Apple Music Getting Antitrust Attention From N.Y., Connecticut AGs

Questions about how Apple approached record companies about joining its new streaming music service are now expanding after an earlier federal review.

Apple Music, attorneys general, FCC, investigation, antitrust, streaming music, Pandora, Spotify

State attorneys general in New York and Connecticut are beginning to look into how Apple has been working with recording companies to make deals for its new Apple Music streaming service, just a month after federal officials began asking similar questions.

The attorneys general are looking into whether recording companies "conspired or were pressured into favoring Apple's paid music subscription service," according to a June 9 report by Bloomberg.

The latest inquiries follow a similar move in May when U.S. officials from the Federal Trade Commission began looking at whether Apple was using its market power and influence from its hugely successful iTunes store to try to shut out or harm competitors like Spotify and Pandora, according to an earlier eWEEK report. The earlier FTC antitrust inquiry is reportedly in its early stages and has included discussions about Apple's practices with executives from several record companies.

So far, one recording company, Universal Music Group, has "confirmed it gave information to the state officials," according to the Bloomberg report.

New York's attorney general is conducting "an ongoing investigation of the music streaming business, an industry in which competition has recently led to new and different ways for consumers to listen to music," Matt Mittenthal, a spokesman for New York Attorney General Eric Schneiderman, wrote in an emailed statement received by eWEEK. "To preserve these benefits, it's important to ensure that the market continues to develop free from collusion and other anticompetitive practices."

Connecticut's attorney general, George Jepsen, has also weighed in on the probes. "We have been working with New York to investigate concerns about potential anticompetitive conduct in the music streaming industry," he said in an emailed statement. "At this point, we are satisfied that Universal does not have in place—or in process—anti-competitive agreements to withhold music titles from no-charge streaming services. We will continue to monitor that market to ensure that consumers and competition are protected."

On June 8, Apple announced its upcoming Apple Music streaming music service, which will launch June 30 in 100 countries, including the United States, and will join the iTunes store to give music lovers a new way to find a huge catalog of music in one destination. The service will be compatible with iOS 8.4 on the iPhone, iPad and iPod Touch and as an update to iTunes on Mac computers to start, though Windows and Android versions will be available later in the fall.

Apple Music will be priced at $9.99 per month after a free 90-day trial, or up to six family members can share a membership for $14.99 per month, according to the company.

Government officials have been eyeing whether Apple has been engaged in inappropriate methods or negotiations in setting up music content deals with record companies, according to the probes.

With Apple Music, Apple is diving into a whole new business market in streaming music that already has established vendors including Spotify, Pandora and others.

Apple did not immediately respond to an emailed inquiry from eWEEK about the investigations.

For months, reports said that Apple would be launching a new music streaming service as an update of the Beats Music service it acquired in May 2014 when it bought Beats Electronics, which also included the company's headphone business. That purchase was made with $2.6 billion in cash and $400 million in Apple stock. Beats Electronics, founded by rapper Dr. Dre and pop music producer Jimmy Iovine, makes high-end headphones and also operates Beats Music, the popular streaming radio service. Beats had launched Beats Music, a $9.99-a-month streaming music service for iOS, Android and Windows Phone devices, in January 2014, according to a previous eWEEK report.