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EU investigates Apple, may levy �323m fine

updated 06:55 pm EDT, Mon April 2, 2007

Apple may face �323m fine

Despite a landmark agreement with EMI to offer DRM-free music via iTunes, European Union regulators are investigating Apple's iTunes Store for possibly violating competition laws, and said that they object to the Cupertino-based company's practice of forcing consumers to purchase songs from its iTunes Store only in their home country. The European Commission sent a letter outlining the accusations to Apple as well as major record companies -- including Sony BMG Music Entertainment, Universal Music Group, Warner Music, and EMI Group, according to the Associated Press. A spokesman for the EU competition commissioner says Apple's arrangements restrict music sales because "consumers can only buy music from the iTunes store in their country of residence." Companies that breach competition law face a fine of up to 10 percent of annual turnover, which according to the Times Online would total roughly �323 million.

Apple spokesman Steve Dowling said the Cupertino-based company originally wanted to run a Europe-wide store, but music labels and publishers feared legal concerns as well as copyright complications.

"We will continue to work with the EU to resolve this matter," Dowling said.

EMI said it doesn't believe it has breached European competition law, and will make its case strongly to the commission.

by MacNN Staff

(25)

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industry, digital music/video

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bobolicious
Fresh-Faced Recruit

Joined: Aug 2002

0

04/02, 07:07pm | report spam | close Reply |
Regulatory overhead...

...sucks the LIFE out of companies - perhaps we should 'regulate' these idealistic parasites into the private sector so they understand what it is like to be told how to run a business for profit, and be let go when they don't make enough money or perform...

Nobody is forcing anyone to buy an iTune as far as I know...?

GreenMnM
Forum Regular

Joined: Nov 2000

0

04/02, 07:29pm | report spam | close Reply |
shouldn't they be...

...suing the music companies? Aren't THEY the ones with the individual licensing agreements for each individual country? Even if it was just for different types of monetary payment, the UK doesn't use Euros yet. Maybe the EU should sue the UK?

eldarkus
Fresh-Faced Recruit

Joined: Feb 2004

0

04/02, 07:39pm | report spam | close Reply |
aarrrrgggghhhh

FOR THE LOVE OF GOD!!!! they are called CD's! my iPod is FILLED with them!

Geobunny
Mac Elite

Joined: Oct 2000

0

04/02, 07:47pm | report spam | close Reply |
Finally!

It's about bloody time the European Commission got onto Apple about this. There's supposed to be a "free movement of goods within the EU" but Apple's restrictive ITMS sales structure prevents this basic right.

myramoki
Fresh-Faced Recruit

Joined: Jul 2004

0

04/02, 07:49pm | report spam | close Reply |
Apple sued just cuz...

Every time I see one of these 'EU suing Apple for ...' articles I just have to wonder what brain dead idiots do they have over there running things? Apple neither had an option for DRM or for selling all music to anyone world wide. The music industry has had a stranglehold on the distribution of music for far longer than Apple has even been around. Every country has their own little 'franchise' that is licensed to distribute music locally, and no one else is allowed in.

How about they sue the record companies that set up the distribution systems? This is nothing more or less than old world business practices that allow some company to buy an exclusive license for distrubtion, of something like Pepsi. You do know that Pepsi at your grocery store doesn't come from Pepsi-Co but from a local bottler that bought a license to server your community.

This was a nice practice back in the day when material goods were expensive to ship around the country, but all it does today is limit competition and favor the good ole boys that bought in early. When it comes to intangible electronically distributed goods, there isn't a reason for it in the world.

Count on the record companies to fight this tooth and nail. While companies would have new markets opened to them, many would probably see a large portion of their bread and butter from distribution deals of foreign music go up in smoke.

If the EU thinks that Apple wants or likes to have to deal with umpteen different distributors of Britney's latest 'music', and having to negotiate deals in every country they go to, they are smoking some excellent weed. Start suing the people that are really responsible for system instead of those who have to deal with it.

Mongoos150
Fresh-Faced Recruit

Joined: Jun 2006

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04/02, 08:41pm | report spam | close Reply |
F*CK REGULATION

This is the reason government should be kept small. What a ridiculous accusation! Who'se being forced to buy this music? Is iTunes the only source of digital music? Good God!

smitch
Fresh-Faced Recruit

Joined: Nov 2005

0

04/02, 08:43pm | report spam | close Reply |
time to..

..move on and leave these rogue EU states without iTunes OR music? That should resolve their idiocy! Unless they then will try to sue someone because they (the EU states) ARE idiots! What a bunch of losers!

testudo
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Joined: Aug 2001

0

04/02, 09:37pm | report spam | close Reply |
f*ck regulation

And yet you all praise the EU when they take MS to task...

nat
Junior Member

Joined: Mar 2002

0

04/02, 09:55pm | report spam | close Reply |
gawd

you're annoying testudo. tell us, how many sleepless nights do you toss and turn over these mac people on MAC F%&CKING FORUMS? po' boy, it must eat at you all night long. ah shucks, i forgot, you are, according to none other than your own high and mighty self, the "voice of reason". go to a ms apologist site already where you'll be welcome with open arms.

Gepard
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Joined: Sep 2000

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04/02, 10:21pm | report spam | close Reply |
look around..

1. They (EU officials) have nothing else to do. 2. They want to make some extra income. 3. They want to demonstrate that they have power too.

On the other hand left EU alone, look around - the famous Russian mp3 online store allofmp3.com quietly has been selling music from all of the World to any resident in any country, DRM-free, various quality and much much cheaper (songs $0.10-0.20, albums $2-4).

How many times the US Government have tried to shut down the store? It's still up and running. Read here: http://news.com.com/2100-1027_3-6139350.html

No success. It's in Russia and it's an Internet store. They are saying that the songs sales were not intended for other countries other than Russia. But anyone can buy from it. Nobody, nobody can touch them.

iTunes store, yeah! They have a lots of money, we will make them to share with us. Who cares about the Russian store? Can't reach them, they probably don't have too much money, plus why deal with the bad guys?

repi8
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Joined: Apr 2007

0

04/02, 10:23pm | report spam | close Reply |
Imagine...

... that you live in California but are not able to buy the same songs on iTunes that people in Arizona can, because California iTunes store does not include some of the catalogue that Arizona iTunes store does. Or that you live in Oregon and can not buy any music over iTunes, because there is no Oregon iTunes store and you are not allowed to buy songs from Arizona or California iTunes store, even though they are in the same country. Would you be pissed? Would you demand that the situation is remedied and laws that dictate open and free market respected. Sure you would. That is the situation within EU. Even if it does not happen in the States and your beloved company is affected, could you think twice before badmouthing somebody fighting to change the same situation you would not accept. Or do the same selfish double standards apply that made USA famous and "beloved" world over. Grow up.

The fact is that the situation is plain wrong and should be changed. And yes, it is true that it most probably is not Apple's desire to have it this way but rather a consequence of the licensing mess that recording companies have established throughout history, but in the final analysis, iTunes store is Apple's store and Apple's responsibility and it should secure licensing deals that would enable it to work within the laws. No use whining it is difficult and hoping that that exonerates you from breaking the law. Going into music and movie business Apple has stepped in a swamp and it will have to deal with it. Like they say, "if you can't stand the heat, stay out of the kitchen".

Well, I believe Apple can stand the heat and it will not just stay in the kitchen but change it quite a bit. And it is just threats like this one or the Norwegian push to either drop or license DRM that will in the end bring profit to all. I don't see people complaining about the arrival of DRM free music. Do you think it would be on the horizon if it were not for the "rouge EU states" pushing Apple and giving it the leverage to convince EMI to take the step? It certainly would not be due to US government whose biggest concern is to keep filling corporations' accounts while playing the mantra "US is the greatest country in the face of the Earth" over and over again. EU might be burdened with bureaucracy but at least it is not paid off by likes of Microsoft, movie and recording industry, oil corporations and others.

jpellino
Fresh-Faced Recruit

Joined: Oct 1999

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04/02, 10:42pm | report spam | close Reply |
great idea.

