FTC looking into Apple subscription terms, while first publishers get on board
US regulators are examining the terms of Apple's App Store subscriptions, a new report claims, even as early adopter publishers have signed on to the new service.
Regulator concerns
In a followup to an earlier report, The Wall Street Journal said the US Justice Department and Federal Trade Commission are looking into Apple's terms, though interest is at "a preliminary stage" and a formal investigation has yet to be launched, according to people familiar with the matter. Meanwhile, the European Commission said Thursday it was "carefully monitoring the situation."
Apple drew criticism earlier this week when it unveiled its iOS App Store subscription service, which will take a 30 percent share of revenue and requires that digital subscriptions for an iOS app sold outside of the app also be available for the same price or better through iTunes.
One developer called the announcement "a huge dick move" on Apple's part, while distributor Rhapsody called the terms "economically untenable." "The costs don't leave any room for a sensible business model," said Rhapsody president John Irwin.
At the time, legal experts chimed in, saying Apple could be subject to antitrust scrutiny, though the iPad maker would need to have a "dominant market position" for its actions to count as antitrust violations.
Representatives of the Justice Department and the FTC declined to comment. Since both agencies enforce federal antitrust laws, the two would have to decide who would take the lead in the event of an investigation, the report noted.
Eric Goldman, director of Santa Clara University's High Tech Law Institute, told the Journal that forbidding apps from linking to external sites "sounds like a pretty aggressive position. "It seems like that's purely in the interests of Apple trying to restrict people doing transactions they don't get a cut from."
The clauses in Apple's terms of service that require pricing on iTunes to match external sites, also known as "most favored nation" clauses, could draw investigator scrutiny. According to the report, the Justice Department recently sued a Michigan health-insurance company, alleging that the company used similar clauses to block competitors.
The day after Apple announced the details of its in-app subscriptions, Google revealed a competing service called "One Pass" that will take just 10 percent of revenue. The service also would allow publishers access to subscribers' personal data, while Apple's model lets users decide which personal information publishers can see.
Publisher adoption
Despite attracting a largely negative response from publishers and developers, Apple has managed to sign on several high-profile publishers to its subscription feature. Men's magazine Maxim will take advantage of the new feature, the Journal reports.
?We understand that Maxim can be consumed in many different ways and on many different platforms and it is our job to serve our audience wherever and however they choose,? said Ben Madden, Maxim?s chief revenue officer.
Elle, Nylon and Popular Science also revealed earlier this week that they will incorporate the new service into their apps. News Corporation negotiated exclusive access to the feature and will utilize it in its The Daily iPad periodical.
For an in-depth comparison of Apple's new subscription plan with those of Google and Amazon, see the AppleInsider feature:
Inside subscription content: Apple iPad vs Google One Pass vs Amazon Kindle
Regulator concerns
In a followup to an earlier report, The Wall Street Journal said the US Justice Department and Federal Trade Commission are looking into Apple's terms, though interest is at "a preliminary stage" and a formal investigation has yet to be launched, according to people familiar with the matter. Meanwhile, the European Commission said Thursday it was "carefully monitoring the situation."
Apple drew criticism earlier this week when it unveiled its iOS App Store subscription service, which will take a 30 percent share of revenue and requires that digital subscriptions for an iOS app sold outside of the app also be available for the same price or better through iTunes.
One developer called the announcement "a huge dick move" on Apple's part, while distributor Rhapsody called the terms "economically untenable." "The costs don't leave any room for a sensible business model," said Rhapsody president John Irwin.
At the time, legal experts chimed in, saying Apple could be subject to antitrust scrutiny, though the iPad maker would need to have a "dominant market position" for its actions to count as antitrust violations.
Representatives of the Justice Department and the FTC declined to comment. Since both agencies enforce federal antitrust laws, the two would have to decide who would take the lead in the event of an investigation, the report noted.
Eric Goldman, director of Santa Clara University's High Tech Law Institute, told the Journal that forbidding apps from linking to external sites "sounds like a pretty aggressive position. "It seems like that's purely in the interests of Apple trying to restrict people doing transactions they don't get a cut from."
