European Commission Objects to Apple iTunes Business Practices
April 3, 2007 1:32 PM
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The EC claims iTunes treats customers unfairly and that record labels are to blame
After a long series of investigations, the European Commission (EC) today decided to formally object to Apple and its iTunes business in European countries on anticompetitive practices. According to the EC, it has sent a Statement of Objections to Apple, indicating that the way Apple does business with its iTunes online store is in violations of EC treaty rules. Additional complaints were sent to major record labels operating in the European Union.
The problem lies in the way that major record labels deal with the iTunes online store, allowing only limited access based on the location of the customer. Prices vary across locations and across borders, and customers in one zone may not be allowed to purchase music that's available in another zone. Worse yet, some customers end up paying higher prices simply because of their geographical location.
European Commission spokesman Jonathan Todd publically stated that the EC
sees the agreement between record labels and Apple as a violation of trade treaties
. "Our current view is that this is an arrangement which is imposed on Apple by the major record companies and we do not see a justification for it." An official statement from the EC indicated that customers were having their credit cards scanned for location information and if for example the customer was located in Belgium, they could only purchase songs designated to Belgium.
The report states, "Apple and major record companies contain territorial sales restrictions which violate Article 81 of the EC Treaty. iTunes verifies consumers' country of residence through their credit card details. For example, in order to buy a music download from the iTunes Belgian on-line store a consumer must use a credit card issued by a bank with an address in Belgium."
An important note in the EC's statement said that while this charge is an indication of treaty violations, it is not a charge of monopolistic practices.
"The Statement of Objections does not allege that Apple is in a dominant market position and is not about Apple's use of its proprietary Digital Rights Management (DRM) to control usage rights for downloads from the iTunes on-line store," concludes the report.
Before the EC sent its formal charge to Apple, the life-style computer company already faced a number of allegations about the iTunes store. Earlier this year, a number of agencies in several European countries
joined forces to threaten legal action towards Apple
if it didn't change the way the iTunes store operated. Groups in Denmark, Germany, France, Norway and Sweden complained that
Apple's DRM format is too restrictive
and did not allow users to play music on players of their choice.
In February of this year, Apple CEO Steve Jobs said that despite the restrictions placed on songs downloaded from the iTunes store,
he would rather see Digital Rights Management (DRM) completely abolished
. "Through the end of 2006, customers purchased a total of 90 million iPods and 2 billion songs from the iTunes store. On average, that’s 22 songs purchased from the iTunes store for each iPod ever sold,” Jobs said. While it's difficult to ignore that iTunes does effect sales of iPods, consumers have been against DRM-enabled music from the get-go. Even
Microsoft chairman Bill Gates took a stab at DRM
late last year.
With the EC's latest charge on Apple, it will be interesting to see how things shape up between Apple and major record labels. While the RIAA is still going after college students and other end users, the
Digital Millennium Copyright Act (DMCA) may be going through some changes
thanks to updated a new FAIR USE act, which calls for reduced restrictions for both consumers and hardware developers. The dynamics between Apple, record labels and government agencies is no doubt a complex one. Despite Apple's troubles,
the iTunes business is still a roaring success
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RE: Their what location?
4/3/2007 6:08:28 PM
Standing on those igenous rocks makes me wonder how difficult it is to have a typo. It must be the temperature.
He who lives in a glass house, should not throw stones!
RE: Their what location?
4/3/2007 11:45:02 PM
How exactly does writing "geological" instead if "geographical" qualify as a "typo"? If it was, say, "geographcial" or something like that, sure, any fast typist will swap the order of letters now and then. That is a typo. "Geological location" is not.
RE: Their what location?
4/4/2007 1:33:44 AM
Geological: –adjective of, pertaining to, or based on geology.
Geology: The scientific study of the origin, history, and structure of the earth.
The structure of a specific region of the earth's crust.
Geographical: –adjective 1. of or pertaining to geography.
2. of or pertaining to the natural features, population, industries, etc., of a region or regions.
It seems pretty clear to me... It's an honest typo, but quite obviously a typo nevertheless. The two words carry two entirely different meanings; one is concerning the content of the planet and its internal processes, and the other locations and topology. Not even close.
RE: Their what location?
4/4/2007 1:42:09 PM
A "typo" is a
error. As in hitting one key (or a couple of keys) by mistake or in the wrong order.
Writing a word that means one thing when you mean something else isn't a "typo", it's an error.
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