FTC begins issuing subpoenas in App Store investigation triggered by Apple Music - report

Posted:
in iPod + iTunes + AppleTV edited July 2015
The Federal Trade Commission has reportedly expanded its inquiry into Apple's policy of forcing companies to turn over 30 percent of subscription revenue earned through the App Store, issuing subpoenas to streaming services that compete with Apple Music.




There is no word on exactly what information the commission is seeking with the subpoenas, which were reported by The Verge, or which services have received them. It's likely that the list includes one or more of Spotify, Rdio, Rhapsody, and Tidal, the most prominent competition for Apple Music.

The commission began looking into the App Store's revenue sharing policy earlier this month, after competitors groused that Apple Music launched with a built-in pricing advantage.

Because Apple keeps a 30 percent cut of all in-app purchases --?including subscription revenue --?services like Spotify are forced to raise their prices in the App Store to compensate, or face lost revenue from iOS users. The companies are also prohibited by App Store rules from directing consumers to sign up through other avenues that would avoid the 30-percent haircut, a likely secondary point of contention for the FTC.

"They [Apple] control iOS to give themselves a price advantage," one music industry insider told The Verge earlier this year. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."
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Comments

  • Reply 1 of 65
    mdriftmeyermdriftmeyer Posts: 7,259member
    Forcing my ass. This is the AppStore policy.

    [QUOTE]"They [Apple] control iOS to give themselves a price advantage," one music industry insider told The Verge earlier this year. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."[/QUOTE]


    Yeah! How dare they invent an operating system and control it.
  • Reply 2 of 65
    I wonder how much the FTC charges to start an investigation. Ten million? Twenty?
  • Reply 3 of 65
    herbapouherbapou Posts: 2,221member
    They just need to disable in app purchased and let customers get there subscription on there website.

    That being said, I still wish the FTC force Apple to take a very small cut when an app is selling copyright content like movies, music, books, ...
  • Reply 4 of 65
    jungmarkjungmark Posts: 6,687member
    This is so bunk and a waste of my taxes. The competitors can charge the same rate as Apple. They choose not to.
  • Reply 5 of 65
    sflocalsflocal Posts: 4,612member

    So the competitors are whining that they have to give a percentage of their earnings for an app that gives those whiners access to millions of potential (and paying) customers all the while Apple maintains that ecosystem and all the overhead costs that goes with it for free?  As if all that infrastructure magically pays-for and maintains itself?



    Stupid people.  Nothing is stopping them from going to a competitor like Android - oh wait.. Fandroids expect everything to be free.



    Apple can have a monopoly on its own product.  Have a nice day crybabies.

  • Reply 6 of 65
    SpamSandwichSpamSandwich Posts: 31,094member
    What utter load of crap based completely on hearsay and because of obvious competitor conflicts of interest.

    What's next? They're going to Federalize iTunes? Nonsense of the highest order.

    I strenuously recommend investors call, write and fax their elected representatives to complain about these abuses of power.
  • Reply 7 of 65

    Of course it has nothing to do with the fact that Goldman Sachs invested $500M in Spotify this year and they're looking to recoup their investment, right?! I'm sure the banking industry's (well known) stranglehold on politics has nothing to do with this investigation, along with Spotify's spending more on directly lobbying the government this year (articles here and here), right?! Nothing whatsoever, I'm sure! ;-)

  • Reply 8 of 65
    eightzeroeightzero Posts: 2,351member
    Quote:

    Originally Posted by mdriftmeyer View Post



    Yeah! How dare they invent an operating system and control it.

    Well...John D. Rockefeller had an "operating system" for distributing kerosene too....

  • Reply 9 of 65
    adrayvenadrayven Posts: 460member
    "The companies are also prohibited by App Store rules from directing consumers to sign up through other avenues that would avoid the 30-percent haircut, a likely secondary point of contention for the FTC."

    Haircut?

    umm.. yeah.. and also, they are not prohibited from selling services outside of App Store.. Many have done this for years w/o issue.
  • Reply 10 of 65
    elrothelroth Posts: 1,201member
    Quote:

    Originally Posted by AppleInsider View Post



    "They [Apple] control iOS to give themselves a price advantage," one music industry insider told The Verge earlier this year. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."

    Yeah, and when you sell a CD through a record store, the store takes 50%. Have you filed a complaint about that also?

  • Reply 11 of 65

    "They [Apple] control iOS to give themselves a price advantage," one music industry insider told The Vergeearlier this year. "Thirty percent doesn't go to any artist, it doesn't go to us, it goes to Apple."

