Apple’s splashy launch of its Apple Music service wasn’t just being watched by loyal fans and iPhone users looking for great tunes – attorney generals from around the country were also watching. Closely.
Just two days after launch, the company’s music streaming service is already facing antitrust investigations from two U.S. states.
New York and Connecticut are now investigating Apple to see if it has pressured or colluded with record labels to eliminate “freemium” services from competitors like Spotify and Rdio.
The freemium services allow music to be played in exchange for users tolerating ads – an important point to remember. The music is not free, as the record labels would have you believe, its ad supported. The same as radio always was.
The services offer paid tiers for users who to avoid the ads and get access to a better selection of music, among other extra features.
Rich record companies have been hounding the industry to do away with the ad supported tier, trying to use technology to extort users rather than provide a better, cheaper, experience.
According to reports, Apple also pushed hard on this goal, pressuring labels to quit supporting the freemium services.
A spokesman for one of the attorneys general said that the investigation is looking to ensure consumers continue to enjoy the benefits of music streaming and that the industry isn’t colluding to force users to pay more.
Streaming is huge business, as we profiled yesterday, with streaming revenues exceeding those from physical media at several big record levels for the first time in history.
Universal Music Group has already responded to the investigation, indicating it had no agreements with Apple or with other record companies to unduly pressure the freemium tier service.
Apple has a history of content-based anti-trust violations. A U.S. federal judge found in 2013 that the company had violated antitrust laws by colluding with publishers artificially raise e-book prices above the $9.99 charged by Amazon.com.
Worryingly for Apple, the two attorneys general involved in the music probe also worked the e-book antitrust case.
Apple has declined to comment on the investigation thus far.
