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Apple’s Licensing Restrictions – Do They Violate Competition Laws?

Apple’s streaming music service has attracted a great deal of attention, from both music lovers and consumer interest groups alike. US Senator Al Franken requested a review of Apple Music by the US Federal Trade Commission, expressing concerns that the combination of Apple’s App Store and its iOS software will chill competition in the music streaming market. Senator Franken argued that “Apple’s position as a dominant platform operator may actually undermine many of the potential consumer benefits of its entry into the market.” To underscore the Senator’s concerns, Apple Music comes preinstalled on the latest version of Apple’s operating systems. Where does this leave the competition?

In order for the competitors to get their music onto Apple devices, they must rely on apps sold through the Apple App Store. The Apple licensing agreements restrict companies from using their apps to inform users that lower prices for music streaming are available through their own websites; to advertise the availability of promotional discounts; or to complete a transaction directly with a consumer within their app.

It is unclear whether these restrictions will be found to have an anti-competitive effect, in breach of US and European competition laws.

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Take away:

  • Depending on the commercial context, some licensing restrictions can attract anti-competition scrutiny by regulators and consumer groups.

 

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