Federal regulators are looking once more into Apple&'s control over the applications available on the iPhone and iPad, according to a report in the Wall Street Journal. This time it&'s Applea4a4s subscription feature for apps (which the company unveiled yesterday) that&'s attracting antitrust scrutiny.
The problem isna4a4t the subscription plan per se, in which Apple takes the same 30 percent cut that it does on App Store purchases, but rather the restrictions that Apple put around it. The company said that any app offering a subscription plan elsewhere has to offer it within Apple&'s iOS app too, and at the same price. In addition, publishers cannot include links inside their app to purchase content or subscriptions elsewhere.
The Justice Department and the Federal Trade Commission are both in the preliminary stage of their investigations, according to the Journal&'s sources (who are a4Apeople familiar with the mattera4), so they may not take any action against Apple or even launch a formal investigation. Eric Goldman, director of Santa Clara University&'s High Tech Law Institute, told the Journal that Apple&'s prohibition of links sounds like a4Aa pretty aggressive position.a4 And the restriction on offering a better price elsewhere could be considered anti-competitive too if it distorts pricing.
Ita4a4s widely believed that the FTC was investigating Apple last year for its ban on tools that converted non-native apps into iPhone apps, and that the investigation pressured Apple into backing off. So if this investigation gets real momentum, we may see another about-face.
Ita4a4s also interesting to see that much of the opposition to Applea4a4s plan seems to be coming from music startups. Rhapsody said yesterday that its subscription model wona4a4t work if Apple takes 30 percent, and today Last.fma4a4s co-founder said Apple a4Afucked over music subs for the iPhone.a4 The Journal article also includes complaints from music startups, including Axel Dauchez, president of French startup Deezer, who says giving Apple 30 percent of a subscription is a4Aso obviously anticompetitive that it will never survive in Europe.a4
Ita4a4s not surprising that Apple is facing some of its loudest opposition from these companies, since the royalty costs for music make it notoriously difficult for startups in the music field to make money. Not even popular Internet radio app Pandora expects to make a profit this year.
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Companies: Apple
People: Eric Goldman
Companies: Apple
People: Eric Goldman
Anthony is a senior editor at VentureBeat, as well as its reporter on media, advertising, and social networks. Before joining the site in 2008, Anthony worked at the Hollister Free Lance, where he won awards from the California Newspaper Publishers Association for breaking news coverage and writing. He attended Stanford University and now lives in San Francisco. Reach him at anthony@venturebeat.com. (All story pitches should also be sent to tips@venturebeat.com) You can also follow Anthony on Twitter.
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