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Rumor: Apple Under Antitrust Investigation Over Plans to Crush Spotify

13972572580_33c420ae92_bRemember how everyone kept insisting that there was no way that Apple was the hub of the publishers' conspiracy to raise ebook prices and restrain Amazon?

Pretty soon they’re going to have an opportunity to deny Apple’s involvement in a conspiracy with record labels, or so The Verge reports:

The Department of Justice is looking closely into Apple’s business practices in relation to its upcoming music streaming service, according to multiple sources. The Verge has learned that Apple has been pushing major music labels to force streaming services like Spotify to abandon their free tiers, which will dramatically reduce the competition for Apple’s upcoming offering. DOJ officials have already interviewed high-ranking music industry executives about Apple’s business habits.

Apple has been using its considerable power in the music industry to stop the music labels from renewing Spotify’s license to stream music through its free tier. Spotify currently has 60 million listeners, but only 15 million of them are paid users. Getting the music labels to kill the freemium tiers from Spotify and others could put Apple in prime position to grab a large swath of new users when it launches its own streaming service, which is widely expected to feature a considerable amount of exclusive content. "All the way up to Tim Cook, these guys are cutthroat," one music industry source said.

Apple is expected to launch a streaming music service at WWDC in June, and it looks like they are laying the same groundwork for the new service that they laid for iBooks in late 2009.

Please excuse me for a second while I enjoy the moment.

… turns on Happy by Pharrell …

… dances like no one is watching …

Okay, I’m done.

Personal glee aside, I am going to wait for real evidence before reaching a conclusion. I want to see a statement on the record, a copy of the indictment, or something that shows that this is more than hearsay.

I might enjoy reading the hearsay but it is still just hearsay at this point. There are reports Apple has pulled tricks like this before, but that doesn’t mean that this report is true.

And even if it is true, that doesn’t mean that Apple actually did anything wrong or that the DOJ will prosecute.  The labels are more than capable of conspiring on their own. Also, there have been other reports that the record labels were already trying to kill Spotify’s free service, which means Apple’s rumored involvement could be nothing more than that: a rumor.

We’ll just have to wait and see.

image by Bev Goodwin

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fjtorres May 4, 2015 um 5:46 pm

Well, if the labels' execs practice BPH-style email discretion there should be no shortage of quotable messages. 🙂

Nate Hoffelder May 4, 2015 um 6:00 pm

They’re worse, if that is possible.

fjtorres May 4, 2015 um 10:53 pm

That should please Judge Cote.
And the antitrust Monitor.

Nate Hoffelder May 4, 2015 um 11:01 pm

Here’s one example. It’s not strictly relevant to this case but it does tell us who we are talking about.

Kevin May 5, 2015 um 8:09 am

But Apple must also be happy. They now have a chance to show that the monitor (Bromwich) is a failure. According to Apple Insider part of Bromwich’s job was that "Apple executives and board members are to be instructed on the antitrust compliance stipulations and what they mean". So Apple must be happy because they can now say that Bromwich is a failure at his job (because, well, because Apple executives still do not understand antitrust laws). So good news for Apple, right?

Ben May 5, 2015 um 11:40 am

Just to give a different view here – this could be Apple saving the music biz from themselves again (like they did with iTunes). The Spotify model doesn’t work – they have massive loses and musicians can’t live off it. The only winners will be the investors when it IPOs. And the only reason the big labels sell their artists down the river to Spotify is because they own 20% of the firm. In the meantime they burn the value of their product. It’s so short sighted to give away their product for free. People may scoff, but Apple love music and I’m sure have a plan to save it again. They need it.

fjtorres May 5, 2015 um 12:34 pm

Right. Saving the labels from their own decisions.
At consumer expense.
Breaking federal law.
Because the law doesn’t apply to Apple.
They’re above such petty things.
They should man up and say so straight to the judge’s face, then.

Mackay Bell May 5, 2015 um 1:52 pm

The record companies hate the power Apple has over the music industry, and that’s one of the reasons they gave Spotify such a good deal to begin with, to undermine Apple. Whatever they do, it will be in their own interests, not in Apple’s.

Moreover, just because you are an insanely profitable company, doesn’t mean every thing you do is illegal. As we shall find out when this accusation goes nowhere and the DOJ publishing charges and forced settlement against Apple are overturned in the appellate court.

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