1. invent an economic entity, 2. invent some new rules many will already be afoul of, 3. hold a big legal gun to their heads, 4. profit!!!

Speckledstone
Dedicated MacNNer

Joined: Apr 2002

0

04/02, 10:54pm | report spam | close Reply |
LOL

"EU might be burdened with bureaucracy but at least it is not paid off by likes of Microsoft, movie and recording industry, oil corporations and others."

Who are you trying to kid? European countries aren't plagued by special interest like every other government on Earth? Get off your high horse!

macnorway2000
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Joined: Nov 2006

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04/02, 11:04pm | report spam | close Reply |
Sheeesh...

...they don't get the licensing thing... When licensing content you license for a certain territory. Being a digital, online store the borders are hard to see because it's just a page on the web (or in iTunes). When I license for publishing I am only allowed to publish and sell within a certain territory. No matter how nice my online store is and no matter how accessible it is from Sweden or Denmark - I still can't sell to those citizens even via mailorder. They have to get someone within the country to order and ship to them. Same goes for music. The EU is not treated as one licensing area even though the officials may think of it as one economic area. There are still territorial boundaries within. This is a basic thing in trade. Maybe these politicians should do some real life work before coming up with silly ideas?

Feathers
Grizzled Veteran

Joined: Oct 1999

0

04/02, 11:06pm | report spam | close Reply |
soft target

A number of years ago the EU investigated the record companies in relation to the sale of CD's and found no evidence of price fixing. Hah! The EU couldn't investigate it's own a** with two mirrors! Now they're going after Apple as a soft target when the should be going directly after the record companies, again!

repi8
Fresh-Faced Recruit

Joined: Apr 2007

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04/02, 11:45pm | report spam | close Reply |
sheeeshlol

"European countries aren't plagued by special interest like every other government on Earth?"

Yes they are. Are they bought off to the same extent as US? No, they aren't.

"No matter how nice my online store is and no matter how accessible it is from Sweden or Denmark - I still can't sell to those citizens even via mailorder."

Hmm. I go to Amazon.co.uk. I put and order for a CD I ask it to be sent to another EU country and voila, the CD crosses a number of territorial boundaries and finishes in my mailbox. I guess it is Amazon.co.uk that should be looking at lawsuits really soon.

In the words of Charlie McCreevy, European Commissioner for Internal Market and Services: "The licensing of music, territory-by-territory, Member-State by Member-State, is the result of custom and practice, rather than law. It made perfect sense in a world of concert-halls and discos, but it is a serious impediment to the roll-out of new services online." (http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/06/558)

As I said before, Apple stepped in a swamp created by record and other "content" companies. With its success it has become an easy target on the battleground where old practices need to be changed to allow progress, in this case aligning licensing territories with EU boundaries. I guess that's the price of being a success.

coldfusion1970
Fresh-Faced Recruit

Joined: Nov 2004

0

04/03, 02:53am | report spam | close Reply |
Licensing

macnorway2000 has it exactly right. Licensing is the problem.

Most artists arent licensed by the same company all over the world, which means that Apple have to tie-up different license agreements in different countries.

Its not like Apple wouldnt want to sell all their music in all the ITMS stores.

Guest
Fresh-Faced Recruit

Joined: Nov 1999

0

04/03, 03:21am | report spam | close Reply |
About time

Hooray for the EU. I am sick of paying more for iTunes music just because I live in the UK. Tax is the same here as the rest of Europe yet we Brits have to pay about 20% more. The new pricing for DRM free music makes this even worse. Within the EU zone we should be free to buy from whichever country we like without paying extra taxes...that was the whole point of the EU!