The clauses in Apple's terms of service that require pricing on iTunes to match external sites, also known as "most favored nation" clauses, could draw investigator scrutiny. According to the report, the Justice Department recently sued a Michigan health-insurance company, alleging that the company used similar clauses to block competitors.
The day after Apple announced the details of its in-app subscriptions, Google revealed a competing service called "One Pass" that will take just 10 percent of revenue. The service also would allow publishers access to subscribers' personal data, while Apple's model lets users decide which personal information publishers can see.
Publisher adoption
Despite attracting a largely negative response from publishers and developers, Apple has managed to sign on several high-profile publishers to its subscription feature. Men's magazine Maxim will take advantage of the new feature, the Journal reports.
?We understand that Maxim can be consumed in many different ways and on many different platforms and it is our job to serve our audience wherever and however they choose,? said Ben Madden, Maxim?s chief revenue officer.
Elle, Nylon and Popular Science also revealed earlier this week that they will incorporate the new service into their apps. News Corporation negotiated exclusive access to the feature and will utilize it in its The Daily iPad periodical.
For an in-depth comparison of Apple's new subscription plan with those of Google and Amazon, see the AppleInsider feature:
Inside subscription content: Apple iPad vs Google One Pass vs Amazon Kindle
Comments
Why on earth do we the people permit government bureaucrats who do not have the cojones to start or operate a business to regulate anything.
Time to dump Obama and his regulators.
There's a really tasteless joke in there somewhere, and I invite you to find it.
It's time for we the people to demand that government stop trying to regulate business. If the publishers choose to accept Apple's terms, that is their business. If they choose to reject or continue to negotiate. But there could be nothing worse than a bureaucrat in the government sticking his nose in to stuff he does not understand.
Why on earth do we the people permit government bureaucrats who do not have the cojones to start or operate a business to regulate anything.
Time to dump Obama and his regulators.
It's time for we the people to demand that government stop trying to regulate business. If the publishers choose to accept Apple's terms, that is their business. If they choose to reject or continue to negotiate. But there could be nothing worse than a bureaucrat in the government sticking his nose in to stuff he does not understand.
Why on earth do we the people permit government bureaucrats who do not have the cojones to start or operate a business to regulate anything.
Time to dump Obama and his regulators.
Nailed it.
"?We understand that Maxim can be consumed in many different ways"
There's a really tasteless joke in there somewhere, and I invite you to find it.
I consume Maxim in the bathroom..
It's time for we the people to demand that government stop trying to regulate business. If the publishers choose to accept Apple's terms, that is their business. If they choose to reject or continue to negotiate. But there could be nothing worse than a bureaucrat in the government sticking his nose in to stuff he does not understand.
Why on earth do we the people permit government bureaucrats who do not have the cojones to start or operate a business to regulate anything.
Time to dump Obama and his regulators.
How will a different President AND THE SAME regulators change anything?
Governments may come and go but the bureaucracies that administer for them carry on regardless.
It's time for we the people to demand that government stop trying to regulate business. If the publishers choose to accept Apple's terms, that is their business. If they choose to reject or continue to negotiate. But there could be nothing worse than a bureaucrat in the government sticking his nose in to stuff he does not understand.
Why on earth do we the people permit government bureaucrats who do not have the cojones to start or operate a business to regulate anything.
Time to dump Obama and his regulators.
The racism displayed in this post is remarkable. I'm disappointed that Apple Insider would allow such rightwing filth to be posted on their website.
Anybody have a link to Apple's original terms for iOS developers? I read here on AI that the restrictions Apple is starting to impose have always existed. In which case it's hard for me to believe representatives of any sizable business venture didn't see this coming.
I don't think there's anything unfair about Apple's terms, EXCEPT for the part requiring that the iPad price be equal or better than prices in non-Apple outlets. It seems to cross the line into price fixing. I can see an argument that it is anti-competitive. (Wikipedia - Anti-Competitive Practices)
Amazon has the same requirement for their third party sellers, no cheaper elsewhere. Some categories of goods their commission is near 30%.
Also Amazon third party sellers have complained of hitting a hot selling item and Amazon then selling it and undercutting them, Amazon gets all the analytics from their sellers so have a good idea what to stock. Apple clearly won't be doing that and put more effort in to curating the marketplace.
