Apple Music and App Store under investigation for 'unfair treatment' of Spotify and rivals

An investigation has been launched to determine whether the way Apple deals with rival music streaming services is unfair and anticompetitive.

The US Federal Trade Commission (FTC) is behind the probe, which is targeting Apple's 30% fee to subscription services which sign up new users through the App Store. Music streaming services which require monthly subscriptions, such as Spotify, Rdio, Rhapsody and Tidal, are the focus of the investigation.

According to multiple sources with direct knowledge of the matter speaking to The Verge, the FTC's inquiries have gained momentum in recent weeks, since the launch of Apple Music, the company's online music streaming service. Free for the first three months, it then costs £9.99 per month – the same as Spotify when bought through its own website.

But Spotify users who purchase a monthly subscription through the iOS app have their payment processed through Apple and its App Store, which takes a 30% cut from all transactions – just as it does with app sales. This has forced companies such as Spotify to charge more through its iOS app than through its website – £12.99 compared to £9.99 per month.

Of course, Apple Music does not need to raise its price to cover for the lost revenue.

An industry source told The Verge: "It's absurd that a company like Apple can have its cake and eat everyone else's."

Sources claim the FTC has issued subpoenas to music streaming services as it gathers information to determine whether Apple's App Store rules are anticompetitive. Google also takes a cut of purchases made through its Play application store, but this excludes content which can be used outside of the app – such as music streaming services. Apple has no such policy.

Apple also prevents companies from explaining to iOS app users how they can pay outside of the app. App Store guidelines state: "Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a 'buy' button that does to a website to purchase a digital book, will be rejected." This also explains why ebooks cannot be bought through the iOS Amazon app.

In response to this, