Apple Subscriptions Raise Antitrust Questions
This week, Apple launched a subscription service for the app store. It enables all publishers of content-based apps (including magazines, newspapers, video, music, etc.) to follow the model of the recently launched The Daily from New Corp.
According to a report from the Wall Street Journal, the service has raised concerns about antitrust, though neither Apple nor the Justice Department has commented on the matter.
"Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing," said Apple CEO Steve Jobs upon the announcement. "All we require is that, if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app. We believe that this innovative subscription service will provide publishers with a brand new opportunity to expand digital access to their content onto the iPad, iPod touch and iPhone, delighting both new and existing subscribers."
Experts said that the first step in an antitrust analysis is to determine whether Apple is a dominant player in the market, which, in turn, requires an assessment of the relevant market at issue.
Publishers, for example, might claim that Apple dominates the market for consumer tablet computers and that it has allegedly used that commanding position to restrict competition. Apple, in turn, might define the market to include all digital and print media, and counter that any publisher not happy with Apple’s terms is free to still reach its customers through many other print and digital outlets.
It’s certainly worth noting that while iPad may have been dominating the tablet market since its launch of the iPad, it is now getting a great deal more competition from manufacturers using a variety of operating systems: Android, webOS, BlackBerry, and Windows.