Apple’s subscriptions could draw antitrust scrutiny


16 Feb 2011

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Apple’s new subscription service has generated controversy, with some lawyers claiming it could draw antitrust scrutiny and some companies speaking out against the service.

The new subscription service applies not only to magazines but for other content, too, such as music.

The service includes some stipulations. When a user subscribes to content through the App Store, Apple keeps a 30pc share of the price.

And while publishers can offer a digital subscription on their own website and keep a 100pc share, Apple insists this deal must be the same or not as good as what is being offered inside the App Store.

Apple also said the content producer cannot include a link within the app to accessing a digital subscription on their site .

According to the Wall Street Journal, Apple could be subject to antitrust scrutiny over this.      

Publishers could claim that, thanks to Apple’s dominant position in the tablet market, it’s using these rules to restrict competition and the company may end up defining the digital media subscription market.

Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law, told the WSJ he doubted Apple has a sufficiently dominant position in the market to get antitrust scrutiny right now.

However, it could change if it reaches a point where it sells 60pc or more of all digital subscriptions.

Rhapsody

Regardless of whether or not a case can be made against Apple, those in the music-streaming business are not happy.

Rhapsody, a digital music subscription service in the US, is one such company. In a statement, it said adding a 30pc subscription fee to the money it already pays music labels to provide this content means they could be forced out of the App Store.

“The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple’s 30pc monthly fee vs a typical 2.5pc credit card fee,” said the company.

“We will continue to allow consumers to sign up at www.rhapsody.com from a smartphone or any other internet access point, including the Safari browser on the iPhone and iPad.

“In the meantime, we will be collaborating with our market peers in determining an appropriate legal and business response to this latest development,” said the company.

Other companies are expected to react to this in a joint statement later. The deadline for implementing the subscription is 30 June.