Regulators Eye New Apple Subscription Service

They are looking at whether the tech giant may be running afoul of antitrust laws by steering consumers to its digital subscription billing system.

NEW YORK - U.S. regulators are looking at the terms that Apple unveiled earlier this week for a new digital subscription system for content companies to gauge possible antitrust concerns, the Wall Street Journal reported.

The tech giant had said it will take a 30 percent commission for subscriptions garnered by the new system in its App Store - which doesn't apply if a content partner itself brings in the subscriber - and said content companies must offer equal or better digital subscription terms to Apple customers than they do elsewhere. Apple is also prohibiting media companies' apps from linking to stores outside of its own app store.

The new subscription system was first introduced for News Corp.'s The Daily, but is now being rolled out to other magazine, video, music and other content offers.

The Justice Department and Federal Trade Commission have shown a preliminary interest in the subscription service, which may or may not develop into a formal probe or action against the company, the Journal said. Their interest is focused on whether Apple may be running afoul of antitrust laws by steering consumers to its payment system.

A spokeswoman for the European Commission told the Journal that the EU arm was also aware of the new subscription service and was "carefully monitoring the situation."

Online music firms said Apple's 30 percent cut for processing subscriptions would hurt them. Jon Irwin, president of Rhapsody International, which sells online music subscriptions through apps from Apple and others, said his company is already paying high royalties to music labels, with Apple’s commission further squeezing margins. "The costs don't leave any room for a sensible business model," he said.



 

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