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Senator Franken, Consumer Watchdog call for App Store investigation
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Jul 23, 2015, 10:17 AM
The terms and fees Apple imposes on other music streaming services using the App Store has come under attack from more sources. US Senator Al Franken (D-MN) and advocacy group Consumer Watchdog have both written to the Department of Justice and the Federal Trade Commission (FTC), urging them to investigate whether or not Apple is "engaging in anticompetitive behavior" with regards to Apple Music and its App Store policies.

The two letters center around the rules apps and must abide by in order to appear in the App Store, which some believe gives Apple an unfair advantage. For a start, the App Store's 30-percent fee on in-app transactions forces competing music services to raise their prices for subscriptions commencing through iOS apps, rather than themselves. This usually pushes the subscription price above Apple Music, making it much harder to compete.

The rules also forbid services from including information in the app about being able to sign up for the same service elsewhere. Spotify evaded this by emailing a guide to its iOS customers, telling them that they could save $3 per month by subscribing directly.

Senator Al Franken
Senator Al Franken

Franken's letter to the FTC and DoJ notes he is "encouraged to see increased competition in this market," but he is concerned about "certain business practices that have the potential to limit choices and raise prices for consumers." Apple's restrictions "seem to offer no competitive benefit and may actually undermine the competitive process, to the detriment of consumers, who may end up paying substantially more than the current market price point."

Consumer Watchdog offers a similar tone to Franken's own, suggesting it "raises serious antitrust concerns that require the government to put limitations on Apple as it develops its service." It goes on to suggest that Apple is using the "proprietary information" it has about customer credit cards and musical preferences as leverage over music labels to lower its costs, comparing it to the way it set e-book prices.

Both letters surface after reports the FTC is proceeding with an investigation into the matter, with it said to be serving subpoenas to music services.

It is noted that Google is not facing a similar pressure from critics over its own activities. Google Play charges an identical 30 percent transaction fee as Apple does, including for music service subscriptions, but its more relaxed policies about app content is seemingly allowing it to avoid criticism.
Mr. Strat
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Jul 23, 2015, 12:41 PM
Al's not the sharpest knife in the drawer.
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Jul 23, 2015, 12:52 PM
Since it is Apple's business why can't they charge the 30%. Spotify and others can promote there wears anywhere they want if they don't like Apple's app store. What happened to a free market for the best business wins. Now it seem like it is a whiners market where the stupid business cry's to the government and Apple is supposed to be penalized for being better? Hey senator, Amazon does this to book sellers yet I don't see you crying about Amazon being unfair. The stupid DOJ muted the only competitor Amazon would have had which was Apple. And for doing what again. Just being in business and being smarter at it at that.
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Jul 23, 2015, 12:53 PM
Let's not kid ourselves -- Al is on the opposite side of the political spectrum from you and that's probably the sole reason for your comment.
Mike Wuerthele
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Jul 23, 2015, 01:20 PM
But not mine. Google, MS, and Amazon have similar policies in their own app stores, yet they aren't being examined.
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Jul 23, 2015, 02:05 PM
I used to have to pay cash at my previous barber because he didn't accept debit or credit; he said that the payment processing fees would be ridiculously high for a small business like his. Isn't Apple just acting as a payment processor in this case? Sure, 30% may be a high transaction fee, but Apple's the one handling everything. As mentioned, people aren't restricted as to where they transact their subscription; if Apple's way were the only way, then I could see some issues.

And, of course, it's rarely surprising that Apple is the one singled out for this so called bad behaviour, even though other companies have similar or worse policies (see: Amazon).
Mike Wuerthele
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Jul 23, 2015, 03:14 PM
Payment processor, server time (because serving free apps isn't free), security, and a crapload of other associated costs with the service.

Apps aren't like a podcast, not hosted on Apple servers.
Flying Meat
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Jul 23, 2015, 04:29 PM
There's nothing wrong with an investigation, if there is a suspicion. However, it should not be a one-sided myopic investigation.
An investigation should take into account what similar services (Google, Amazon,..) are doing, and their overall impact on each other, the content and app developers, and the customer experience.
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Jul 23, 2015, 05:17 PM
1. Apple set up the App store agnostic to games, productivity, videos, magazines, etc., that if you use the site to [good will, services [super credit card], data, infrastructure, convenience, and easy access to users] to make money, then you must pay your share of the cost. App Store/iTunes are not a profit center, but have goal of break even.
2. Apple has been consistent on this for over 7 years for ANY business that wants to make money from the the store. They also say you can't end run the system by pretending to not sell on the site, but send people elsewhere to pay from the site.
3. The music streamers like everyone else has two clear choices:
A. Pay the 30% fee on sales in the Store
B. Offer out of store purchases, but not through store advertising. A lot of magazines let you subscribe at their not-Apple store rates and get "free digital" downloads - music streamers can do the same.

Market rates have to include Apple costs [which Apple chooses not to bill itself] to operating a world wide huge media operation. It makes no sense to create enormous complication by creating complex billing rates for each business line to address regulators concerns. Apple may do this to appease content owners etc., but the imagine the market is governing the content media versus a mountain of laws, regulations, historical contracts dating from the 1930s, etc., is simply foolish.

Finally, regarding the e-publishing market, who are we kidding it was a miscarriage of justice to allow a monopoly, Amazon, drive book distributors and publishers and authors into bankruptcy [see the latest suites being brought] and when someone finally comes along to bring market reason they get sued.
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Jul 24, 2015, 04:23 AM
30% was Easy to swallow back when everybody expected to make money off of selling apps. 30% makes sense for Apple to take as a cut when they sell music. (Record stores used to keep more.) But these days:
A) Apple already makes tons of money and app store revenue is a meaningful part of it, but is it even 1% of their business?
B) They're now leveraging it to be able to make money off of competing services, while charging less for their own. (Which I think counts as anti-competitive)
C) Back in the 90s we'd have considered this horrible for Microsoft to have done to somebody else, particularly the, "You can't link to a website that tells people how to sign up."

Now, if Apple wants to argue, "The experience is better with us processing the payment." They can do that, but they should then be requiring app makers to have in print at a font size of 18 or something big, the statement, "This transactions for this app will be handled by Amazon/Spotify/Microsoft/Whoever, any issues you have involving your payment will need to be processed by this company."

I'm completely against them having been found guilty in the iBooks case, that's been a gong show. But in terms of the app store, you shouldn't be able to be the gate keeper of every dollar's worth of software that is developed for your platform. And if you are, I can understand 5% or even maybe 10%. But 30% is a large portion.
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