I don't think there's anything unfair about Apple's terms, EXCEPT for the part requiring that the iPad price be equal or better than prices in non-Apple outlets. It seems to cross the line into price fixing. I can see an argument that it is anti-competitive. (Wikipedia - Anti-Competitive Practices)
Linking to a wikipedia article doesn't make you wise. Go google around for some lawsuits around similar policy from Visa and Mastercard and the what will probably be, to you anyway, surprising outcomes.
Just because a company or companies do something that seems illegal to you doesn't mean it particularly is.
The racism displayed in this post is remarkable.
Nice ad Hominem attack. The only racism being displayed is by those who try to trot it out where it doesn't exist
Al Sharpton and Jessie Jackson would be so proud...
I don't think there's anything unfair about Apple's terms, EXCEPT for the part requiring that the iPad price be equal or better than prices in non-Apple outlets. It seems to cross the line into price fixing. I can see an argument that it is anti-competitive. (Wikipedia - Anti-Competitive Practices)
It is kinda a backwards sort of price fixing... Instead of a vender telling a store what to charge, the store is telling the vendor what to charge...
I am wondering if Apple will allow all-you-can-eat subscriptions outside of the new in-app subscriptions. It seems that Apple is targeting subscriptions where you purchase content permanently instead of just rent access to content. If Apple makes this distinction then Netflix would be fine.
Personally I think 30% is fine, but I think Apple should offer more infrastructure. It is good for the consumer too because they know they will always be able to download their content again from Apple's datacenter. If Apple hosts the data then it also removes all of the printing and distribution costs that the publisher would have otherwise incurred and provides some exposure to their product. Essentially I think it should work just like the iTunes store does. I think the App Store in-app purchase got it wrong. For some reason in-app works differently then everything else. I originally though it was an interm thing until they released something more sophisticated... but it has been awhile.
It feels like the motivation for this is to eventually control access to the content. That would enable Apple to seamlessly offer some of this content in the cloud so it all doesn't need to live on the device.
Ultimately this licensing would lock out resellers of digital content from Apple devices because they don't have the margins to play with and they may have two conflicting licenses on how the content is to be used–-one from the publishers and one from the App Store. I think for digital content stores are becoming dinosaurs anyway. Why do you need a store when the product can travel the speed of light across the Internet? Stores mainly just solve a logistical problem. Publishers will just sell direct.
Time to dump Obama and his regulators.
I'm at least as opposed to Obama's policies as you appear to be, but I have to say that you're wrong on this one. (I also note, with some irony, that as I write this, there's an article up on AI about Steve Jobs having met with Obama, implying that if anything, Apple could get treated with kid gloves because Steve is an Obama supporter.)
Preventing the use of fraud (scams, confidence schemes, contracts signed with no intention of following through) and force (protection rackets, anti-trust/anti-competitive misbehavior) in the marketplace is one of the legitimate and basic functions of government. I would have been extremely annoyed if the FTC and/or Justice Department was not at least giving these policies the once over; and that has absolutely nothing to do with who is in office.
The racism displayed in this post is remarkable. I'm disappointed that Apple Insider would allow such rightwing filth to be posted on their website.
Racism? I cant stand people who pull that card unnecessarily. How lame.
It's time for we the people to demand that government stop trying to regulate business. If the publishers choose to accept Apple's terms, that is their business. If they choose to reject or continue to negotiate. But there could be nothing worse than a bureaucrat in the government sticking his nose in to stuff he does not understand.
Why on earth do we the people permit government bureaucrats who do not have the cojones to start or operate a business to regulate anything.
Time to dump Obama and his regulators.
Are you serious? What country or example do you recommend that doesn't have rules and regs that is your utopia? Do you have any idea what life was like(or is like) before theses mean ol regulators came along? Grow up.
Linking to a wikipedia article doesn't make you wise. Go google around for some lawsuits around similar policy from Visa and Mastercard and the what will probably be, to you anyway, surprising outcomes.
Just because a company or companies do something that seems illegal to you doesn't mean it particularly is.
Well DocNo42 we could have had an interesting discussion as to why you think the price fixing argument won't stick. But apparently you'd rather just make veiled passive/aggressive insults at me.