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Apple faces antitrust inquiry of online music tactics
The Justice Department is examining Apple’s (AAPL-Q250.365.142.09%) 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.
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 online retailer Amazon.com (AMZN-Q124.28-0.58-0.46%) exclusive access to music about to be released.
All these people spoke on the 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 website.
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 per cent of the market, according to data from the NPD Group, a marketing consultancy. Amazon’s MP3 store was in second place, with an 8 per cent share. Apple is also the largest seller of music, with 26.7 per cent of the overall market, up from 12 per cent in 2007.
Though the Justice Department’s inquiry is preliminary, it represents additional evidence that Apple, once the perennial underdog in high tech, is now viewed by government regulators as a dominant company with considerable market power.
Through its iTunes store, Apple sells TV shows, films and applications for its iPhone, iPod Touch and iPad hand-held computing devices. Apple has also begun to sell electronic books.
“Certainly if the Justice Department is getting involved, it raises the possibility of potential serious problems down the road for Apple,” said Daniel L. Brown, an antitrust lawyer at Sheppard Mullin Richter & Hampton.
“Without knowing what acts or practices they are targeting, it’s difficult to say exactly how big a problem this is,” Brown added. “But it’s probably something Apple is already concerned about.”
The Justice Department is examining Apple’s (AAPL-Q250.365.142.09%) 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.
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 online retailer Amazon.com (AMZN-Q124.28-0.58-0.46%) exclusive access to music about to be released.
All these people spoke on the 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 website.
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 per cent of the market, according to data from the NPD Group, a marketing consultancy. Amazon’s MP3 store was in second place, with an 8 per cent share. Apple is also the largest seller of music, with 26.7 per cent of the overall market, up from 12 per cent in 2007.
Though the Justice Department’s inquiry is preliminary, it represents additional evidence that Apple, once the perennial underdog in high tech, is now viewed by government regulators as a dominant company with considerable market power.
Through its iTunes store, Apple sells TV shows, films and applications for its iPhone, iPod Touch and iPad hand-held computing devices. Apple has also begun to sell electronic books.
“Certainly if the Justice Department is getting involved, it raises the possibility of potential serious problems down the road for Apple,” said Daniel L. Brown, an antitrust lawyer at Sheppard Mullin Richter & Hampton.
“Without knowing what acts or practices they are targeting, it’s difficult to say exactly how big a problem this is,” Brown added. “But it’s probably something Apple is already concerned about.”
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