Justice Department Asking Questions About Apple Trying To Block Labels From Offering Deals To Amazon

from the restraint-of-trade... dept

Wed, May 26th 2010 6:55am — Mike Masnick

Back in March, we wrote about reports that Apple had gone around and pressured various record labels to stop working with Amazon on its "MP3 Daily Deal" promotion. The reports suggested that Apple had told the labels that it would not promote any releases that were featured as Amazon's Daily Deal. As we noted at the time, this sounded like a classic "restraint of trade" situation that the government tends to frown upon, especially when performed by what might be considered the dominant player in the market. I'm not sure I believe it should be an antitrust issue, but it certainly is the kind of thing that the government gets upset about.

So it should come as little surprise at all to find out, indeed, that the Justice Department is now looking into this. Of course, it's early, and nothing may come of it, but you would still think that Apple would be a bit more careful than blatantly telling partners not to work with a competitor. Or does Steve Jobs hope that his powers of persuasion will wow over the Feds as well?

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Filed Under: antitrust, music, promotions
Companies: amazon, apple, justice department

20 Comments

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Anonymous Coward, 26 May 2010 @ 8:29am

Here are the real questions in this issue.
1. Whose Reality Distortion Field is stronger, Jobs or the Federal Government's?

2. Who do you root for?
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- Sean T Henry (profile), 26 May 2010 @ 9:29am
  
  Re: Here are the real questions in this issue.
  The Federal Government.
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Overcast (profile), 26 May 2010 @ 8:34am

A Lawyer a Day keeps the Apple Away.
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Anonymous Coward, 26 May 2010 @ 8:43am

this is a great example of why companies like apple, google, and microsoft are scary. they have the ability to play in so many markets, that they can use their power in other areas to punish competitors. i think itunes should be spun off and removed from apples control, and i also think that googles ad sales unit should be removed from the search business. too much danger there of results being tilted based on ad spends.
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- :Lobo Santo (profile), 26 May 2010 @ 8:54am
  
  Re: Just Wow
  That's amazingly... dimwitted.
  iTunes is damn near a "loss leader" for Apple. They make pretty much no money from it. The only reason it exists is because it makes the iPod (et al) more valuable by being a 'free' media management/acquisition service.
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  - Hephaestus (profile), 26 May 2010 @ 10:40am
    
    Re: Re: Just Wow
    "iTunes is damn near a "loss leader" for Apple. "
    
    You are doing what everyone else does just repeating what you have heard. So show me the money or proof that iTunes is a loss leader.
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    - Mike Masnick (profile), 26 May 2010 @ 11:06am
      
      Re: Re: Re: Just Wow
      You are doing what everyone else does just repeating what you have heard. So show me the money or proof that iTunes is a loss leader.
      
      It may be a bit out of date, but Steve Jobs has said so in the past:
      
      http://www.theregister.co.uk/2003/11/07/your_99c_belong/
      
      At an Apple financial analyst conference on Wednesday CEO Steve Jobs admitted that Apple makes no revenue from the online download service, the iTunes Music Store....
      
      "Most of the money goes to the music companies," admitted Jobs.
      
      "We would like to break even/make a little bit of money but it's not a money maker," he said, candidly.
      
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  - shakir, 26 May 2010 @ 12:35pm
    
    Re: Re: Just Wow
    you could be right if you consider a bricks and mortar store front as a loss leaders as well - as it is a 'free' acquisition device. To extend my point - the entire Amazon site can be likened to the iTunes application - its a free management / acquisition device. But wait dont they sell things there? Just like in iTunes?
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agraham999, 26 May 2010 @ 8:45am

Boo Hoo
You know I'm starting to get a little bored with the whole anti-trust issues when it comes to these poor poor billion dollar companies all sad because they don't feel the other titan is treating them fairly. Google, Apple, Amazon, Microsoft...I could care less that they feel the need to go to the government to take care of helping them when a gazillion gallons of oil are pouring into the gulf. This is an effective use of tax payer money.

As for this particular case...I doubt anything will come of it. Apple may have a huge chunk of the emerging online music market, but they do not have a monopoly. I might have more sympathy for Amazon if they weren't a billion dollar company that also wants to control the music biz.

