FTC investigation into Apple heats up, music streaming services hit with subpoenas

“The FTC has launched an investigation into Apple’s dealings with competing music streaming services in its App Store, according to multiple sources,” Micah Singleton reports for The Verge. “The investigation is targeting Apple’s 30 percent fee charged to subscription services who sign up new users through the App Store. This has been a major point of conflict between Apple and rival music services.”

“The FTC’s inquiries have picked up over the recent weeks, on the heels of its initial investigation into whether Apple pressured labels to kill Spotify’s free streaming tier,” Singleton reports. “Sources with direct knowledge of the matter tell The Verge that the FTC has already issued subpoenas to music streaming services as it gathers more information to determine whether Apple’s App Store rules are anticompetitive.”

“Apple’s App Store guidelines call for a 30 percent fee to be charged to any sales by a subscription service that signs up users through an iOS app and uses iAP, which is essentially every paid music streaming service,” Singleton reports. “Before Apple decided to get into the streaming game, its 30 percent tax was still a pain for music streaming services, but not a hindrance to competition, since everyone had to abide by the same rules. But now that Apple Music is available, the world’s largest company has put itself directly in the FTC’s line of fire.”

Read more in the full article here.

MacDailyNews Take: Once again, hard-nosed competition is not illegal. This is business, not Kumbaya ’round the campfire.

If Spotify, Rdio, Rhapsody, Tidal and Pandora don’t like Apple’s App Store terms, they are free to market their wares to non-iOS users. Surely their “freemium” offering will be in very high demand among the skinflint set who have proven more than willing to surrender their privacy and personal date in exchange for what they erroneously think is “free.”

As myopic “analysts” like to repeatedly tell each other on CNBC, Apple’s iOS market share is dwarfed by Android, that amazing and wondrous OS that delivers not only a poor facsimile of iOS and 99% of all mobile malware, but also exceedingly profitless results for knockoff peddlers the world over. Therefore, Apple clearly does not have a monopoly in smartphones — only in brilliantphones — so there’s simply no monopoly to abuse.

Spotify and the rest of the also-rans: Go peddle your outmoded, inferior crap to the billion+ fragmandroid settlers if you don’t like Apple’s App Store terms. Knock yourselves out.

SEE ALSO:
Apple Music faces antitrust scrutiny in New York, Connecticut – June 10, 2015
a href=”http://macdailynews.com/2015/05/07/rival-music-services-claim-apples-app-store-pricing-is-anticompetitive/”>Rival music services claim Apple’s App Store pricing is anticompetitive – May 7, 2015
EU regulators already probing Apple’s music streaming plans in Europe – April 2, 2015

12 Comments

  1. So the FTC thinks I should be able to set up a table in my local department store and take orders for my handmade quilts and not owe the department store a cut? Why is that fair for the department store that pays the lease and utilities to operate?

  2. The real issue is not the 30%. It is the fact that the apps in the App Store for iOS apps are not allowed, by Apple’s rules, to point to alternative sources for media. Thus in order for a service to have their media play on an Apple iOS device, they have to pay the 30% forever. If they could point to their own signup sites it would allow these services to have an iOS app, pay the first month or so through Apple with the 30% fee going to Apple, then those users going through a link in the app to the service providers own website to sign up for long term service.

    The idea that if they want an official app on an iOS device they must go through the App Store is OK. Apple makes no money off these free apps as, in and of themselves, the apps are free, and 30% of nothing is nothing. It costs Apple money to vet the app and host it. The alternate service providers should not be allowed to force Apple to give them something for nothing.

    The idea that they must do a limited time of paid service through the app downloaded from the App Store, just makes sense. If its two or three months, then Apple gets 30% of that two or three months and gets reimbursed for vetting and hosting the app. The companies can do the math. If Apple gets 100% reimbursed off of even one month’s service then that would be OK.

    After that initial period, the app could then be allowed to have a pop up or a link show up that points to the services own site through which they can get the service and still play through their Apple device. Apple gets 0% of that follow on service.

    These services want a level playing field? That’s how it could be done. Apple should not be forced to host their apps for free while they make money, and they should not be forced to pay the 30% forever just for the right to have their service on an iOS device.

    1. I don’t pay for any music streaming service now, so I am 100% sure this correct, but…
      Let’s take Spotify as an example. I can easily set up an account without an iOS app or any payment to Apple by Spotify.
      I can then install the free Spotify app, again requiring no payment to Apple.
      Spotify’s product of streaming music plays on all my Apple devices through the free app or the Spotify website with neither Spotify or me paying a penny to Apple.

      The point of streaming services is NOT to buy music. I’m not clear on your point.

  3. Pay the piper.

    Apple is the piper, there are no free lunches. If anyone wants to eat apple’s unique sauce they have to pay for a seat at the table, if not they are fre to eat whatever and wherever they want to.

    Enjoy the andriod resulting diarrhea if that’s the choice you make.

  4. Can’t you just sign up for these services on their own website then log in on the phone? Then Apple gets no money – I don’t see the problem? Apple only charges the 30% on the subscription fee not the streaming.

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