The Department of Justice is investigating Apple’s business practices in relation to its upcoming music streaming service, according to multiple press reports.
The news comes after reports that Apple has been pushing major music labels to demand that streaming services like Spotify abandon their free tiers, a move which would dramatically reduce the competition for Apple’s upcoming offering.
DOJ officials have already interviewed high-ranking music industry executives about Apple’s negotiating tactics.
Apple has been putting huge, likely illegal, pressure on record labels to deny Spotify’s license to stream music through its free tier. Spotify currently has over 60 million listeners, but only about 15 million of them are paid users.
Getting the music labels to not license music for free tiers from Spotify and others would put Apple in prime position to grab a large swath of new users when it launches its own streaming service, which will feature a considerable amount of exclusive content. “All the way up to Tim Cook, these guys are cutthroat,” one music industry executive said.
In another clearly anti-competitive maneuver, sources say that Apple offered to pay YouTube’s music licensing fee to Universal Music Group if the record lavel stopped putting its songs on YouTube.
Apple looks to be clearing a path for its streaming service launch. The service is expected to debut in June. If Apple could convince the record labels to stop issuing licenses to freemium services from Spotify and YouTube, it would remove significant competition from the industry.
Apple already has an antitrust monitor on its premises, after it was found guilty in the ebook antitrust case last year, but it’s unclear if that monitor is involved in the latest actions.
But the DOJ isn’t the only agency examining Apple’s dealings with the music industry. The New York Post reports that Apple is also being investigated by the European Union’s Competition Commission about the move to rid the industry of freemium services.
If Apple has indeed made these demands, which seem very credible, it would clearly be a violation of antitrust laws given the intent is precisely to reduce competition and disadvantage consumers by way of collusion.
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