Apple faces new antitrust investigation over iTunes

Apple’s image as an underdog seems finally to have been shattered as it emerges that the computing giant - as of yesterday, the largest in the world - could face an antitrust investigation into its music publishing. The US Justice Department is investigating claims that Apple is misusing its dominant market position, according to sources quoted in the New York Times on Tuesday.

The newspaper says the new investigation will centre on allegations Apple has been leaning on music labels to refuse online retailer Amazon exclusive access to sell new songs before they go on general release. In March, Billboard magazine reported claims that Apple was punishing publishers who agreed to Amazon’s request by not marketing their tracks on iTunes.

The Times does not name its sources, stressing that they all “spoke on condition of anonymity, citing the extreme delicacy of the matter”. But it quotes one antitrust lawyer, Daniel L Brown, as saying the Justice Department’s involvement “raises the possibility of potential serious problems down the road for Apple”.

Despite the news that Apple yesterday overtook Microsoft to become the world's largest technology company with a market capitalisation of $222bn, the new inquiry comes at the end of a bad few months for Apple. The First Post reported earlier in May that US regulators have begun preparations for a separate antitrust investigation – this time into Apple’s rules for developers who make apps for the iPhone - after a complaint from Adobe, whose Flash software cannot be run on the phones.

What’s more, the company’s hiring practises are being investigated by US authorities, alongside those of Intel, IBM and Google. The firms are alleged to have made an improper agreement to avoid recruiting each other’s employees. And, as we reported yesterday, a tenth employee at the Chinese factory where the iPhone, iPad and iPod are produced jumped to his death from the roof. It was apparently the latest in a cluster of suicides at Foxconn, which has been accused of harsh working practices.

Apple is now by far the dominant force in online music publishing. It has 69 per cent of US online sales, according to the NPD marketing consultancy group. Its nearest rival is far smaller: Amazon has just eight per cent of the market. And Apple’s online dominance translates into 26.7 per cent of US music sales of any type, up from 12 per cent in 2007. The company has now begun selling e-books through iTunes, alongside its existing sales of TV shows, films, apps and of course music.

It seems that the tables have turned since the 1980s when Apple’s image-making TV ad depicted it as the colourful, individualist rebel in a grey world – a reference to George Orwell’s 1984, with a thinly-veiled comparison of Microsoft and the PC orthodoxy to Big Brother and the forces of repression. These days, Apple’s fans might be forgiven for recalling another of Orwell’s novels: “The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.” ·