European Commission Objects to Apple iTunes Business Practices
April 3, 2007 1:32 PM
comment(s) - last by
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
This article is over a month old, voting and posting comments is disabled
RE: Their what location?
4/4/2007 1:44:24 AM
Or perhaps you didn't understand that oreganian was trying to bring up the economic concept of excludability and apply the EC's twisted logic to it? Which would be, more elaborately put, because record labels excluding countries from their "store" is illegal, then walk-in stores must be illegal because all of the population they serve can't possibly get service from that one location, and god only knows how the EC would like to treat various types of social clubs that have various types of discrimination that provide products/services to only its membership.
A stretch, but a valid point. Where would the EC like to draw the line on excludability? They provide no clarity on that.
RE: Their what location?
4/4/2007 11:07:37 AM
I find all of your comments very well thought out and backed up with examples. I also admire your ability to write extremely well.
Thank-you for putting forth logical, well thought out, and respectful commentary on this topic.
Additionally, I agree with your stance. I hold my physical property to the same degree as the importance of my personal rights. I do not need the government telling me what, where and who to sell goods too.
"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
Proposed FAIR USE Act to Limit DMCA Restrictions
March 7, 2007, 3:51 PM
Steve Jobs Makes Case for Abolishing DRM
February 7, 2007, 10:19 AM
Dutch Agency Joins Battle Against Apple iTunes
January 26, 2007, 1:11 AM
German, French Groups Still Want iTunes Changed
January 24, 2007, 12:51 PM
Bill Gates Takes a Jab at DRM
December 15, 2006, 4:25 PM
Report: AT&T Eyeing $40B DirecTV Purchase
May 1, 2014, 8:00 AM
WebOS Class Action Settlement Costs HP $57 Million
April 1, 2014, 10:22 AM
IBM Workers Strike Over Terms of Deal That Will Have Them Working for Lenovo
March 6, 2014, 9:29 AM
Google Picking Up Artificial Intelligence Company "DeepMind" for $400 Million
January 27, 2014, 9:25 AM
Quick Note: Qualcomm Grabs up Palm, IPAQ, and Bitfone Patent Portfolio from HP
January 24, 2014, 9:18 AM
Verizon Buys Intel Media OnCue Cloud TV assets
January 21, 2014, 10:26 AM
Most Popular Articles
Microsoft Kills Entertainment Unit, May Shelve Flagship Lumia "McLaren"
July 18, 2014, 7:40 PM
Boeing 777 Malaysian Airlines Flight 17 Crashes in Ukraine
July 17, 2014, 1:00 PM
FBI Report Suggests That Self-Driving Cars Could Be Used as Rolling Bombs
July 16, 2014, 11:02 AM
Tesla Confirms “Model III” EV with 200+ Mile Range, Blames Ford for Missed "SEX"
July 15, 2014, 9:12 PM
Google Signs Controversial Deal With Pharmaceutical Giant Novartis
July 16, 2014, 7:32 PM
Latest Blog Posts
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information