EC Goes After Apple & Music’s Big Four

Clearly Monday's announcement didn't fully appease...

There’s an old saying about going-from-hero-to-zero and that is how both Apple and EMI are likely to feel today.

Just 48 hours after Steve Jobs sat in alongside EMI CEO Eric Nicol (above) for the record company’s announcement that it will be offering tracks, albums and music videos DRM free, Apple and four unnamed major record labels – clearly EMI, Sony BMG, Universal and Time Warner – have been hit with an EC Antitrust investigation.

The investigation stems from complains back in 2005 when complains flooded in about the iTunes pricing differential between France, Germany and the UK. The deal being Apple started it and the other companies allowed it to be perpetuated. Also – vitally – iTunes consumers are forced to buy music from their country of residence and this is regulated through credit card validation. Such trade restriction is a violation of Article 81 of the EC Treaty and any imposed fines could be up to 10 per cent of global annual turnover – ouch.

Consequently it is unlikely EMI’s decision to start selling DRM free music and music videos and Apple’s very public support of it will be enough to get either of them off the hook. Apple, EMI, Sony BMG, Universal and Time Warner will be given two months to make their cases against the investigation but the EC may not be swayed by anything other than wholesale action.

For the consumer we can only hope this will translate to universal pricing (at least across Europe) and DRM free music offered by all major record labels. Of course things are rarely this simplistic but perhaps Monday’s announcement suggests while the desired wind of change is already a gentle breeze…

”’Update:”’ EC spokesman Jonathan Todd has put a rather different spin on things after making the first official comments on behalf of the investigation. He told Reuters, “Our current view is that this is an arrangement which is imposed on Apple by the major record companies and we do not see a justification for it.”

“Apple are the managers of the iTunes store. It’s true that the focus is the major record companies,” he concluded.

So Apple appears to be the victim in all this which is somewhat surprising but considering the deals that would have had to be struck to get iTunes off the ground initially this may not be entirely unfeasible. Watch this space…

”(Thanks to regular reader and purported superhuman Simon for the update)”

European Commission

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