EU: Apple is violating antitrust laws

EU: Apple is violating antitrust laws

Summary: Today the European Union (EU) announced that an investigation of Apple is underway for antitrust violations related to the pricing of music sold through the iTunes store.

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TOPICS: Apple
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Today the European Union (EU) announced that an investigation of Apple is underway for antitrust violations related to the pricing of music sold through the iTunes store.

What's happened so far is that the European Commission (EC) has issued Apple with a statement of objections to Apple.  This statement lays out how Apple, along with four major recording companies, are violating EU antitrust laws.

The antitrust allegations center around how Apple charges a different price in the iTunes store for the same content across different countries.  This action, according to the EU, unfairly penalizes consumers in countries where the content is more expensive.  For example, in the US a track on iTunes costs $0.99, but throughout the Eurozone, a track sets you back €0.99, while in the UK a track costs £0.79.  However, $0.99 converts out to roughly €0.74 and £0.50 respectively.

Here are a couple of extracts from a memo issued by the EC:

The European Commission can confirm that it has sent a Statement of Objections to major record companies and Apple in relation to agreements between each record company and Apple that restrict music sales.

Consumers can only buy music from the iTunes on-line store in their country of residence. Consumers are thus restricted in their choice of where to buy music, and consequently what music is available, and at what price.

The EU and the EC are perfectly capable of making mountains out of molehills, but I don't see this issue giving Apple much of a headache.  After all, it's not Apple that set pricing, but the record companies. 

Now if the EC really wanted something to get its teeth into, it should take a look at the tightly locked iPod/iTunes ecosystem that Apple fosters.  That would make for a far more interesting case and I think that Apple knows this - which is why they want to appear to embrace the new "in support of a DRM-free world" image.

Topic: Apple

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12 comments
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  • It's really nice to know that Apple is ahead of the game . <NT>

    <NT>
    I'm Ye, the MS SHILL .
  • I wondered

    How long it would take before the EU/EC would try to take a bite out of Apple. I guess they got tired of chasing MS' tail huh?
    I'm guessing that the EU has nothing better than to constantly look at companies and try to find some small way that could be construed as a violation of anti-trust laws.
    Shelendrea
  • What Contitutes an Open FairPlay?

    What constitutes an open FairPlay? Who does one license to? A single partner? 2 or
    3 partners? Are the 4th and 5th potential partners envious of the first 3? How do
    we solve that? License to all comers, a la Microsoft's broad schemes?

    If we can agree it quickly becomes all or nothing, it becomes clear that the secret
    that prevents breach of the DRM is hard to keep. Jobs made this point. We can be
    quick to blame the policeman for the enforcement of an unpopular law, but it
    amounts to shooting the messenger. Whereas Apple is simply abiding by the
    wishes of a consortium, it becomes clear that the collective interests of this
    consortium is monopolistic in nature. What was a lose collusion made more clear
    in the need to funnel content through this one portal.

    Apple is not the monopolist. They have done nothing to prevent real, open market
    competition. They do however, change the landscape and create contrast where
    there was none, in so doing, they reveal the monopolist. This is the second time
    now.
    Harry Bardal
    • The shinola is strong with ....

      ... you Harry! In this area Apple is every bit the monopolist that Microsoft is in PC OS's. Fuerthermore they are price fixing. They are dictating to the record companies what the price will be. This has absolutely nothing to do with protecting the DRM something that Apple has been unable to do by the exclusive arraingement. This is about leveraging their dominant position in the hardware to sell music.
      ShadeTree
      • You'll never get Harry to see it though ShadeTree (NT)

        ...
        Scrat
      • See How this Plays Out

        Show me the consumer harm. Show me the barriers to entry. Tell me how
        Microsoft is unable to compete effectively in this arena when most music
        collections are in mp3 format. Compare WMA to AAC.

        I think you're confusing price fixing with fixed pricing. Work that out, or take
        every dollar store on the planet to court.

        The broad coercive licensing that was the catalyst for the MS antitrust suit is
        nowhere to be seen here.

        If this is about leveraging their dominant position in hardware, exactly at what
        point in their rise to popularity do they become a monopoly and who gets to
        decide? Are you going to base antitrust law on the fickle taste of the open market?
        Good luck with that. Who will be next week's dangerous monopolist?

        Popularity is not illegal. Fair pricing is not illegal. The iTunes/iPod presents a
        simple value proposition amongst a host of others. Accept it, reject it, buy a CD,
        knock yourself out.
        Harry Bardal
        • Different in EU

          From what I remember of the EC/MS, it is not about consumer harm, only competition harm. You have to remember that the EC has different criteria then the US does.
          Joeman57
      • Laughs

        "In this area Apple is every bit the monopolist that Microsoft is in PC OS's"

        MS was in trouble for abusing their monopoly, with included threats to
        competitors. This is not the case with Apple.

        "Fuerthermore they are price fixing. They are dictating to the record companies
        what the price will be."

        You should learn about price fixing. Apple's contract with record companies does
        not (well it's not publicly disclosed) fix prices for iTunes competitors, nor does
        Apple collude with competitors to set either the price they charge consumers or
        the price they buy from record companies.

        The issue with the EC investigation is about restricting EU consumers from buying
        from any iTunes store in the EU area. This is clearly against EU laws and Apple
        (who has maintained it's the licensing with records companies that is the problem)
        should fix it.

        This has nothing to do with Fairplay DRM licensing, however it is interesting that
        even here Apple's position of adopting DRM-free music as begun with EMI.

        The result should be the EU record companies negotiating a single euro price for
        music and a single EU iTunes store (by the way Apple is not the only company
        affected). I suspect this will happen before MS hands over it's interoperability
        documentation;-)
        Richard Flude
  • And Europe is complaining?

    Here in Australia, Apple charges $A1.69 per track! The exchange rate is currently just over US80c per $A1.00. That works out to what should be just under $1.25 per track.

    Apple aren't the only ones treating the Australian consumer with utter contempt. I did a comparison of Vista's US prices and compared them to the Australian prices (converted to $US) and found that there was up to a $A250 discrepancy on identical versions!! How the hell do they justify THAT sort of rip-off?

    Freight from the US would be a hell of a lot less than $250, I can assure you! With all its new anti-piracy technology, Vista should be half the price of XP. No wonder the adoption of Vista in Australia is flagmatic at best.
    Big Scoddie
    • Check your pricing

      Aussie prices include GST at 10% and, while the Aussie
      Dollar is finally breaking the 80? mark it also broke the
      50? mark a while back. Throw in the fact that the record
      companies influence the price in a country and you start
      to get the picture.
      Ken_z
      • Let's just look at the GST for a moment...

        GST or no GST, a $250 premium is ridiculous on a product that costs around $A500 in the US. I don't care what anyone says, they cannot justify $A750!
        http://www.ht.com.au/N/0/keyword/vista/part/U4505/detail.hts
        That equates to a 50% GST on the US price, not 10%!

        You imply that we pay a premium now based on an assumption that one day our dollar may be worth only 50c again? That exchange rate was a looooong time ago. Well before Vista came out, so they could not possibly base their pricing on it.

        It's a rip-off, pure and simple.
        Big Scoddie
  • Price Point!

    in a capitalist society don't you set pricing according to what the market will bear? if users in the UK are only willing to spend .79 then thats what you charge

    Here in the US it seems most are willing to spend $.99 per track. whats the issue???

    and besides, if you dont like the pricing or the iPod/iTunes set up, guess what, go buy elsewhere! Again, capitalism!

    Money Talks, BS walks
    richvball44