09/17/2007, 2:55pm, EDT
Monday, September 17th
EU targets iTunes after Microsoft legal win
Emboldened by the European Court's rejection of Microsoft's appeal against a 2004 European Commission ruling that declared the company in violation of European anti-trust regulations, the EU is taking square aim at Apple's iTunes according to several reports. Starting this Wednesday, the European Commission will begin holding hearings on the pricing structure of Apple's online store. The basis of the complaint is this: Apple charges different prices to European consumers dependent on their country of purchase. The consequences for a decision against Apple in this matter could be steep: the regulators have the ability to fine companies up to 10% of their global revenue if they are found to be in violation of antitrust law.
The Wall Street Journal reports "So why does the iTunes store charge some Europeans more than others to download a song? In an April WSJ story, Apple blamed the music companies. 'Apple has always wanted to operate a single pan-European iTunes Store accessible by anyone from any member state,' said an Apple spokesman. 'We don’t think Apple did anything to violate EU law.'"
Meanwhile, the EU also blames record labels, apparently considering Apple to be more or less a conduit of the record companies' wrongs rather than an active violator. An EU spokesperson said "this is an arrangement imposed on Apple by the record companies [...] The main focus of our attention is the major record companies."
In June, the EU said that Apple had only two days to respond to an anti-trust charges alleging that the company restricted online sales of music in Europe. The European Commission originally set a deadline of early June for the response, but granted a two-week extension at the request of Apple and three of the four record companies also implicated; the fourth record company had already submitted a written response to the charges. Apple's response was that it has always wanted to offer a standard pricing structure across Europe, but is unable to do so because of record company policy.
Filed under: Apple
, 
, 34
, 
, 
, 
, 
, 
, 
Top
subscribe to comments
for this article
The problem is, with the European courts they have a good chance of winning this case
Apple could be fined up to 10% of their worldwide revenue! That would amount to a penalty of 150x what they make on worldwide music sales, hardly a fair fine, even if they were guilty.
An EU spokesperson said "this is an arrangement imposed on Apple by the record companies [...] The main focus of our attention is the major record companies."
The actual goods are shipped more or less directly from China where they are made, so how come consumers closer to source actually pay more than the USA?
Actually purely software based material such as the music represents a clear case against differential prices. Many shareware companies charge a flat price, the only difference being what you pay for the currency exchange.
Only the majors such as Apple, Microsoft and Adobe charge on a per country basis. In Adobe's case hugely so.
"Atlas Shrugged" is finally coming home to roost in my mind, at least.
Oh it's happened already!
One day you're cheering on the EU for taking on Microsoft, the next day its as if the EU had declared war on the USA - just because the focus of its attention has switched to Apple. But, what most of you fail to understand is that Apple is breaking EU law - just as it would probably be breaking US law if it refused to sell to some US states.
All that is being asked is that all EU citizens (in fact, anyone visiting or living temporarily in the EU) can choose to buy from whichever Apple outlet they like. If you're in Spain you should be able to buy from the German iTunes store, if you are in the UK you should be able to buy from the Greek store. That's what free movement of goods and services in the EU means.
If you want to trade in that market that's the law you have to work within.
As to vinitaboy's comments, if Apple and Microsoft pulled out of Europe the end result would be more expensive hardware and software for Americans, because the R&D costs would be spread over fewer end-users and a smaller userbase would not generate the same economies of scale.
That would put the US$ in a worse state than it already is, and cost you even more money to buy stuff from China.
Not to mention Brazil where they charge horrible prices! A MacBook can cost close to twice of what it does in the USA! Now, that is absurd and a sure way to abandon a huge potential market as the country's economy is steadily improving.
Maybe a bit off-topic, but...