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U.S. and European Regulators 'Looking At' Apple's App Store Subscriptions Program

Friday February 18, 2011 6:21 am PST by Eric Slivka

Earlier this week, we noted that some observers were expressing concern over potential antitrust issues related to Apple's new App Store subscription program that forces content providers to at least offer users the option of subscribing through Apple's in-app subscriptions, which sees the company taking a 30% cut of revenue. The program also comes with restrictions preventing developers from including links to external subscription signup options within their apps and offering lower prices outside of their apps.

Any antitrust issues are likely to hinge on how the market addressed by in-app subscriptions is defined, and thus whether Apple is considered to hold a sufficiently dominant position in it that regulators might be interested in stepping in. According to The Wall Street Journal, several regulatory agencies in the United States and Europe have begun "looking at" Apple's subscription program, although the inquiries are still in an early stage that may not proceed to a formal investigation.

U.S. antitrust enforcers have begun looking at the terms Apple Inc. set this week for media companies who want to sell their content on its popular iPad and other devices, according to people familiar with the matter.

The Justice Department and Federal Trade Commission's interest in Apple's new subscription service is at a preliminary stage, and might not develop into either a formal investigation or any action against the company. But it comes as Apple has attracted growing antitrust scrutiny in the U.S. and Europe.

A spokeswoman for the European Commission, the European Union's executive arm, said Thursday that the commission was aware of the new subscription service and was "carefully monitoring the situation."

While a number of content providers have expressed concern over the new policies, subscription music services appear to be the most vocal opponents at this point, arguing that their slim profit margins simply won't allow them to give Apple a 30% cut of their revenue. But regulatory experts note that government officials may be unable to tag Apple's commission rates as anticompetitive given a lack of benchmark standards in the market and an unwillingness to interfere in complex pricing decisions.

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