Licensing terms prohibit competing companies from letting consumers know of better music deals
Apple's licensing terms for competing music streaming services may be raising prices for consumers, a potential unfair competition issue that should be investigated, a U.S. senator alleged Wednesday.
Sen. Al Franken (D-Minn.) called on the U.S. Department of Justice and the Federal Trade Commission to investigate whether Apple's licensing terms for streaming music apps puts competing companies at a disadvantage.
Apple charges a 30 percent fee for in-app purchases and prohibits app developers from telling users that lower-cost products may be available to customers directly from their websites, Franken wrote in a letter to the agencies.
"These types of 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," he wrote.
Apple launched its streaming service, Apple Music, at the end of June, putting it in direct competition with companies including Spotify, Pandora, Google Play Music, Amazon Prime Music and others.
Apple's strong position in the smartphone and desktops markets gives it a powerful advantage, which could undermine benefits consumers could get by its entry into music streaming, Franken contended.
"Increased competition in the music streaming market should mean that consumers will ultimately benefit through more choices of better products and at lower prices," he wrote.
Also on Wednesday, Consumer Watchdog, a nonprofit consumer advocate group based in Washington, D.C., called on the same agencies to look into whether Apple was trying to restrict ad-supported streaming services.
The group claimed it has information that Apple has been pressing three music labels to give it exclusive rights to artists' content.
Such arrangements could allow Apple greater power "to dominate the subscription music sector with whatever price it chooses," according to its letter.
Apple officials could not immediately be reached for comment.
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Jeremy reports on security and regional news for the IDG News Service.