U.S. Justice Department launches antitrust inquiry into Apple’s online music tactics

“The Justice Department is examining Apple’s tactics in the market for digital music, and its staff members have talked to major music labels and Internet music companies, according to several people briefed on the conversations,” Brad Stone reports for The New York Times. “The antitrust inquiry is in the early stages, these people say, and the conversations have revolved broadly around the dynamics of selling music online.”

“But people briefed on the inquiries also said investigators had asked in particular about recent allegations that Apple used its dominant market position to persuade music labels to refuse to give the online retailer Amazon.com exclusive access to music about to be released, Stone reports. “All these people spoke on condition of anonymity, citing the delicacy of the matter. Representatives from Apple and Amazon declined to comment. Gina Talamona, a deputy director at the Justice Department, also declined to comment.”

“In March, Billboard magazine reported that Amazon was asking music labels to give it the exclusive right to sell certain forthcoming songs for one day before they went on sale more widely. In exchange, Amazon promised to include those songs in a promotion called the ‘MP3 Daily Deal’ on its Web site, Stone reports. “The magazine reported that representatives of Apple’s iTunes music service were asking the labels not to participate in Amazon’s promotion, adding that Apple punished those that did by withdrawing marketing support for those songs on iTunes.”

“Apple is by far the largest seller of online music in the United States, with 69 percent of the market, according to data from the NPD Group, a marketing consultancy. Amazon’s MP3 store was in second place, with an 8 percent share,” Stone reports. “Apple is also the largest seller of music, with 26.7 percent of the overall market, up from 12 percent in 2007.”

“The inquiry is one of several by the federal government involving Apple. The Federal Trade Commission is moving ahead with a separate investigation of Apple’s rules for developers who create applications for the iPhone operating system, according to a person familiar with that discussion,” Stone reports. “That inquiry, initiated by complaint from Adobe Systems, the maker of the Flash format for Internet video, is said to be in its early stages as well.”

Stone reports, “The music investigation signals the elevated scrutiny of technology companies under the antitrust agencies of the Obama administration.”

Full article here.

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