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Al Franken Urges Federal Probe of Apple Music

NATIONAL JOURNAL
http://www.nationaljournal.com/tech/al-franken-urges-federal-probe-of-apple-music-20150722

The senator warns of limited competition and price increases due to Apple's new music-streaming service.

Sen. Al Franken wants federal regulators to investigate whether Apple's new music-streaming service runs afoul of antitrust law, marking the latest escalation in an ongoing, multi-pronged battle for dominance in the crowded online music market.

In a letter addressed Wednesday to both the Justice Department and Federal Trade Commission, the Minnesota Democrat warned that new Apple Music platform may be harming consumers by limiting competition and driving up the price of access to streaming music.

"Increased competition in the music streaming market should mean that consumers will ultimately benefit through more choices of better products and at lower prices," Franken wrote in his letter. "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."

Apple has been dogged by accusations that it is unfairly using its enormous size and influence—and access to the payment information of millions of customers—to cut better deals with record labels on Apple Music, its streaming service that launched last month. Its critics have also said Apple is driving up prices of its competitors' services, such as Spotify and Pandora, by taking a 30 percent cut of any purchases made via its popular app store.

Apple Music is exempt from that surcharge, as it is an Apple platform. To combat the fee, Spotify has begun an advertising blitz to inform customers they can save $3 a month by signing up on the web and not through Apple's app store.

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," Franken wrote.

Apple is already facing antitrust inquiries on the state level in New York and Connecticut.

The scrutiny has prompted Spotify and others to lobby on Capitol Hill for an investigation, and several media reports have cited unnamed officials claiming the Federal Trade Commission has already launched a probe. The regulator has not said publicly whether Apple Music is under its microscope, though it did begin to issue subpoenas for business information from its competitors this week, according to The Verge.

Consumer advocates have been piling on as well. Wednesday, Consumer Watchdog asked regulators to begin a formal probe of Apple Music on grounds that Apple size grants it unfair negotiating power with record labels, arguing the company's potential for market dominance in music-streaming resembled its controversial price-setting of e-book prices. The group also expressed concerns about Apple Music's privacy policy.

"The market power and leverage Apple is exerting in the creation of its new streaming music service is very disconcerting and must be stopped," Consumer Watchdog wrote.