Report: FTC Looking into Apple Subscription Model

Report: FTC Looking into Apple Subscription Model

Photo by Mr. T in DC -

Apple once again may be the focus of federal regulators. The Cupertino, Calif. company’s recent decision to require publishers to offer subscriptions through the App Store — providing a 30 percent cut for the tech giant — has prompted an initial antitrust investigation by the Justice Department and Federal Trade Commission, according to a Wall Street Journal report.

Although publishers seeking to sell magazine, newspaper and music subscriptions to owners of iOS devices can pitch services on outside websites, the new rules require companies offer iTunes as an alternative at the best available price. Traditionally, publishers offer tiered pricing based on where products and services are sold.

While federal regulators reportedly are interested in the requirement to offer sales through Apple’s App Store, a publishing trade group objects to the price of subscriptions being the same via Apple, as through companys’ own websites.

A day after Apple’s Tuesday announcement, rival Google offered publishers an alternative: Google One Pass. The service from the Mountain View, Calif. Internet giant permits publishers to retain 90 percent sales revenue and companies keep control of important consumer data.

Soon after Apple announced the subscription requirements, companies looking to reach iPhone and iPad users voice objections. Music service Rhapsody hinted it might take legal action, calling the new App rules “untenable.”

This isn’t the first time Apple’s App Store policies have caught the attention of federal regulators. In May 2010, the FTC and the Justice Department raised questions about changes to Apple’s developer agreement which seemed to be anti-Android. Following the federal pressure, the Cupertino, Calif. company announced greater developer freedoms.

[WSJ, CNET, 9to5Mac]

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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