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Did Apple use its online music monopoly to prevent much smaller competitor Amazon from landing music deals? The U.S. Department of Justice is investigating.  (Source: Dave's Whiteboard)
Apple's anti-Amazon moves may cost it some big fines

When it comes to the digital music sales market, services like Amazon or Zune Pass have made a minor splash, but Apple has long dominated the market.  Over the last two decades, antitrust regulators in the U.S. and Europe have imposed fines and restrictions on Microsoft and Intel to try to prevent them from abusing their dominant position in several markets.  However, they have cast a largely blind eye on Apple's iTunes -- until now.

Antitrust investigators with the U.S. Department of Justice are conducting an extensive inquiry into Apple's online music business, interviewing Apple employees, internet music company employees, and music label employees according to the
New York Times.  At the core of the investigation is the allegation that Apple applied pressure to force music labels not to grant access to exclusive tracks to help grow the online retailer's fledgling music market.

A previous investigation was conducted several years back in the European Union, examining Apple's iTunes pricing practices.  The investigation's conclusions were highly critical of Apple, but did not levy any fines -- unlike recent EU investigations into Microsoft and Intel.

In March, it was reported in 
Billboard magazine that would be getting certain songs a day before they were widely released.  It would put these songs in a special promotional section dubbed "MP3 Daily Deal."  According to the article, Apple hated the idea and threatened music labels that participated.  Specifically, it vowed not to sell the songs featured in the promotion on iTunes -- a much bigger marketplace.

ITunes reportedly owns 69 percent of the online music market, according to the NPD group. The next closest competitor in the online market is Amazon, which holds an 8 percent share. The remaining 23 percent are split up among smaller players.

In 2007 Apple had a mere 12 percent of the total music market (both online and offline), but it recently became the largest single seller of music in the world, with 26.7 percent of the overall market.

Daniel L. Brown, an antitrust lawyer at Sheppard Mullin Richter & Hampton states, "Certainly if the Justice Department is getting involved, it raises the possibility of potential serious problems down the road for Apple.  Without knowing what acts or practices they are targeting, it’s difficult to say exactly how big a problem this is, but it’s probably something Apple is already concerned about."

Apple now has dominant positions in several markets -- tablet computing (iPad), portable music players (iPod), smart phone applications (iTunes App Store), and online music (iTunes Music Store).  Thus it has leverage to use its position to damage competitors, if it should so choose.

The new investigation is at least the fourth antitrust inquiry into Apple.  The U.S. government is also investigating Apple, Palm and others to see whether the companies illegally agreed not poach each others' employees (Apple's CEO Steven P. Jobs secretly suggested such a truce, which appears to be illegal).  The government is also investigating Apple's ban on Flash for the iPhone or iPad and its decision to block out ports of Flash titles to native iPhone code.  And there's also a pending investigation about whether board members serving on both Apple's and Google's boards violated antitrust laws.

ITunes first launched in 2001 and has long been on the forefront of the push for legal online music downloads.  Apple has sold over 10 billion tracks on iTunes to date, and has become one of the biggest revenue sources for the struggling music industry.  Apple also has supported a number of smaller independent artists by promoting them and giving them tools to expose their work to a broader audience.  Apple also has recently made some steps to increase competition, such as allowing streaming music services such as Pandora and Rhapsody onto Apple devices.

Spokespeople for Apple and Amazon would not comment on the inquiry.  Gina Talamona, a deputy director at the Justice Department, also had no comment.

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Remember palm?
By jabberwolf on 5/26/2010 11:27:26 AM , Rating: 3
One word, one company- PALM

Remember when itunes kept changing things to make itunes incompatible with other devices aside from their own hardware?! It was purposely done, repeatedly done and only to restrict and sabotage its programing for others to use.

That CLEARLY defines an antitrust violation.

I cant even believe the other ruling with psystar where the judges ruling actually defined the EXACT definition of the copyright misuse doctrine that Apple was violating.

