Did Apple try to destroy Spotify? Investigation launched
US and EU officials to probe Apple's alleged attempt to halt freemium streaming
Apple is facing a probe in the US amid allegations that it tried to turn music labels against Spotify before launching its own Music service this week. The US attorneys general want to know if Apple pressued record labels to drop support for “freemium” streams, potentially crippling Spotify’s ad-supported service.
Apple launched its streaming rival to Spotify at Monday’s WWDC keynote, offering unlimited streams for $9.99 per month, after a three-month free trial. Reports in the run up to the launch suggested Apple had put pressure on the record labels to withdraw their support for Spotify’s free tier of streaming, which gives users access to the entire music library in exchange for listening to adverts. Apple was reportedly concerned that the free service would damage its chances of selling subscriptions.
Apple’s fears aren’t unfounded. Spotify’s own figures claim the service has 60 million active users, but only a quarter of those are paying for ad-free subscriptions. The question is whether Apple acted illegally by putting pressure on the labels to potentially damage its biggest rival in the streaming business.
The New York Times reports that Universal Music Group is co-operating with the investigation, which is being led by New York’s attorney generals of New York and Connecticut. The music firm reportedly denied that it had reached any agreement with Apple that would impede freemium streaming services.
A spokesman for the attorney general of New York, Eric Schneiderman, told the newspaper that it was “important that the market continues to develop free from collusion and other anti-competitive practices”.
Apple’s problems aren’t limited to the US. The European Commission is also probing Apple’s negotiations with the music labels, which could leave the company facing separate sanctions on either side of the Atlantic, if found guilty.
It’s not the first time Apple has been investigated for colluding with its partners. Last year, the company settled for $450 million after it was found guilty of working with five publishers to fix the price of eBooks. That settlement is little more than loose change to the company, which is sitting on a cash pile of almost $200 billion.
Apple hadn’t returned a request for comment at the time of publication.