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Why An Antitrust Investigation Into iTunes Abuse Of Market Dominance Makes Sense

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If the US Federal Commission can launch an anti-trust inquiry into Google’s dominance of search advertising, why can’t it do the same in terms of Apple’s monopoly grip on digital music sales? The Google investigation) follows one opened a year ago by the EU authorities. Its core focus will be Google’s potential abuse of web dominance. Well, there is a far stronger case in terms of Apple and how it treats its content partners, especially record labels.

Apple currently controls on average a 70% share of digital music sales globally. Furthermore, it’s anti-competitive practices whereby it threatened labels with pulling any iTunes promotions when Amazon was undertaking its deal of the day promotions is a CLEAR and well documented abuse of monopoly power. There have also been other media outlets reporting on similar shenanigans’ so it is clear there is a need for both EU and US based anti-trust inquiries to be launched sooner rather than later.

Just because the labels are spineless and do not have the cajones to demand an anti-trust inquiry into Apple’s abuse of market dominance does not mean the relevant authorities should not launch an investigation. In fact, it compounds the requirement for an open and transparent investigation. An unwanted outcome for the labels may be the illumination of labels acquiescence in enabling and quite often-blatant willingness to ensure Apple receives preferential business terms over other digital music businesses. By this I also specifically refer to first to market opportunities’ which, disadvantage competitor digital music retailers.

Wayne Rosso’s recent revelations in TMV that WMG probably duplicitously profited from its association of having a director on its board whose other company that they were also on the board of was the prime distributor of illegal file sharing software LimeWire and Kazaa…we will let you the reader make up your own minds. But if a company can allow such a lack of morality to permeate its boardroom, then collusion with Apple/iTunes not just by WMG but other labels is also surely possible?

One reason such an investigation into iTunes and the music business has more likelihood of a successful outcome for the relevant authorities is the fact that the labels have very small kitties when it comes to cash reserves due to declining sales. Albeit Apple has a mountainous war chest to fight legislative and private lawsuits into its actions, there is a high likelihood one label may become a state witness. Look at it this way WMG has just been sold (but facing a shareholder revolt over the way it managed the deal) and EMI is on the block with bids being solicited.

Once the cat is out of the bag and an anti-trust investigation is underway, what do the labels have to lose? Whether they like it or not it is in labels interest to have a more ‘level playing field” when it comes to the digital music retail sector. Once an investigation is launched it would be stupid for Apple to threaten labels, as all investigative eyes would be focused on Apple/iTunes and their abuse of market domination. Realistically an anti-trust investigation would be in the music industries and more importantly consumer’s best interests.

Any other industry and now including the web search industry – or the dominant player in each that poses a monopoly threat has been investigated even Microsoft. So why has an anti-trust investigation never been launched into Apple/iTunes? This is despite its average 70% global market share and its well-documented abuse of its market position – little own the labels collusion in enabling this market dominance?

When are governments on both sides of the Atlantic going to stand up for consumer rights to fair competition in the digital music retail sector? The silence is deafening…

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