The Federal Trade Commission (FTC) is reportedly looking into allegations that Apple's treatment of rival music streaming companies' apps such as Spotify, Rhapsody and Jango is illegal under the antitrust laws.
The information is courtesy of three anonymous industry sources who revealed to Reuters that while the FTC is looking into the matter, it is yet to begin a formal investigation of the same.
"The agency has had meetings with multiple concerned parties, one source said. The agency meets with companies routinely, and a formal investigation may not materialize," per Reuters.
For those wondering what the brouhaha is all about, the company's Apple Music offers an App Store platform for the above-mentioned rival music streaming services. In return, Apple keeps a 30 percent cut for all the in-app purchases that are made for these digital products such as games, music streaming subscriptions, etc. which are sold via its platform.
Even though the per month music subscription rate is $9.99, which includes Apple, some of the music streaming companies allege that the cut taken by Apple compels them to charge users more on the App Store when compared to alternate platforms. If they don't do this they have to reduce their profit margin.
Lawyers who Reuters interviewed were divided as to whether the Cupertino company's policies violated antitrust laws. While the main grievance of the rival streaming services who use the Apple Music platform is the 30 percent cut Apple keeps, a way of avoiding the same is to allow customers to sign-up for Spotify, Jango or Rhapsody via their web browsers. However, industry insiders say that several consumers are not aware of this option.
On Wednesday, July 8, Spotify sent out emails to its subscribers requesting them to withdraw their App Store subscription. The subscribers were asked to resubscribe via the web to bypass the $3 surcharge owing to the App Store's policy.
Music streaming service Deezer's CEO Tyler Goldman is also of the opinion that the $9.99 subscription fee leaves little profit margin for the company.
"The margin in music is quite small, and the App Store diminishes the margin. It will be an issue for the industry going forward. You can either raise your prices and not be competitive with Apple's price, or you can have no margin," feels Goldman who is not aware of FTC looking into the matter.
While it is lawful to have monopoly, it is unlawful for the monopolizing company to use their position to subvert rivals per lawyers.
Per sources, those against Apple's current stance are likely attempting to persuade the FTC to deploy Section Five of the FTC Act. This act debars "unfair or deceptive acts or practices."
