Is iTunes Too Successful? Apple's Antitrust Problem

The Department of Justice launches a preliminary inquiry

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It's no secret that iTunes dominates the digital music market. With a whopping 69 percent of all digital sales, the Apple-created media player sells more music than any single record label. The company's ascendancy has reportedly alarmed the Justice Department, which is specifically looking at complaints that Apple exploits its clout to squash smaller competitors.

One example involves Apple's aggressive moves against Amazon's MP3 store. The popular website attempted to sell new music releases before they were available on iTunes or physical store shelves. This required the cooperation of record labels, which own the music. However, Apple pressured the labels to withdraw from Amazon's deal by refusing to market their songs on the iTunes Music Store. Does this violate antitrust laws?

  • Apple Is Reaping What It Sowed, writes the Edible Apple blog: "As iTunes grows, the need for record labels to maintain a congenial disposition with Apple becomes that much more important. A prominent spot on the iTunes landing page can do wonders to help give a new song or album a strong push out of the gate. Apple allegedly abusing that power in an anti-competitive manner has naturally attracted the attention of federal regulators."
  • Don't Bame Apple--Blame the Labels, writes Peter Kafka at All Things Digital: "The people most responsible for Apple's market power are the ones who gripe about it most often -- the big music labels. They're the ones who insisted on locking their songs up with digital rights management technology. Which meant that anyone who bought digital music was forced to choose between Apple's iTunes/iPod platform, or the lousy one promoted by Microsoft (MSFT) and others you can't even recall anymore. Not really a choice at all. The labels eventually wised up and started selling their stuff as unencrypted MP3s -- meaning anyone could sell music that plays on Apple's devices. But that was years too late."
  • Regardless, Apple Can't Get a Break These Days, writes Jason Mick at Daily Tech: "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."
This article is from the archive of our partner The Wire.