Apple and all the big record companies are facing a European Commission investigation that came about because UK-based users of the iTunes store are barred from buying tracks on other Apple stores in Europe - where they're sold more cheaply.
The announcement from the EC, which couches things in rather general terms, comes close behind the joint announcement by Apple and EMI (one of the music firms under investigation) that all of EMI's catalogue will be available without any form of copy-protection, for a slight premium. See this HEXUS.lifestyle news article, EMI and Apple announce DRM-free music.
EMI and Apple will have known well before the EC announcement that they were to be investigated. However, we can't see how yesterday's hugely-welcome and dam-breaking news from the two companies could be any kind of defensive reaction to what the commission is doing.
Instead, it's just a demonstration that good sense is at last starting to prevail, while the EC's announcement is a rather pleasing co-incidence and more good news for consumers.
Indeed, the EC's own press statement issued today points out that there is no link between Apple's use of Digital Rights Management (DRM) and its investigation, saying,
The Statement of
Objections does not allege that Apple is in a dominant market position
and is not about Apple's use of its proprietary Digital Rights
Management (DRM) to control usage rights for downloads from the iTunes
on-line store.
However, there can be little doubt that Apple and the record companies
are going to have to take the investigation very seriously - each could
be fined up to
10 per cent of its worldwide annual turnover if
the case is proven!The EC's full press statement says,
Competition: European Commission
confirms sending a Statement of Objections against alleged territorial
restrictions in on-line music sales to major record companies and Apple
The European Commission can confirm that it has sent a Statement of Objections to major record companies and Apple in relation to agreements between each record company and Apple that restrict music sales: consumers can only buy music from the iTunes' on-line store in their country of residence. Consumers are thus restricted in their choice of where to buy music, and consequently what music is available, and at what price. The Commission alleges in the Statement of Objections that these agreements violate the EC Treaty's rules prohibiting restrictive business practices (Article 81).
Apple operates a series of iTunes on-line stores in the European Economic Area (EEA) which sell music downloads. The Statement of Objections alleges that distribution agreements between Apple and major record companies contain territorial sales restrictions which violate Article 81 of the EC Treaty. iTunes verifies consumers' country of residence through their credit card details. For example, in order to buy a music download from the iTunes' Belgian on-line store a consumer must use a credit card issued by a bank with an address in Belgium.
The Statement of Objections does not allege that Apple is in a dominant market position and is not about Apple's use of its proprietary Digital Rights Management (DRM) to control usage rights for downloads from the iTunes on-line store.
Procedural background
Statements of Objections are a formal step in European antitrust investigations. After receiving such statements, companies have two months to defend themselves in writing. They can also ask the Commission to hear their case at an oral hearing which usually takes place about one month after the written reply has been received. Only after having heard the company's defence can the Commission take a final decision, which may be accompanied by fines of up to ten per cent of a company’s worldwide annual turnover.
The European Commission can confirm that it has sent a Statement of Objections to major record companies and Apple in relation to agreements between each record company and Apple that restrict music sales: consumers can only buy music from the iTunes' on-line store in their country of residence. Consumers are thus restricted in their choice of where to buy music, and consequently what music is available, and at what price. The Commission alleges in the Statement of Objections that these agreements violate the EC Treaty's rules prohibiting restrictive business practices (Article 81).
Apple operates a series of iTunes on-line stores in the European Economic Area (EEA) which sell music downloads. The Statement of Objections alleges that distribution agreements between Apple and major record companies contain territorial sales restrictions which violate Article 81 of the EC Treaty. iTunes verifies consumers' country of residence through their credit card details. For example, in order to buy a music download from the iTunes' Belgian on-line store a consumer must use a credit card issued by a bank with an address in Belgium.
The Statement of Objections does not allege that Apple is in a dominant market position and is not about Apple's use of its proprietary Digital Rights Management (DRM) to control usage rights for downloads from the iTunes on-line store.
Procedural background
Statements of Objections are a formal step in European antitrust investigations. After receiving such statements, companies have two months to defend themselves in writing. They can also ask the Commission to hear their case at an oral hearing which usually takes place about one month after the written reply has been received. Only after having heard the company's defence can the Commission take a final decision, which may be accompanied by fines of up to ten per cent of a company’s worldwide annual turnover.
So, that two lots of good news about downloadable music in one week - well, for us users.
We're assuming that the dropping of copy-protection on EMI's music is going to mean that other record companies follow swiftly behind and are hoping that the movie studios and TV companies - many part of the same massive media corporations as the record labels - will follow suit, too, and sooner rather than later.
It might also be nice if Apple were to cut its download prices in the UK to the same level as in other EU nations - though the company could take a different path and increase all prices to the same level! However, we reckon that history will show Apple and EMI as being on the side of the goodies for going where other big-name firms have feared to tread.
But will all or any of this actually come to pass? Let us know your hopes and predictions in the HEXUS.lifestyle community.
HEXUS.links
HEXUS.community :: discussion thread about this articleHEXUS.lifestyle - news :: EMI and Apple announce DRM-free music
HEXUS.lifestyle - news :: Hackers turning Apple TV damp squib into hot item?
HEXUS.lifestyle - opinions :: Apple TV media player now available in UK - but why?
HEXUS.lifestyle - opinions :: Apple movie downloads (US only) & network media player (yawn) - commentary on "special event"
HEXUS.lifestyle - news :: Apple shows iPhone & HD network media player, changes name
HEXUS.lifestyle - news :: Microsoft Office 2008 for Mac is coming - but not right now
HEXUS.lifestyle - news :: Apple falls foul of Greenpeace for not being green enough
HEXUS.lifestyle - news :: Macworld San Francisco kicks off with launch of Roxio Toast 8
External.links
European Commission - Annoucement about alleged territorial restrictions in on-line music salesApple UK - home page
Apple USA - home page
