Apple May Face Inquiry Over Digital Music Tactics

Posted on 26 May 2010 by jjkomplett in News

Rumours are circulating across US media outlets that the Justice Department there is beginning to investigate Apple’s tactics in the digital music market. Staff members from the Department are already said have talked to major music labels and internet music companies, according to “several people briefed on the conversations”.

The anti-trust inquiry is in the early stages and the conversations have, according to the NY Times, “revolved broadly around the dynamics of selling music online.” Investigators were said had asked in particular about recent allegations that Apple used its dominant market position to persuade music labels to refuse to give Amazon.com exclusive access to music about to be released.

All these people spoke on condition of anonymity, citing the delicacy of the matter. In March, Billboard magazine reported that Amazon was asking music labels to give it the exclusive right to sell certain forthcoming songs for one day before they went on sale more widely. In exchange, Amazon promised to include those songs in a promotion called the “MP3 Daily Deal” on its website.

The magazine reported that representatives of iTunes were asking the labels not to participate in Amazon’s promotion, adding that Apple punished those that did by withdrawing marketing support for those songs on iTunes.

Apple is by far the largest seller of online music in the United States, with 69% of the market, according to data from the NPD Group, a marketing consultancy. Amazon’s MP3 store was in second place, with an 8% share. Apple is also the largest seller of music, with 26.7% of the overall market, up from 12% in 2007.

The inquiry is one of several by the federal government involving Apple. The Federal Trade Commission is moving ahead with a separate investigation of Apple’s rules for developers who create applications for the iPhone operating system, according to a person familiar with that discussion.

Representatives from Apple and Amazon declined to comment according to the NY Times while Gina Talamona, a deputy director at the Justice Department, also declined to comment.

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