The Justice Department has become suspicious of Apple’s sales techniques for selling music online. More specifically, they are investigating Apple’s dealings with major music labels and Internet music companies. This comes according to several people with knowledge of discussions around the investigation. The investigation is just getting started, but those aware of what’s going on say it revolves around the broad dynamics of selling digital music.
One specific instance that keeps coming up according to sources is Apple’s behavior regarding Amazon digital music sales. Some allege that Apple used its dominant position in the online music market to influence music labels and dissuade them from giving Amazon exclusive access to unreleased music. Most who have said anything about the matter only did so in exchange for anonymity. This is a delicate situation that could cause a major stir in the online music market. Apple, Amazon, and a deputy director at the Justice Department Gina Talamona all declined to comment.
Back in March, Amazon ran a promotion called the “MP3 Daily Deal.” It offered consumers the chance to buy select music a day before its actual release. In order to make this promotion work, Amazon needed labels to give it exclusive rights to these songs for one day. According to the report by Billboard magazine, Apple urged labels to avoid this promotion. They even went as far as withdrawing marketing support from iTunes for those who did participate with Amazon.
“Certainly if the Justice Department is getting involved, it raises the possibility of potential serious problems down the road for Apple,” said Daniel L. Brown, an antitrust lawyer at Sheppard Mullin Richter & Hampton. “Without knowing what acts or practices they are targeting, it’s difficult to say exactly how big a problem this is,” Mr. Brown added. “But it’s probably something Apple is already concerned about.”
Apple has grown from a digital music underdog in 2001, to an Internet media juggernaut in 2010. They are also being investigated in a few other areas, including hiring practices and iPhone development rules. While some may say that this exclusive world of media created by Apple via iTunes is necessary to provide a certain level of quality, it’s also obvious that it gives Apple a lot of power. They control pricing, presentation, and the relationship with music consumers. If these antitrust investigations turn up anything significant, it could bring major changes to the online music and media world.