Apple’s New Subscription Term to Face Federal Investigation

By Park Sae-jin Posted : February 20, 2011, 13:28 Updated : February 20, 2011, 13:28
Apple is under fire over its new subscription charges to newspapers and other services through its iPhone and iPad.

Anti-trust regulators are considering whether it is breaking the law by forcing publishers to use its own subscription systems to collect user payments. The word leaked on same night when Steve Jobs dined with President Obama along with other technology titans on Thursday night.

Apple’s new terms say publishers can’t offer links within apps to websites where customers could purchase their products or offer a better deal from outside of the Apps Store. Also Publishers that sell content on an iPad or iPhone app have to give a 30 percent cut to Apple.

The U.S. Justice Department and Federal Trade Commission are looking into concerns from app makers that Apple wants to take a 30 percent cut on revenue from online subscriptions, reported the Wall Street Journal. It could mean any businesses which provide contents and get subscriptions from that badly hurt their revenue.

Apple decide what applications can run on its devices’ music and video player, which only works with content from own iTunes store.

It does not stop media firms from selling digital subscriptions, but restrictions could make that less attractive to consumers and channel sales thought its own system. Apple claims the move is better for customers and publishers alike. But the publishers thing otherwise and have called for a probe.

Buying something through the iTunes store require a few clicks and users saved billing details, which makes it easier for customers to use the system.

Apple is attracting growing anti-trust scrutiny worldwide, but the inquiry is only at a preliminary stage and may not produce a formal investigation with action.

The European Commission said it has also been monitoring Apple’s new pricing program and its impact on music, and newspaper and magazine publishers.

Apple announced last month that more than 10 billion apps have been downloaded from its App Store by 160 million iPhone, iPod touch and iPad users worldwide.

A federal official confirmed to news that the government is looking at Apple’s subscriptions service terms for potential antitrust issues but said there is no formal investigation.

Right after Apple announced its service this week, Google revealed details of its One Pass Program, which will only take 10 percent of a publisher’s revenue and allow contents businesses to retain control over the customer data.



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