Apple Music’s edge over streaming services like Spotify, Rdio and Pandora means that Apple gets to take a 30 percent cut of rivals’ App Store subscriptions — thereby forcing them to jack up their prices or lose money.
It’s the subject of a current FTC antitrust investigation, but according to Rutgers University law professor Michael Carrier, while it may be harsh, it’s probably not illegal.
“[You have to ask] whether or not Apple is taking actions that make no sense for its business other than harming competitors,” Carrier tells Wired, adding that “This is not a slam dunk antitrust case.”
“At the end of the day, what does the consumer view as a substitute?” Carrier says elsewhere in the article. “If the iPhone is really a unique market, then you could make the argument that the iPhone is the market, the App Store has a huge percentage there.”
However, due to the presence of Android — and the fact that companies can choose not to sell through the App Store, it’s likely that Apple’s “take it or leave it approach” is tough, but not antitrust-worthy. That could change if Apple’s share of the streaming market changes drastically in the years to come, though.
If it’s not illegal, then Apple’s definitely played a master game, though. As Rdio’s CEO explains in the article, because 70 percent of revenue from music streaming immediately goes to music labels, publishers, and distributors to pay for music rights, Apple’s extra fee means that companies like Tidal and co. make no money at all — or even lose it — if they try and match Apple at the $10 per month rate.
Game, set, and match?
