Reports: Feds probe Apple's iTunes practices

Latest talk of antitrust inquiries by DOJ eyes heavy-handed tactics in digital music biz

The U.S. Department of Justice has opened an antitrust investigation into Apple Inc.'s digital music business, according to several reports Tuesday that cited unnamed sources.

The probe is in the early stages, the New York Times said in a story published on its Web site, but DOJ investigators have already spoken with major recording labels and online music firms about Apple's business practices.

Other reports by the Wall Street Journal (subscription required) and CNET said that unidentified industry sources had corroborated the New York Times story.

According to all three reports, the DOJ's questions may not lead to a formal inquiry but they are meant to determine whether further investigation into complaints is warranted.

Those complaints stem from pressure Apple allegedly put on music labels to pull their support of an Amazon.com music promotion that gave the online retailer -- which also sells digital music -- exclusive access to new tracks. Dubbed "MP3 Daily Deal," the promotion surfaced in March as a bone of contention between Apple and the large recording labels, according to a story that month in music industry trade magazine Billboard.

Officials at Apple and the DOJ were not available for comment late last night.

Apple already faces one reported antitrust investigation. Earlier this month, the New York Post said the DOJ and the Federal Trade Commission were looking into charges by Adobe Systems Inc. over Apple's decision in April to ban cross-platform compilers, including the one packaged with Adobe's Flash Professional CS5, from being used to craft software for the iPhone and the iPad.

Both the DOJ and the FTC declined to comment on those reports at the time.

Antitrust experts, however, said that any potential action by either agency was guaranteed to fail because Apple does not have a lock on the mobile market.

The situation in music is different. There, Apple's iTunes is the dominant player and accounts for almost 70% of all digital sales, according to the most recent data from market research company NPD Group.

Apple has had to defend itself against antitrust charges in civil court in the past, most notably in 2008 when Doral, Fla.-based Mac clone maker Psystar Corp. failed to convince a federal judge that Apple had a monopoly in hardware able to run the Mac OS X operating system. The Cupertino, Calif.-based computer maker has also faced antitrust allegations in Europe, where regulators successfully pressured Apple to lower iTunes pricing in the U.K. to match what it charged customers in 16 other European Union countries.

In return, the EU ended its antitrust investigation.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

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