Maybe this time they can get a judge that isnt technology-retarded!

RE: Remember palm?
By Daeros on 5/26/2010 3:20:06 PM , Rating: 2
Uhh, what?

Apple was simply revising the device firmware detection routines in iTunes so it could accurately identify if there was an iPod attached. Palm was whining because this made hacking the usb device ID system less effective/ not feasible. I for one am not sad that it didn"t work. Devices should say what they are to the computer, and any software interactions should handle the rest.

RE: Remember palm?
By Bateluer on 5/27/2010 6:01:07 AM , Rating: 3
Problem was, when the device said 'I am an iRiver.' or 'I am a Palm.', iTunes said 'Not Allowed'.

RE: Remember palm?
By Tony Swash on 5/26/2010 6:43:29 PM , Rating: 1
One word, one company- PALM

There are iTunes APIs - Palm chose not to use them and instead used some cack-handed hack to make their new phone dependent on their competitor (duh!). Given the fact that Palm seems to have decided to use the Homer Simpson school of competitive product development its not really surprising they folded.

As for Pystar they lost in open court - perhaps it didn't help their case that they sold more installed versions of MacOSX than they actually bought. They were pirates and they got shafted - good!

Basically all this endless spluttering and frothing about Apple's imaginary monopoly misdeeds boils down to resentment that products that techtards don't like can actually succeed in the market place. In fact it goes deeper - the techtard's rage against Apple is very deep because they simply don't undertsand why Apple's products succeed, the advantages that millions of ordinary consumers see in Apple's products are invisible to techtards so Apple's success is mysterious, and thus can only be explained by nefarious monopoly practices, voodoo marketing or consumer stupidity.

Guys - get a grip - you are embarrassing. This is a site for techies - demonstrate some ability to think logically, embrace new ideas and accept unpalatable truths such as the fact that Apple is a huge success because they make stuff that people want to buy.

RE: Remember palm?
By afkrotch on 5/27/2010 2:08:37 AM , Rating: 2
I don't think a single person doesn't know why ppl buy Apple products. It's the "cool" factor and not much else. The "cool" factor has been what has kept Louis Vitton, Ferrari, etc in business.

It just simply amazes us that we are unable to inform consumers that much better products are available on the market for a much lower price.

Course, eventually the truth starts to sink into the majority. Why PCs are the biggest sellers. Why Android is taking off like crazy. iTunes. That's pretty much been a lost cause now. Especially with the monopolistic practices in place.

RE: Remember palm?
By Tony Swash on 5/27/2010 6:26:58 AM , Rating: 2
I don't think a single person doesn't know why ppl buy Apple products. It's the "cool" factor and not much else.

Thank you for perfectly illustrating the way Techtards are incapable of understanding why Apple products succeed.

The absurd idea that the main (only) reason Apple products succeed is because they are cool has the added bonus, from your point of view, of turning your own inability to understand the dynamics of the real world into the virtue of not falling for Apple's voodoo marketing and thus props up your weird world view. Pathetic.

RE: Remember palm?
By gralex on 5/27/2010 8:35:41 AM , Rating: 2
Prepare to celebrate Tony 'cause Apple just passed MS as largest tech company!

Hum that tune while you can... Jobs is doing a "live fast, die young" on Apple. Once he's gone, Apple is in for a crash landing.

RE: Remember palm?
By Tony Swash on 5/27/2010 9:48:22 AM , Rating: 2
Prepare to celebrate Tony 'cause Apple just passed MS as largest tech company!

Hum that tune while you can... Jobs is doing a "live fast, die young" on Apple. Once he's gone, Apple is in for a crash landing.

"The long run is a misleading guide to current affairs. In the long run we are all dead."

John Maynard Keynes

RE: Remember palm?
By gralex on 5/27/2010 10:53:45 AM , Rating: 2
Well at least you ain't a Thatcher fan!;)

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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