     

    ?Do stores stock their shelves with products for manufactures and sell to and service their customers for free? If the argument is the app store is a virtual store and therefore should get no cut I'd argue that apps and music are virtual products and should be free. I understand they want to keep the 30% themselves just as I'd like my sales staff to sell for me and I keep the commission. Just because it is a subscription and the music services are ultimately paying the cost of royalties and bandwidth to reach their customers does not change the fact that their app is distributed by apple. If they are allowed to argue against this requirement then every other term Apple has set forth for code compliance and app compatibility is also up for grabs. Bottom line you can't force a store to sell what you want on your terms unless you are in a position to negotiate them. Apple is pretty uniform on the commissions so it's not like any service, company or industry is being shown preference which would be discriminatory. 

  • Reply 12 of 65
    sandorsandor Posts: 523member

    I am really at a loss as to what the argument is...

     

    Does it differ from Amazon allowing other retailers/wholesalers to sell similar products, but being able to undercut their pricing due to instituted fee policies?

  • Reply 13 of 65
    Since when have stores not been allowed to make money? Apple may not seem on the surface as a conventional store but it acts in the same way. What you purchase through the iTunes store has mark-up just like any other store. If they are not allowed to make money than I would assume that downloads through Amazon should have no markup either. I have things on subscribe and save at Amazon so I should only pay mark-up on the first box of Cheerios. All the subsequent boxes of Cheerios should not have mark-up. I'm not sure why that makes sense but OK.

    Fortunately there are a lot more Android devices and PCs so we don't even have a monopoly issue here.
  • Reply 14 of 65
    SpamSandwichSpamSandwich Posts: 31,094member
    sandor wrote: »
    I am really at a loss as to what the argument is...

    Does it differ from Amazon allowing other retailers/wholesalers to sell similar products, but being able to undercut their pricing due to instituted fee policies?

    I know what the argument is going to be... Next iTunes will be accused of being a monopoly, despite dozens of crappy competitors.
  • Reply 15 of 65
    mac_dogmac_dog Posts: 679member
    i think, most importantly, apple is disruptive to those in power. they eliminate the middleman whose sole purpose was that of a bottom feeder who really didn't do a thing and got most of the profit. they're also gaining too much power on wall street. this is making a lot of enemies of those stuck in the old economies & business models. it didn't bother them when typographers were going out of business, but now that it's coming to the areas of music, medical, and automotive, you can bet there's going to be more of this. the stakes are so much bigger. i guess government will be the last one.

    i predict this government will find a way to break up apple (as a monopoly) before it gets there.
  • Reply 16 of 65
    SpamSandwichSpamSandwich Posts: 31,094member
    mac_dog wrote: »
    i think, most importantly, apple is disruptive to those in power. they eliminate the middleman whose sole purpose was that of a bottom feeder who really didn't do a thing and got most of the profit. they're also gaining too much power on wall street. this is making a lot of enemies of those stuck in the old economies & business models. it didn't bother them when typographers were going out of business, but now that it's coming to the areas of music, medical, and automotive, you can bet there's going to be more of this. the stakes are so much bigger. i guess government will be the last one.

    i predict this government will find a way to break up apple (as a monopoly) before it gets there.

    Especially if Apple is legally able to continue to provide uncrackable security measures. Expect our illustrious leaders to continue to mount full frontal assaults on Apple.
  • Reply 17 of 65
    mstonemstone Posts: 11,510member

    I understand how people defend Apple on this but it is a gray area in my opinion because it is a subscription. Apple has nothing to do with the monthly billing because it does not go through the App Store. I fully agree that they should get 30% of the first month but not so sure they have a right to 30% of the ongoing reoccurring billing.

  • Reply 18 of 65
    geekmeegeekmee Posts: 319member
    Help me to understand this?... The FTC is investigating what Apple does with pricing of its own product & services, huh??... Something reeks!!
  • Reply 19 of 65
    SpamSandwichSpamSandwich Posts: 31,094member
    mstone wrote: »
    I understand how people defend Apple on this but it is a gray area in my opinion because it is a subscription. Apple has nothing to do with the monthly billing because it does not go through the App Store. I fully agree that they should get 30% of the first month but not so sure they have a right to 30% of the ongoing reoccurring billing.

    As long as that app is offered through the App Store, that pricing is completely fair. Let these deadbeats offer their services as web apps otherwise.
  • Reply 20 of 65
    mike1mike1 Posts: 1,884member

    So, I make a and sell a widget through two channels, retail and direct through my company web site.

    My widget costs me $40 all in.

     

    1. I sell my widget to, let's say Target, for $70. They sell it for $100. They make $30 and I make $30.

    2. I sell my widget to some people directly. I make $60, Target makes nothing.

     

    With the logic of this lawsuit, I should be suing Target to recoup the $30 I would have made if the customers had bought from me directly.

    That doesn't make much sense, does it?

     

    All Spotify and others need to do is not put in-app purchases in their app. If they want Apple to do some of the work, then they should suck it up and pay the 30%.

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