's web site?

     

    What a STUPID move!

    Why would they bother re-registering when they have Apple Music free for 3 months and thereafter 6 family members pay 14 bucks!  That's 2 bucks a month.

     

    Spotify is toast and they know it.

  • Reply 17 of 72
    MacProMacPro Posts: 18,367member
    tmay wrote: »
    The dollar is so strong against the Euro now that there are great deals to be had in purchasing products out of the EU; certainly doesn't help the U.S. balance of trade, and makes American products more expensive for others.

    Right, and I have to wonder if Disney or Carnival contemplated buying Greece with the Euro being weak ;). BTW I was staggered to read the entire population is about that of Miami.
  • Reply 18 of 72
    I'd like to add that it's going to be hard to prove any wrongdoing on Apple's behalf when the investigators realize you can sign up for spotify outside of the app and App Store. No one is being forced into buying through the app and further if spotify did more of their own marketing they should have plenty of paid subscribers who bypass the App Store and save money.
  • Reply 19 of 72
    adonissmu wrote: »
    The government needs to stay out of it and let the free market sort this stuff out TBQH. I hate when the government gets involved in picking winners and losers with the interpretation of the law. Apple's 30% cut is standard retail practice. The maintenance of such a HUGE app ecosystem alone is a HUGE expensive undertaking. The 30% covers the cost and offers Apple what is at best a slightly above break-even proposition. Apple has not done anything wrong to Spotify other than offer up more competition in the music streaming market seeing as Spotify's efforts to get users to stream their music have been unprofitable for pretty much everyone involved.

    Go back 20+\- years. The government was doing the same thing with Microsoft. Think like a consumer and drop your corporation worship. If you have a problem, write your Senator.
  • Reply 20 of 72
    matrix07matrix07 Posts: 1,993member
    And yet no inquiries about Google matching policies in Google Play similar to the App Store.

    That because no one care about 10 people using them.
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