US authorities begin examining Apple iTunes new business arrangement as content providers cry foul.Steve Jobs’ company, which is taking a 30 percent cut from all non-Apple content sold through its music store has set alarm bells off in official circles who suspect anti-competitive practices are being pedalled by the tech giant.
The US Justice Department as well as the Federal Trade Commission, who is responsible for investigations into unfair trading practices, have not yet acted on the case but are carefully examining the situation as are the European Commission, according to The Australian.
Media companies wishing to sell their music, movies, games and e-books applications through the eponymous iPhone, iPad iPod or Mac PC are forced to go through the Apple payment system, where they take one third of the sale price.
These new rules makes doing business through iTunes and now its other publication subscription services on its iPad and iPhone an unprofitable game for outsiders.
In addition, Apple makes it almost impossible for customers to make purchases externally, forbidding all outside links to other retailers.
And if that isn’t enough it also prevents other companies from building relationships and gaining personal information on their customers and makes it easier for music lovers to purchase from its iTunes Store if they have previously made a purchase as billing details are already stored in their system.
The tech powerhouse don’t allow the retailers to retain customer information but keep it on file for their own marketing department’s use.
Complaints from music companies are fierce and most providers are deeply unhappy with the new regime.
“The costs don’t leave room for a sensible business model,” says Jon Irwin, of Rhapsody international who already sells content through the system.
“The rate is so obviously anti-competitive it will never survive in Europe,” states Axel Dauchez, president of Deezer, another digital music provider.
This also comes as Apple announce a new subscription service for publishers also, which will allow users to make purchases of magazines or newspapers on a weekly or monthly basis, which the company says will give publishers a revenue boost, given the flexibility of the business model.
But the same business arrangements including the 30 per cent cut apply as with the iTunes model.
However, Steve Jobs denies any wrongdoing in the new arrangements.
“We believe this innovative subscription service will provide publishers with a brand new opportunities to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers,” Jobs said in a statement.