Perhaps the government should get back to looking into...oh...Bank of America and why they held my mortgage hostage for 3 months while I tried to refinance it with another bank.
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Bobo Bolinski, 26 May 2010 @ 9:26am

Apple
I helps if Gore is on the Board.
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ac, 26 May 2010 @ 10:20am

Jobs to Justice Dept...
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freedom, 26 May 2010 @ 11:11am

Revenue = Profit...
>> that Apple makes no revenue from the online download service, the iTunes Music Store....

When did revenue mean profit? Apples brings in a ton of revenue from their online store. Profit is a totally different issue.

Freedom
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Bruce Partington, 26 May 2010 @ 12:20pm

where's the restraint of trade?
There'd be a much more convincing case for restraint of trade if Apple dropped the offending products from the iTunes store altogether.

They didn't, they just refused to promote them. Or are we now believing that product promotion is an entitlement?

If Apple violated contracts with the labels involved by not promoting their products, then sue them!
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Anonymous Coward, 26 May 2010 @ 2:14pm

so why the threats then?
It seems to me that if Apple isn't making much money off of the itunes store, then there's no reason at all to try and influence the availability of media to other providers--as long as the ipod remains open enough that any media, acquired from any source, will sync and play. Hell, that's creating value/demand for your own platform from other services who happily take on all the risk.
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Anonymous Coward, 26 May 2010 @ 6:02pm

THIS SUCKS
O like this sucks because that's where I get some of my SONGS THAT I DOWNLOAD!!!Geez!!!!!
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hitesh joshi, 26 May 2010 @ 10:29pm

that's a good post.i enjoy reading it.thanks for it.

Hitesh joshi
http://hiteshjoshi.com
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cuband, 27 May 2010 @ 12:35am

Oh, Apple
Apple has become the new Microsoft. I hope that sometime soon they get slapped on the wrist for all of the anti-consumer stuff that they currently get away with. It's only a matter of time..
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- Overtkill (profile), 27 May 2010 @ 11:48am
  
  Re: Oh, Apple
  Ditto! :)
  
  My thinking exactly!
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agraham999, 27 May 2010 @ 6:32pm

I'm sorry...
exactly what anti-consumer stuff do they do? Has Apple forced anyone to buy their products? Apple doesn't support Flash...perhaps that's one thing you are referring to...should I expect Android to support Silverlight native in their operating system because some people might want it? Or maybe you are upset that they are anti-consumer because they don't allow you to buy music from other vendors and put it on an iPod or buy music from iTunes and put it on a Zune. Oh wait...they allow all that as well.

I'd really like to know what they do that is so anti-consumer???
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MAURICE M. CARTER, 26 Jul 2010 @ 3:07pm

MONOPOLY
APPLE , GGOGLE, AMAZONCOM ARE PIKERS WITH THEIR BILLION DOLLAR MONOPLOLIES. NOT THAT THE LAW SHOULD NOT BE ENFORCED.
BUT DONT HOLD YOUR BREATH TOO LONG.

THE OIL COMPAINIES ARE OPERATING MONOPOLIES ON A TRILLION DOLLAR SCALE AND NO ONE IN THE FEDERAL GOVT IS CONCERNED.

THE OIL COMPANIES OPERATING IN PA ARE CONDUCTING FRAUD O A SCALE SO LARGE THAT THE FEDERAL GOVT SOES NOT WANT TO LOOKSLOOK INTO IT BECASUE OF THEIR FEAR THAT THE OIL COMPANIES MAY NOTICE THEIR DEPART;MENTS AND ARRANGE VIA CONGRESS TO HAVE THEM ELIMINATED. THE OIL COMPONEIS HAVE DIVIDED UP TERRITORIES, SET LABOR COSLLS, SET DRILLING LEASE PRICE COSTS ON A GIGANTICE SCALE SO THAT THEY WILL MAKE ONLY ONE THOUSNAD PERCENT PROFIT FROM SELLIN LEASE TO FOREIGN CONTRIES . THEY ARE MAKING THESE MONOPOLU PROFITS BY SPECUATING TO BUYIN ANDF SELLING OF LEASE. THEY HAVE NO DEED TO INCUR THE EXPENSE OF ACTUALLY DRILLIN.
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