February 18, 2011

Apple Subscription Plan May Lead To Antitrust Investigation

Apple's announcement earlier this week that they would allow iPad, iPhone, and iPod touch users to purchase subscriptions to magazines and newspapers could result in an antitrust investigation by US regulators, the Wall Street Journal is reporting.

On Tuesday, the Cupertino, California-based company announced that publishers would be allowed to sell subscriptions of varying lengths to users of iOS devices. However, according to a February 16 article by the Journal's Nathan Koppel, those subscriptions must be sold through the App Store, with Apple earning a 30% share of all money generated through sales.

"A magazine that wants to publish its content on an iPad cannot include a link in an iPad app that would direct readers to buy subscriptions through the magazine's website," Koppel added. "One more potential string attached: If publishers sell digital subscriptions outside the Apple orbit they must allow Apple to offer the subscriptions at the same price or less."

That, legal experts told the Journal, is likely to attract the attention of the Justice Department, the Federal Trade Commission (FTC), or both. However, they would first need to determine whether or not Apple is "a dominant player in the market," Koppel wrote.

According to Bloomberg's Jeff Bliss, neither the Justice Department or the FTC have decided whether to not "to pursue a more formal investigation as the examination is at a preliminary stage," based on what a pair of anonymous sources told him. Bliss also noted that participating publishers "will have to offer their lowest subscription rates" available in their App Store packages.

Both an Apple spokeswoman and a Justice Department representative declined Koppel's request for comment. Likewise, a pair of Apple employees, a Justice Department spokeswoman, and an FTC official either declined to comment or did not respond to similar requests from the Bloomberg reporter as of early Friday morning.

"The FTC has been reviewing separate allegations that Apple is engaging in anti-competitive tactics to restrict rivals in the mobile-advertising market," Bliss added. "The Justice Department is looking into Apple's business practices regarding its iTunes digital music service.


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