Antitrust
Justice Department said to make inquiry into Apple
The U.S. Justice Department is making preliminary inquiries into Apple Inc.'s business practices regarding its iTunes digital music service, two people familiar with the matter said.
The antitrust division's questioning of music industry officials and Internet companies is in the early stages, and the department hasn't found that Apple has done anything wrong, said the people, who spoke on condition of anonymity.
Cathy Halgas Nevins, a spokeswoman for EMusic.com, a small privately held online music vendor, confirmed that the company has been contacted by the Justice Department as part of the investigation. She declined to comment further.
Cupertino, California-based Apple surpassed Wal-Mart Stores Inc. as the biggest music retailer more than two years ago, giving Apple Chief Executive Officer Steve Jobs more leverage to press music companies to agree to terms. Apple offers more than 11 million songs through the iTunes store, which it opened in April 2003.
With that dominance "is going to come an awful lot of scrutiny, especially if the music industry is looking to regain more control over its products and services," said Michael Gartenberg, an analyst and partner at the Altimeter Group, a technology research and advisory firm based in San Mateo, Calif. Gartenberg is based in New York.
Record Labels
The major record labels -- Universal Music Group, Warner Music Group Corp., Sony Corp. and EMI Group Ltd. -- have benefited from Apple’s iTunes popularity, which helped drive online music revenue as sales of compact discs were slumping worldwide. They also disputed its pricing policy, asking Apple to charge more for some songs in 2006.
Last year, Apple allowed more flexible pricing on its iTunes service after record labels complained about its former price of 99 cents a song. The flexible prices, from 69 cents to $1.29, let record companies charge more for popular songs. The pricing also enabled Apple to better compete with Amazon.com Inc., which charged as little as 79 cents a song.
In 2008, Apple agreed to lower prices on iTunes tracks sold in the U.K. as a result of an inquiry by the European Union’s Competition Commission, begun in 2005.
Apple also has faced inquiries from regulators in Norway, Sweden and Denmark over complaints that songs sold on iTunes were incompatible with music players other than Apple’s iPod.
Google, AdMob
U.S. antitrust authorities are looking into other aspects of Apple's business. The Federal Trade Commission said on May 21 it approved Google Inc.’s purchase of AdMob Inc. in part because Apple recently entered the mobile-advertising market to compete with the companies.
Apple also is part of a Justice Department probe into the hiring practices of technology companies, the Wall Street Journal reported last month.
The iTunes inquiry initially was reported by the Wall Street Journal and the New York Times.
(Published by Bloomberg – May 26, 2010)