Apple Cleared of Collusion Charges Over Music Sales by European Commission

Posted by at 8:45 am on August 10, 2015

An investigation into whether Apple’s deals with major record labels did anything to hurt or impede its competition has concluded that no such collusion took place, according to a new report from the European Commission. The body said it would continue to monitor the streaming industry overall, but cleared Apple Music of any alleged wrongdoing.

The Commission looked at both the iPhone maker’s deals with the major record labels, as well as the company’s strategy and efforts to promote the fledging service, which has signed up more than 11 million users in its first few weeks for an unusually-long three-month free trial, after which the streaming music portion of the service will require a $10 per month subscription (or $15 per month for a family subscription that allows up to six separate accounts).

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Rivals such as Spotify have complained that Apple’s rules on in-app purchases for things like subscriptions give it an unfair advantage over rivals, since all of the main streaming services charge an average of $10 per month, and Apple automatically takes a 30 percent cut of in-app subscription prices, meaning rivals who wish to be on iOS must either absorb the loss or raise prices to offset Apple’s cut. Spotify has tried to do an end-run around the problem, emailing users that switching to website-direct billing will save them $3 per month.

The EC likely found that other stores, such as Google Play and the BlackBerry and Microsoft stores, also get 30 percent out of in-app purchases such as subscriptions, and that while Apple and the other services forbid direct mentions of ways to work around the in-app charge, the companies also do nothing to stop or punish companies, such as the Financial Times or Spotify, that offer alternative billing so as to avoid the charge.

The European Commission first started looking into the matter in April, sending letters to major labels and indie music companies asking for details on the streaming deals they had with Apple. It later formally announced an investigation in June, followed a month later by a similar one (which has not yet concluded) by the US Federal Trade Commission.

The EC is not yet finished with Apple, however. The Commission is still asking about Apple’s (and presumably the other services’) fees, restrictions, and any possible anti-competitive guidelines put in place. The FTC investigation is also looking into whether Apple unfairly leverages its strong iOS platform advantage to artificially stifle competition.

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