Allegations that Apple is engaging in anti-competitive practices in the run-up to the launch of its rebranded Beats streaming music service are now being investigated by the Department of Justice, according to “multiple sources” cited by The Verge.
The claim is that Apple has been attempting to use its influence to persuade music labels to pull out of deals with free, ad-supported services like Spotify and YouTube in order to reduce competition and increase demand for its own paid service. The European Commission launched an investigation into these same allegations last month …
One specific claim is that Apple tried to persuade Universal Music Group to stop allowing YouTube to stream its music videos by offering to match the license fee currently paid by YouTube.
DOJ officials have already interviewed high-ranking music industry executives about Apple’s business habits […]
“All the way up to Tim Cook, these guys are cutthroat,” one music industry source said.
If true, the allegations would suggest that Apple is concerned about the potential size of the market for its streaming music service – which seems likely to cost $9.99/month – while competing with free sources like Spotify and YouTube. The company reportedly failed in a bid to negotiate terms that would have allowed pricing of $5/month, with later reports that labels also refused to support a $7.99/month deal.
Apple is expected to launch its service at WWDC in June. It was recently reported to have hired a number of BBC Radio 1 producers to help with the service.
The company was last year found guilty of anti-competitive practices in the long-running ebook case, eventually settling the case for $450M.
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I imagine Apple would argue that they are seeking concessions in exchange for giving way on price. It does seem hard to understand how Apple could be expected to put up with being pushed to a higher pricing tier than they aimed for while competitors are able to offer highly competitive services for significantly lower rates (treating Ad revenue as payment)
Welcome to the business world, if you want to be a company who offers no free tier that others are willing to offer, then you have to deal with that. No cry like children and attempt to shut down free tier offerings by competitors.
Nobody is attempting to shut down anybody. Apple is seeking concessions in exchange for themselves conceding on price. That is how negotiations work: Welcome to the business world, yourself.
“concession” lol, if those concession include having top selling artists pull their music it IS in all essence trying to shut them down.
Sorry Apple you sat on your butts for too long, now trying to play dirty wont help you win. Try offering a better service than Spotify, as opposed to controlling it, and people will join.
They’re probably trying to convince people how bad the free streaming is for artists. They make very little for the free streaming, hence why Taylor Swift pulled out of Spotify. You’ll see Apple gain exclusive artists for their streaming service due to the artists making more money. Apple should circumvent record labels and get artists to go all out with them, which could potentially make the artists far more money, enabling them to tour for far less time, enabling them to spend a little more time making the 1-2 decent songs per album, better. Chris you really know absolutely nothing about it, you might as well argue about what Apple’s engineers do with their batteries (you have zero knowledge of it).
Music in general is awful now though. It’s been progressively getting worse for the last few years, and I don’t think there has been more than a few decent songs in so many years.
Apple has a long history of anti competitive practice, sorry to bust your bubble Smoothies, Apple is one of the dirtiest in the business when it comes to cutting deals. Plain and simple.
OR just buy Spotify. Problem solved.
From watching Apple over the years, I’m under the belief that they would rather spend a fraction of the money on hiring their own engineers to develop a competing product than spend a higher sum on an acquisition. They also won’t get into a bidding war (i.e. Waze). Of course, there are those companies that are either really cheap or that offer a product Apple just can’t compete with. Case in point is the purchase of Beats, if you believe only Beats could deliver Apple a customer base for a streaming music service. I’m certain a move by Apple to acquire Spotify would only result in Google making a higher bid, and then Microsoft, and then there goes that acquisition price.
Personally, I’m so tired of waiting for an iTunes integrated Beats service that I’ve come to the point where I will have to see it before I believe it. And I don’t believe there will be an unveiling this June as predicted here.
If apple are having problems in the US with this, just you wait until the EU start investigating…
You should have read the title. It says that the US Justice Department joins the European Commission.
Apple’s negotiations in the early 2000’s for Paid Digital music is what paved the way for Spotify’s and other half baked streaming ideas to even exist.
