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FTC looking into impact of Apple tax rules on rival streamers

By | Published on Monday 13 July 2015

Apple

The Federal Trade Commission in America is reportedly looking into Apple’s app store polices again following the tech giant’s move into streaming via Apple Music.

Other streaming music firms generally provide users with free apps for Apple devices, but to experience the full service the user must then subscribe to the streaming platform. They can do this without Apple’s involvement via the streaming firm’s own website, and then enter their login info into the iOS app to access the service. But if they sign up to the premium option via the app itself, Apple demands a 30% cut of any income, in line with what it charges on single-payment apps, where users are charged at the point of download.

For streaming services, which already operate on incredibly tight margins, paying 30% of subscription income to Apple generally makes things untenable, meaning many services charge users more if they subscribe through the iOS app rather than via the service provider’s own website. But, those streaming services complain, strict Apple rules governing iOS apps make it hard for them to explain all this to customers, who might now be paying $12.99 a month rather than the standard $9.99 monthly fee.

This is all the more problematic now that Apple is entering the market with its own $9.99 a month music service, because it means that users who choose to subscribe to a streaming platform via their iPhone might think Apple’s service is more competitively priced than its rivals, like Spotify.

With this in mind, according to various sources speaking to Reuters, the FTC is now speaking to a number of stakeholders about Apple’s app store policies, though the regulator is yet to launch any formal investigation.

It seems unlikely that FTC officials would actually demand Apple review its 30% cut on app transactions, but it could force the tech giant to relax its rules regarding rival streaming services pointing customers to alternative cheaper payment options, on the basis that the current rules are anti-competitive.

As previously reported, it emerged last week Spotify was emailing users who subscribed to the service via its iOS app, and who are therefore paying the $3 premium, recommending that they cancel their current account and re-subscribe via spotify.com.



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