Apple says subscriptions. Feds say antitrust: report(Read article summary)
Apple has levied a new tax on publishers who sell subscriptions through the Apple iTunes Store. Now, one new report suggests Apple is being investigated by two federal agencies.
Earlier this month, Apple announced it would begin charging content providers a 30 percent tax on all subscriptions sold through its iTunes App Store. The deal was seen as a very good one for Apple – 30 percent is no small figure – and a pretty bad one for publishers, who are essentially being asked to fork over a major portion of their profits in order to peddle their wares to iPad or iPhone users.
Apple CEO Steve Jobs, for his part, defended the subscription tax, noting that it only went into effect when a customer found a particular app through Apple. "Our philosophy is simple – when Apple brings a new subscriber to the app, Apple earns a 30 percent share," Jobs wrote. "[W]hen the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing." (More on that here.)
IN PICTURES: Steve's Apple
Now comes news that the US Justice Department and the Federal Trade Commission are looking into the possibility that the Apple subscription service violates antitrust laws. According to Bloomberg, which cites "two people familiar with the matter," the Justice Department and the FTC "haven’t decided whether to pursue a more formal investigation as the examination is at a preliminary stage." Apple has declined to comment.
So does this mean that Apple is about to be hauled through a massive – and potentially damaging – antitrust suit? Not necessarily. As Matt Rosoff of BusinessInsider notes, "there are no investigations at this point, just some officials 'looking at' the new terms. In the US, at least, an antitrust lawsuit probably wouldn't get very far: Apple doesn't have dominant market share in either smartphones or portable computers."
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