BREAKING NEWS: Apple is a fairly successful company. Recently, Cupertino got tired of all that success with phones, pads, computers and watches…so it got into music streaming.
iTunes doesn’t quite scream “global domination,” so, Apple Music became a thing. The problem? People get to Apple Music the same way they get to its competitors (e.g., Spotify, Pandora, Grooveshark): through the App Store.
That small conflict has the Federal Trade Commission interested and ready to pounce. In fact, Sen. Al Franken (D-MN) is asking the Justice Department to further investigate whether the company is engaging in anticompetitive behavior.
This all started back in May, but the talks have really picked up steam following the company’s most recent earnings report announcement. That’s what leads to Apple’s latest round of bad PR: just the tax, ma’am. The Daily Dot points this out:
Apple runs the iTunes App Store, which sells all the games and utilities and social apps that litter your iPhone or iPad home screen, but it doesn’t host the sale of those apps for free.
Apple’s cut is 30 percent of every transaction that takes place on its own marketplace—this is in line with most digital shops, and isn’t anything out of the ordinary—and since streaming services such as Spotify can only be downloaded to an iOS device via the App Store, they also fall under that umbrella.
Spotify and its kin are free to download, and Apple can’t take a cut of nothing, so those downloads aren’t the issue. However, when a customer using the Spotify app wants to subscribe to Spotify’s premium service, that transaction takes place via an in-app purchase which goes through the App Store and is then subject to Apple’s 30 percent fee.
This is not a company in need of recuperating lost costs, so when a 30 percent Apple Tax keeps coming around to haunt the competition, Congress gets a little concerned. So do the customers.