Jon

ajhoughton
Fresh-Faced Recruit

Joined: Mar 2004

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04/03, 05:36am | report spam | close Reply |
yes and no

Yes, there should be one unified EU store.

BUT

There are a few things here that people get wrong:

1. There may be "free movement of goods", but downloadable items aren't goods (the EU classifies them as services). On the other hand, CDs (as distributed by Amazon) *are* goods.

2. The licensing problem isn't Apple's fault (amazing how often this is being ignored).

3. Consumers actually like having prices that they understand. Asking customers in the U.K. to pay in Euros wouldn't really work and creates problems because if you purchase in a foreign currency you usually don't know exactly how much you're going to be paying until your card statement arrives.

So it *is* fair to set prices in different currencies, and the moment you do that you have to put up with the fact that either (a) they will drift about relative to each other, or (b) you're going to have to change them all the time. Consumers wouldn't like option (b), because it's a nuisance (imagine wondering how much an iTunes song will cost today...). But unless the market is segmented by currency, option (a) can lead to significant losses if one currency falls relative to another; maybe you could stomach losing revenue in a single country because of an exchange rate shift, but ask yourself whether you could live with a loss across the entire E.U.?

4. Let's remember that most of the tracks on iTunes sell for a very small price. I for one couldn't care less about 20% of 99 pence. I really couldn't. And I've bought significant numbers of tracks from iTunes.

iTunes is *way* cheaper than CDs from shops used to be, so it still looks cheap to me (yes, I used to buy CDs from shops rather than copying the music from my friends, or buying bootlegged CDs from market stalls).

Personally I'd rather the EU found something that really matters to concentrate their efforts on. Not that they have a good history in that area (our American cousins will probably laugh to hear that we now have regulations on how straight a cucumber must be, but sadly someone at the EU thought that legislating about cucumber straightness was a good use of their time).

testudo
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Joined: Aug 2001

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04/03, 09:58am | report spam | close Reply |
Re: gawd

you're annoying testudo. tell us, how many sleepless nights do you toss and turn over these mac people on MAC F%&CKING FORUMS? po' boy, it must eat at you all night long. ah shucks, i forgot, you are, according to none other than your own high and mighty self, the "voice of reason". go to a ms apologist site already where you'll be welcome with open arms.

Oh, and exactly how many sleepless nights do you worry about that the EU is going to fine apple. How in the world does this affect you? Yet here you are, bemoaning poor apple.

And, yet, besides your shots at me, my point is 100% valid. When the EU talks about fining MS, its all about how they're getting their due. Dare talk negative (actually, even just non-positive), and you're blasted as slamming Apple and just an MS apologist. I'm as much an ms apologist as you're a steve jobs a** kisser who believes anything apple does has been blessed from above and should not be met with any oposition.

G5man
Forum Regular

Joined: Jun 2005

0

04/03, 11:26am | report spam | close Reply |
if only

if only idiocy was a crime. They think they have to have rules on competition, makes the game boring and just makes the government greedy IMO. EU should instead talk to recording artists and tell em instead of blaming the scapegoat.

appleuzr
Fresh-Faced Recruit

Joined: Aug 2006

0

04/03, 01:47pm | report spam | close Reply |
Testudo, how we love thee

Testudo shut's down his Windows Vista wannabe mac equivilant, slowly rolls back in his chair and throws his hands behind his head. He sits, trying to come up with an original thought/argument(other than his usual "if it were MS in the spotlight, all you apple fan boys...). Meanwhile, his poorly assembled wannabe computer chair he purchased from a company that it is a subsidiary of Microsoft, gives way. The air compressed cylinder controlling the raise and lower functions bursts through the poorly manufactured seat of the chair and jams right up his @$$. Testudo remains still, trying not to move. The cylinder inching deeper and deeper (you get the picture). All along, Testudo grins with enjoyment, for this very situation is similar in feeling to what Testudo experiences on a daily basis. Moral of the story. He is angry and lonely and can only find pleasure in sticking/inserting things into his @$$. You wouldn't have anything better to do than troll MacNN if this was your life. Have sympathy for the guy. Embrace his awkward obsession. Testudo, we don't know how it feels to insert things in our @$$'s (as you do) but we do feel your pain. Write on Testudo. We are all laughing with you (as far as you know).

