Apple faces content backlash

Apple's latest tussle with antitrust authorities looks set to center on its unpopular content arrangements.

 

According to the Wall Street Journal, several US regulators have started to scrutinize the terms and conditions Apple is imposing on iPad content suppliers, and the European Union is “monitoring the situation.”

 

While investigations are at an early stage and may not progress further, they reportedly center mainly on allegations of 'funneling'.

 

In other words, media firms are encouraged to sell via the App Store, so that Apple can gain it’s 30% cut of the revenue. The partners are not actually barred from selling in other stores, but they cannot offer a better price elsewhere than in Apple's shop, and apps cannot link directly to other content sources.

 

The issue came to light when Apple barred a Sony e-reader application from the iPad and iPhone, because this would have linked to Sony's own eBook Store, depriving Apple of its share of the revenue when a consumer purchased a book to read on an iPad.

 

Apple has not yet engaged in the expected face-off with Amazon over the same issue, but may hold back from that to avoid quickening the antitrust bodies' interest further. Last year, it was forced to relax its restrictions on apps created with Adobe Flash following probes by the EU and the US Federal Trade Commission.

 

Apple sparked publisher fury last week when it introduced its subscription scheme, which could “blow it” with valuable partners Forrester Research chief George Colony blogged.

 

Colony thinks that Apple's success has gone to its head and it is overpricing subscription fees in iTunes Store, which should be about 5%. “Apple is blowing it,” he writes. “This time around Apple's hostile position could result in a 2014 App internet market that looks something like this: 80% Android, 10% Apple, 10% other.”