Apple's app subscription plan gets Feds interested: Time to retreat?

Apple's app subscription plan gets Feds interested: Time to retreat?

Summary: The Justice Department and Federal Trade Commission are reportedly eyeing Apple's new App Store subscription plan. Will Apple back down?

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The Justice Department and Federal Trade Commission are reportedly eyeing Apple's new App Store subscription plan.

According to the Wall Street Journal, regulators are looking into Apple's new subscription plan, which aims to keep customers in iTunes and taking a 30 percent cut of the revenue. Apple launched its plan on Monday. On Tuesday, Google announced its own plan with less stringent terms.

Media execs spent most of the week trying to figure out what Apple's subscription rules would mean for them. A company like music subscription service Rhapsody called Apple's new rules a business model killer. The most controversial element of Apple's subscription plan is the move to ban media companies from linking customers to their own stores. Apple also said media partners couldn't offer better deals outside of the App Store.

The possible outcomes from this preliminary regulatory probe go like this:

  • Apple will backtrack as regulators poke around. In fact, the Feds may have just given Apple a good excuse to back down without looking like it's caving to media companies.
  • Apple sticks to its guns and regulators would have to determine if the company could be anticompetitive with at best a quarter of the smartphone platform market.
  • Media companies and their apps could leave Apple's ecosystem and focus on Android.

Door No. 1 is the most realistic scenario. Apple is likely to revise its terms to keep regulators in Europe and the U.S. at bay.

Related:

Topics: Apple, Government, Government US

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49 comments
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  • I hope they don't

    I hope they don't back down and the feds pop them for it as this will harm consumers.
    slickjim
    • How this "will harm consumers" ??

      @Peter Perry Last I checked:
      #1- You can still buy a subscription without iTunes
      #2- Nobody is forcing you to get an iPhone.
      wackoae
      • Nobody is forcing you to get an iPhone...

        @wackoae And this is another great reason from Apple that you shouldn't.
        mstone0802
      • Apple doesn't have a monopoly though

        @wackoae

        If Apple has a monopoly (per the legal meaning, not the literal one), this move is definitely anti-competitive. However, I don't think it can be shown that Apple has a monopoly in any market. Dominance, yes. But monopoly, no.

        However, I still think it's a really dumb move by Apple - soaking your best line of supporters is plain dumb. It gives them a very, very good reason to support some alternative platform. I suspect a large part of Microsoft's issues with the mobile phone OEMs is that they saw what MS did to computer OEMs and decided that wasn't going to happen to them, so they used any OS but Windows (mostly Symbian). And now there are plenty of alternatives to Windows for smart phones, MS just isn't getting market share.

        The same thing could happen to Apple - anyone who wants to sell stuff through smart phones will use some other platform, maybe just a web page.

        Maybe Apple's strategy is to get rid of apps on iStore that lead customers to other sites for purchases. So by making it prohibitively expensive, they're hoping such apps go elsewhere.
        Fred Fredrickson
      • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

        @wackoae
        80% of the tablet market. Monopoly.
        Droid101
      • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

        @wackoae but what about all the people who already have a crapple iphone, or ipad, or itouch? they too will be subject to these new rules, my question is how does apple even know whats happening with subscription services within an app?
        nickdangerthirdi
      • Droid101: Look up the definition of monopoly. 80% is not a monopoly.

        It constitutes a large majority or large share, but it's still not a monopoly.

        As long as there are others in the same market and making sales to the same kind of customers for the same kind of product or service, then there doesn't exist a monopoly.
        adornoe
      • Bull

        [i]80% of the tablet market. Monopoly.[/i]

        @Droid101
        Have they actively stopped anybody else from selling a tablet? Or is it that the other manufacturers haven't gotten their act together yet to come up with an iPad killer?

        Come up with some legal proof before you shoot off your mouth. K?
        search & destroy
    • How does it harm consumers?

      If it pisses consumers off then Apple loses them. Then Apple might smarten up and stop it. If it doesn't then who cares? Market can correct it on its own so what in the deep heck is that of Fed's business here?
      LBiege
      • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

        @LBiege Pissing off the consumers

        This won't harm the consumer in any way since it requires that companies charge no more for a purchase from the iPhone than from their website. Who it will harm is the company selling the product since they probably have low profit margins already and now Apple wants to take a slice of that. If this goes through I envision that companies will remove their app, or severly disable it, from the iPhone. What motive is there for them to have an app on the iPhone if they are going to lose money on every sale?
        boomchuck1
      • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

        @boomchuck1 its not about the app, its about in app subscriptions, like rhapsody, Apple wants 30% of all in app purchases, so in rhapsody's case, apple wants 30 cents of every 99 cent song that rhapsody sells to an i(insert device here) user, which is BS, because its like the post office charging you to send an email, once the app is downloaded, any interaction with apple should be done, and you are doing business on YOUR device with another company....
        nickdangerthirdi
      • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

        @nickdangerthird, a better analogy would be that it is like the post office charging you to send a package via Federal Express.

        P.S. I like your Firesign Theater reference. I doubt if many people get it.
        Stoshie
      • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

        @nickdangerthirdi That's a bunch of BS. They are not trying to get a cut of every in app purchase, only subscription purchases. <br><br>They are doing this targeting companies that are putting free apps in the store then selling subscriptions through the app. They way I read the new policy they are only affected if they offer in app subscription purchasing. What is to keep them from offering the app for free as they are doing now but you have to go through the website to subscribe? They can't link to the website via the app but if you really want a subscription is it all that tough to go to the website and create your account then enter your login info in the app? Also, could be wrong but aren't all in app purchases of any kind handled through Apple? If they processing all the purchases, shouldn't they get paid for it? I am not saying I agree with it but that's how I read it at least.
        non-biased
    • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

      @Peter Perry

      Give consumers the choice to protect their personal data don't you mean?

      Publishers want your details so they can sell ads, with Apple's model users have to opt in, publishers don't like that and that's what this is all about.

      Consumers are pawns.
      alsobannedfromzdnet
    • It ***PROTECTS*** consumers' right for best choices, equal price

      @Peter Perry: also, Apple does not give out consumers' information to publishers unless consumer explicitly agree to each type of information to be forwarded to publisher.

      Contrary to what Google and Facebook do, forever reselling their consumers.
      DDERSSS
      • Right, it's all about the consumers.

        So then Apple should just [b]not[/b] charge 30% and [b]not[/b] worry about other services consumers, and in the end <font color="red">everybody</font> will be very happy!
        John Zern
  • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

    Hey they are quite free to pay Amazon 30-70% plus pay for WhisperNet data @ 15c a MB in the US and UK and 99c a MB anywhere else to get their subscriptions on Kindles.<br><br>Google will happily allow the collection of user data as they understand how advertising works.<br><br>This will be dropped there is no antitrust issue, Apple doesn't hold a monopoly, not even close.

    btw Maxim, Elle, Nylon, Popular Science and The Daily have already jumped on board.

    I guess they know where the money is.
    alsobannedfromzdnet
    • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

      @alsobannedfromzdnet
      HAHAHAHAHAHA. I love this line of your argument: Maxim, Elle, Nylon, Popular Science and The Daily have already jumped on board.

      Where are real publications, i.e. NYtimes, WSJ, the Economist, GQ, etc.
      Your examples are drivel.
      hoaxoner
      • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

        @hoaxoner
        Every thing you both listed I can get all the content for free.
        Droid101
  • RE: Apple's app subscription plan gets Feds interested: Time to retreat?

    This is a waste of tax payer money. The market will decide.
    computerchipt