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Apple Music Draws Calls For Federal Probe

THE HILL
http://thehill.com/policy/technology/248792-consumer-group-to-regulators-investigate-apple-music

A consumer group is asking federal regulators to look at whether Apple broke antitrust rules while establishing its new music service.

“Based on information received by our group, Apple’s new streaming music service raises serious antitrust concerns that require the government to put limitations on Apple as it develops its service if consumers are to continue to have access to free streaming music services and so-called 'freemium' music,'” Consumer Watchdog executives said in a letter to the Federal Trade Commission and the Department of Justice.

The group said that “the market power and leverage Apple is exerting in the creation of its new streaming music service is very disconcerting and must be stopped.”

Last month, the company launched Apple Music with a three-month free trial for users. After the trial is over, users must choose to pay or lose the service — there is not a free tier.

That stands in contrast to services like Spotify and Pandora, which have free ad-supported levels.

One of the issues raised by the consumer group is that when customers order a streaming music service’s paid tier through an in-app purchase, Apple takes a cut. That, the group says, drives up prices for music services and can allow Apple to exert dominance over competitors.

“While getting artists more money for their songs is an enviable goal, the fact that Apple is using its market position as download and credit card leader to demand higher prices marks of the very price fixing it was caught doing in the e-book case,” the executives wrote in their letter.

The group also says that Apple is “allegedly requiring music labels to commit to giving it exclusive rights to early artist releases before they go to freemium services.”

“Such an effort should be prohibited given Apple’s market power and ability to drive Spotify, Pandora, Iheartradio and other commercial-sponsored services out of business,” the group said.

The group expressed concerns about Apples wide database of user credit cards, its propriatary data on users' music tastes and its ability to go directly to artists instead of working through music labels.

A Department of Justice spokesperson said the agency would review Consumer Watchdog's letter.

The FTC is reportedly already probing Apple Music. The Verge reported on Tuesday that the agency had subpoenaed rival music services as part of an examination of the company’s practices.

Spotify has also reportedly been discussing its concerns about Apple with members of Congress.