The US senator asked the Department of Justice and the Federal Trade Commission to probe into Apple policies in light of antitrust laws.
On Wednesday, Senator Al Franken, a democrat urged two major federal departments to investigate the policies of Apple music. Franken sent open letters to both the (DOJ) Department of Justice and (FTC) Federal Trade Commission to probe into the music streaming policies of Apple music and determine whether it is breaking antitrust laws.
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The letters were sent to the heads of both the departments Attorney General Loretta Lynch and FTC Chairwoman Edith Ramirez. According to Franken Apple music may have been breaking antitrust laws in treating its music service competition and it could limit choices and raise prices for consumers.
Franken also showed concern when it comes to music streaming practices of Apple music streaming service which was launched in June.
The FTC had already been considering complaints such as Apple’s rules governing app developers but has not yet started a formal investigation. FTC confirmed having received the letter by Senator Franken but declined to comment on the matter further, while the DOJ declined to comment at all.
The complaints against Apple argue that Apple has its own music streaming service and on top of that the Apple store also provides a platform for other music streaming services such as Jango, Spotify, Rhapsody, while taking a 30 percent cut from them.
Streaming companies have often complained Apple does not allow them to put up app advertisement which can be purchased for less by costumers if downloaded from a site other than Apple. Streaming sites are also not allowed to advertise discounts on the Apple store platform.
Senator Franken shared in a statement such practices by Apple do not promote competition and undermines the competitive process and ends up costing consumers more than the market price.
You can read full letter below.
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July 22, 2015
The Honorable Loretta Lynch
United States Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530
The Honorable Edith Ramirez
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Dear Attorney General Lynch and Chairwoman Ramirez:
I am writing to encourage you to examine Apple's current dealings with app developers to determine whether the company is engaging in anticompetitive behavior in the music streaming market. As the digital music industry continues to evolve, we must ensure that this relatively new market allows for meaningful competition and that consumers have access to important information about the products and services available to them. While I am encouraged to see increased competition in this market, I am concerned about certain business practices that have the potential to limit choices and raise prices for consumers.
One of the most innovative companies of our time, Apple is world-renowned for producing high-quality products and offering excellent customer service. However, the recent launch of Apple Music has brought to light a number of restrictions Apple places on app developers, including its own competitors in the music streaming market, that rely on Apple's operating system to offer their products and services to all consumers with Apple devices. Apple currently charges a non-negotiable 30 percent fee on revenues from in-app purchases made through apps operating on Apple devices. Apple then enforces this fee through rules and guidelines found in its licensing agreements with app developers. Among other things, these agreements prevent apps from communicating important information to their users, such as why prices for the same product can vary significantly depending on the operating platform or the technology a consumer uses to make the purchase.
In the case of music streaming services, Apple's licensing agreements have prevented companies from using their apps to inform users that lower prices are available through their own websites, to advertise the availability of promotional discounts, or to complete a transaction directly with a consumer within their app. These types of restrictions seem to offer no competitive benefit and may actually undermine the competitive process, to the detriment of consumers, who may end up paying substantially more than the current market price point.
Increased competition in the music streaming market should mean that consumers will ultimately benefit through more choices of better products and at lower prices. I am concerned, however, that Apple's position as a dominant platform operator may actually undermine many of the potential consumer benefits of its entry into the market. To protect consumer choice and promote greater transparency of pricing, I ask that you review Apple's business practices with respect to its competitors in the music streaming market.
I appreciate your attention to this matter.