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?
4/6/2007 8:20:02 PM
> the EU wants to force Apple to "ship
> internationally", exactly what you
> say isn't required.
You're right, the EC are a bunch of morons who know nothing about european law. I'll be sure to point them towards your posts, and I'm positive they'll reverse their decision... sigh...
The iTunes shop doesn't sell physical goods. There is no shipping involved (nor is Apple so stupid that it'll try that line of "defence"); sending a file over the internet to a greek IP is exactly the same as sending it to an irish IP, as far as Apple is concerned (the connections over which the data travels aren't even owned by Apple).
They are discriminating based on the country that each user is registered in, and denying users access to the "shops" meant for other countries. That is illegal, plain and simply. Doesn't matter
an EU citizen is (physically) or which country he was born in. He cannot be denied access to shops in other EU countries, period. It's irrelevant if Apple is forbidding entry based on the person's
; both are illegal.
Have you stopped to consider the remote possibility that maybe europeans (and the European Commission in particular) might have a slightly better grasp on european trade law than you do...?
"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch
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
Google's Gleaming Glass HQ Gets Mountain View Snub, LinkedIn Gets the Love
May 7, 2015, 6:58 AM
Tech's Tax Day Fortunate Few: Qualcomm, Xerox, GE, et al. Pay Little or No Taxes
April 15, 2015, 11:30 AM
LinkNYC Terminals to Blanket New York City With Free WiFi, Free Calls, and Ads
November 17, 2014, 6:50 PM
Microsoft is Open-Sourcing Most of .NET, Adding OS X and Linux Support
November 12, 2014, 8:27 PM
Home Depot Lost 53 Million Emails, Blames Windows, Buys Execs New Macs
November 9, 2014, 5:00 PM
Former NSA Lawyer: If Google, Apple Encrypt User Data, They’ll Wither on the Vine Like Blackberry
November 6, 2014, 12:15 PM
Most Popular Articles
America's Largest Cable Company, Comcast, Sees Internet Subscriptions Pass TV
May 4, 2015, 2:46 PM
Hot Microsoft Lumia 940 Shows Off Benchmark, Fall Launch w/ Windows 10 Eyed
May 29, 2015, 7:15 PM
Editorial: Apple Say Watch is "Not [Selling] Enough" -- What's Gone Wrong?
May 29, 2015, 11:11 AM
Study Shows Prior Owner's Data is Easy to Recover From Used Android Phones
May 26, 2015, 9:54 PM
Samsung and Marvel Team Up for Slick Iron Man Avengers GS6 Edge
May 27, 2015, 10:54 PM
Latest Blog Posts
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
More Blog Posts
Copyright 2015 DailyTech LLC. -
Terms, Conditions & Privacy Information