The iPhone’s business practices are being closely scrutinized by the Department of Justice in relation to the company’s upcoming music service, according to a number of sources. It has been revealed that major music labels are being pushed by Apple Inc. to force other streaming services such as Spotify into abandoning their free tiers, which will lead to a dramatic reduction in competition for Apple’s upcoming music streaming service. High-ranking executives of the music industry have already been interviewed by the Department of Justice regarding the business habits of the American technology giant.
It is known that Apple holds considerable power and authority in the music industry and now it seems that the company is taking advantage of it by trying to stop the music labels from renewing Spotify’s license for streaming music through its free tier structure. Currently, there are about 60 million music listeners using Spotify, but only 15 million of these users are actually paid subscribers. Apple could be put into a prime position if it manages to convince the music labels into forcing Spotify to kill its freemium service as it would be able to grab a large number of users when it finally launches its music service.
The Beats music service of Apple is expected to contain a lot of exclusive content. A source from the music industry said that all executives, leading to Tim Cook, are highly competitive and cutthroat. It was also indicated by sources that the iPhone maker offered to pay Universal Music Group like licensing fee of YouTube if it label stopped letting its songs play on the video-sharing service. The firm’s music service is set to launch at WWDC in June and the iPhone maker is trying to clear the path for it. If the labels are convinced by the firm to cancel the freemium services from YouTube and Spotify, it could win over a significant portion of business from its two prominent music competitors.
Courtesy of the Department of Justice, there is an antitrust monitor on Apple’s campus after the firm was found guilty in an e-book antitrust case the previous year. The company is appealing this decision, but it is unclear if the monitor is involved in the current issue. Furthermore, the DOJ isn’t the only organization that’s looking into the company’s actions relating to the music industry. The European Union’s Competition Commission is also probing the firm to find out if it is colluding with the labels for eliminating the freemium services from the industry.