Sen. Al Franken Wants Federal Probe of Apple Music, App Store Practices
Critics of Apple's surcharge for in-app purchases, as well as rules meant to keep that money flowing, have a powerful new friend in Washington. Sen. Al Franken (D-Minn.) on Wednesday sent a letter to Attorney General Loretta Lynch and Federal Trade Commission chairwoman Edith Ramirez, asking them to review Apple’s policies for possible anti-competitive behavior.
"I am concerned about certain business practices that have the potential to limit choices and raise prices for consumers,” Franken wrote in a letter dated July 22.
As previously reported, Apple takes a 30 percent cut of all purchases within its App store. Outside developers are barred from informing consumers within their App pages that the same service can be purchased on their third-party websites, thereby cutting Apple out of the equation. Rules also prohibit apps from including a link to their websites and from mentioning other platforms, like Google Play.
"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,” Franken said in his letter.
Franken’s letter addresses concerns from music streaming services that believe consumers should be better informed about pricing disparities between the App store and their websites. Services including Spotify and Rdio charge $12.99/month in the App store to account for Apple’s 30 percent cut. If purchased directly, the price would be $9.99/month.
Taking matters into their own hands, Spotify recently announced plans to email iPhone users with directions on how to alter their subscriptions in order to save a few dollars each month. "It's super simple," the emailed tutorial reads.
Apple Music, which launched June 30 to much fanfare, also charges $9.99 but does not have to worry about the company’s 30 percent.
"Increased competition in the music streaming market should mean that consumers will ultimately benefit through more choices of better products and at lower prices," Franken wrote. "I am concerned, however, that Apple's position as a dominant platform operator may actually undermine many of the potential consumer benefits of its entry into the market."
Apple did not immediately respond to request for comment.
Also on Wednesday, the AG and the FTC received a petition by the nonpartisan Consumer Watchdog group, who claim "Apple's new streaming music service raises serious antitrust concerns that require the government to put limitations on Apple as it develops its service." Like Franken, the watchdog group is worried that Apple's policies will drive up prices for consumers.
The FTC is reportedly already on the case, having met with multiple concerned parties about Apple’s practices, though it has not opened a formal investigation. Section Five of the FTC Act prohibits "unfair or deceptive acts or practices."
Google also charges a 30 percent fee in its app store, but it places fewer marketing restrictions on third-party apps.
Franken’s letter and the FTC’s possible investigation arrives a few months after Attorneys General Eric T. Schneiderman of New York and George Jepsen of Connecticut looked into possible collusion between Apple and the major record labels around streaming competition.
Read Sen. Franken's letter here.