Clive
Mac Enthusiast

Joined: Jan 2001

0

04/03, 06:40pm | report spam | close Reply |
Goods�

ajhoughton, it's goods, and services, and� people too, that are to have free movement within the EU.

monkeymilk
Fresh-Faced Recruit

Joined: Apr 2007

0

04/03, 06:50pm | report spam | close Reply |
what's with the EU hate?

Did any of the "shoot from the hip" posters actually read the linked Associate Press article before gushing anti-EU rhetoric. Maybe you should check the history before wading into battle guns blazing.

The competition commissioner did not single out Apple and nor did they threaten a fine. In fact they wrote to both Apple and the record companies asking for justification for pricing disparity amongst national iTunes Music Stores (The UK is 20% more and Denmark 8% more than Euro zone Europe). This is despite European laws that dictate cross border trade must be free of impediment or additional tariffs.

The fine of �323m seems to have been concocted by trolling journalists based on the bounds of the law. The MS case started in 1993 and MS belligerently denied the 2004 judgment for 2 years before the fine weapon was deployed. There has been no threat of a fine from the EU and Apple would be crazy to get themselves into a situation, years from now, where it could happen.

Variations in exchange rate is not a valid argument for price differentials as marginal sales tax rates vary by as much as 40% within the Euro zone yet Apple still charge the same �0.99 price so there is plenty of flexibility on net price. UK sales tax is the lowest of any major nation in Europe bar Spain, a whopping 43% less than Denmark yet the UK suffers the highest prices.

The iTMS pricing is obvious gerrymandering to milk UK consumers who care about music. Thanks to the EU for standing up for UK rights to buy from any European iTMS at the price they prefer, why did it take so long?

doemel
Fresh-Faced Recruit

Joined: Jul 2006

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04/04, 04:35am | report spam | close Reply |
Re: testudo, how we love

appleuzr, if you tried to show how much grown up you are with this post, let me tell you that you've failed miserably. as much as i'm an apple fanboy at times it still gets on my nerves if taken to the extremes that can be - frequently - found in macnn or other mac related news/rumour sites' user comments.

back to the issue at hand: as expected, the eu commission has realized who's really to blame. read all about it here: http://biz.yahoo.com/rb/070403/apple_eu.html?.v=8

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EU investigates Apple, may levy �323m fine

updated 06:55 pm EDT, Mon April 2, 2007

Apple may face �323m fine

Regulatory overhead...

shouldn't they be...

aarrrrgggghhhh

Finally!

Apple sued just cuz...

F*CK REGULATION

time to..

f*ck regulation

gawd

look around..

Imagine...

great idea.

LOL

Sheeesh...

soft target

sheeeshlol

Licensing

About time

yes and no

Re: gawd

if only

Testudo, how we love thee

Goods�

what's with the EU hate?

Re: testudo, how we love

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EU investigates Apple, may levy �323m fine

updated 06:55 pm EDT, Mon April 2, 2007

Apple may face �323m fine

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Regulatory overhead...

shouldn't they be...

aarrrrgggghhhh

Finally!

Apple sued just cuz...

F*CK REGULATION

time to..

f*ck regulation

gawd

look around..

Imagine...

great idea.

LOL

Sheeesh...

soft target

sheeeshlol

Licensing

About time

yes and no

Re: gawd

if only

Testudo, how we love thee

Goods�

what's with the EU hate?

Re: testudo, how we love

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