Print 55 comment(s) - last by gprovida.. on May 31 at 1:21 PM

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.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: Digital Music
By Azure Sky on 5/26/2010 1:36:16 PM , Rating: 2
not really, flac/ape/ofr/tac all are lossless and compressed, with PROPER decoders you literally cant tell the difference, with a bad decoder you can, but you can also have same problem with a crappy cd player(i know i had 2 crappy cd players years back...sounded bad....)

I also dont feel lossy formats are all bad, MP3 sucks, AAC isnt "bad" but IMHO it isnt great either.

I use Ogg Vorbis for my portable use, using a proper encoder like the latist aoTuV 5.x encoder you can drop bitrate VERY low and 99% of tracks will still be transparent even to the "golden ears club" and their $500 or higher earphones/headphones, the tracks that have issues you can up the bitrate for, Out of close to 3000 tracks on my fuze I have maby 6-8 tracks that where problematic, and recoding them from flac to higher rate vorbis was a matter of a 3 clicks and 10 seconds(or less)

Wav is a dead format IMHO, same with BMP images and the like, Flac and PNG(among many others) are replacing uncompressed formats with lossless compressed formats, yes storage media is getting cheaper and cheaper per GB, but Thats still on reason to use uncompressed formats when you can have lossless compression, not only do compressed files take up less space, they also are quicker to move, and in portable devices compressed formats(lower bitrate) use less power.

quick example would be my buddies iRiver h340(upgraded with a 160gb drive) that gets days of use on ogg, flac eats batt life pretty quick, you have to charge it once a day when using flac, with WAV you see yet another drop in batt life due to bitrate, I only know this because he was going to use wav or flac for all his massive music collection but changed his mind after testing it, the tests lead him to decide to use max rate vorbis since that would allow him to put most if not all his music on his player without any quality issues.

NOTE: I do agree that formats like iTards...I mean iTunes lossy SUCK DONKEY Schelong but using them as a reason to say compressed formats are like 8track is way off base, NOT ALL COMPRESSED FORMATS ARE EQUAL!!!!

RE: Digital Music
By gralex on 5/26/2010 2:04:53 PM , Rating: 2
Damn, now I look retarded! I left my reply to go make a cup of coffee and you beat me to it:)

FLAC is only lossless by self proclamation. It's CD quality (at best) and that's not something to write home about.

RE: Digital Music
By afkrotch on 5/27/2010 1:42:39 AM , Rating: 2
I prefer mp3. It works on everything. I don't care if the only person who can tell the difference between an mp3 and flac is a dog.

"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki