Antitrust Regulators Are Already Scrutinizing Apple’s Subscription Plan

Apple Jan 2010

From the moment that Apple (NSDQ: AAPL) announced its new subscription plan this week, there has been widespread speculation about whether it would attract scrutiny from the feds. Well, speculate no more. Both the WSJ and Reuters are reporting that regulators from the Department of Justice and the Federal Trade Commission, the two U.S. government agencies that enforce antitrust laws, are asking questions about Apple’s plan to take a 30 percent cut of digital publishers’ subscription money. The WSJ also reports that European regulators are also “carefully monitoring the situation.”

Not too much can be read into the inquiries at this point. Government regulators would appear remiss if they didn’t at least take a look at the details of the new plan.

Separately, some publishers have raised concerns about the new subscription plan to members of European Parliament. They’re concerned not just about the business terms of the plan, but about Apple using its App Store to engage in censorship of titles it doesn’t like.

In order for a real antitrust to be built against Apple, it would have to be shown to dominate some type of market, and defining the market is often the most complex and difficult part of an antitrust case. Is the relevant market tablet computers? In that market, Apple is truly dominant, at least for now, and a reasonable case could be made that publishers don’t have other serious options. But perhaps the relevant market is actually digital media as a whole? Consumers today have loads of options to consume media, and if they’re willing to do it on connected desktop, much of it is essentially free.

The last time the U.S. government waged an all-out antitrust attack on a tech company was the litigation against Microsoft (NSDQ: MSFT) in the 1990s. But smaller actions have forced tech companies to change certain policies. Apple agreed last year to change some rules about how its App Store operates in response to government pressure. And in 2008, antitrust regulators were just hours away from suing Google (NSDQ: GOOG) and Yahoo (NSDQ: YHOO) over their joint advertising deal, when the two web giants agreed to abandon their plan.

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