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: What Is The EU Trying To Do
4/8/2007 2:59:22 PM
I wasn't aware that Apple is a "country".
Besides, last time I checked, if I set up a business in, say, Canada, I have to comply with canadian trade law. Doesn't really matter what
If you think Apple is "US-based" think again. It may have started there, but these days they do 99% of their manufacturing outside the USA (mostly in Asia), and they have local branches in virtually every european country, as well as most of Asia and America (as do Microsoft, IBM, etc.).
"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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
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
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
Most Popular Articles
Austrian Pilots Call Surface 3 Pro Flight Bag a "Dream Come True"
November 14, 2014, 2:00 PM
U.S. Marshals Using Fake, Airplane-based Cell Towers to Scan Cell Phones of Americans
November 14, 2014, 9:05 AM
Wal-Mart: Miss Thanksgiving, Get Xbox One + Master Chief Collection for $299
November 17, 2014, 9:40 PM
Nokia Explores Two Paths Back to the Smartphone Market
November 14, 2014, 9:05 PM
Microsoft: All* Lumias Will Get Windows 10; Adds Real-Time Battery Live Tile
November 13, 2014, 6:32 PM
Latest Blog Posts
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
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information