Apple has had the digital music infrastructure forever, and if they decide its time for a subscription-to-rent music, that is their right.
Apple’s iPhone is the platform for Spotify.app to achieve what little popularity it has.
If Apple wanted to be anti-competitive, they could just delete Spotify from existence just by removing it from the App Store. They every right to do this, but of course won’t.
“half baked” “what little popularity it has”. Damn, your ridiculousness is showing again.
If Apple “deleted” spotify, the DOJ would come down on them incredibly hard and they would be sued. It’s hilarious how you attack Microsoft at every turn, but you say incredibly stupid things like this. Anyway, Android is a bigger platform than iOS.
What Apple is actually trying to do is stop labels from undermining all the hard work Apple has put in to placing a VALUE on music.
Licensing free ad-supported music on YouTube and elsewhere is a race to the bottom.
You mean Apple is trying to make up for the fact that other companies were able to negotiate better terms by strong arming labels to pull out of competing services……anti-competitive.
So let me get this straight. Apple hasn’t even brought out its music service but the DOJ and EU are hot on their trail. So the possibility exists that these government entities will shut down Apple’s service before it even launches? Predetermined guilty verdict? New legal concept?
So, you are incapable of comprehending things you read?
I’d love this article to be rewritten with Google or Samsung replacing Apple and watch these water carrying commenters have a very different tone. This is why this site is so weak on getting a lot of comments, macrumors gets 10 times as many comments because the community is level headed and call-out dirty business even whats its Apple involved. Here its just excuses.
Exactly, this place is ridiculous. They will defend any awful thing Apple does. I use Macs and Windows machines, but damn these people are absolutely crazy.
The DOJ is so full of $*&# on this case. Apple’s just offering a variety of music services and what others do is their decision. Apple has the ad version called iTunes Radio, and now they bought the ad free service called Beats Music. So what? They aren’t trying to persuade others out of the ad based model. None of these services are big money makers, so whatever profits they can see is rare to begin with, as far as I can tell, it’s getting the model that loses the least. None of the pay subscriptions have made a profit.
This doesn’t seem to describe what I think of as cut-throat tactics, they are more like 500 lb. gorilla tactics. It seems to describe Apple presenting a variety of different ideas, much like how advertising agencies present different marketing campaign ideas to their clients. For the tactics to be cut-throat, there needs to be some form of threat, and I’m not reading that here. I am reading Apple suggesting what could be done price-wise when you change the whole landscape. Which, I imagine, can be very off-putting when you’re on the receiving end since Apple has proven itself completely capable of following through on all sorts of wild ideas.
As much as I love Apple most of my beefs with their products are related to schemes like this. I really want to use the new Photos app sync but compared to the prices that Amazon has for a competing product I’m willing to accept a little less for spending a lot less (we have A LOT of photos). I’m excited to see what Apple offers in this space but if they are offering what Spotify is at the same price or more than Spotify my reaction will likely be the same.
This is the nature of competing: you have to convince the customer that your “superiority” is worth the price you’re asking and I’m not sure that Apple’s is. They have convinced me of the value of an iPhone, a Mac, an iPad and an Airport Express but not the value of their photos app and (if the rumors are true) their music offering.
The big miss in most of these comments is that Apple is trying to create a music service that both makes them money and is more attractive to the artists that create the music. Existing streaming services all screw the artist while the labels still make out more than reasonably well. This is a difficult balance with the labels holding the cards and little incentive to change the marketplace that’s profitable to them at the expense of the creative talent that makes any of this possible. Let’s not pass judgement until any of us knows for sure what is being designed, and then let the artists weigh in on what is the most attractive to them. And yes, if it’s more attractive to the artists it can do damage to the “cheap as I can” existing streaming services.
It’s just another case of executives trying to devalue someone else’s work. This time its the labels. When Apple and Google were conspiring to devalue the work of software engineers, people were all upset. When it’s an artist where there is much more competition and much more likely you will starve people are happy to starve the bulk of the artists so labels and execs can make bank.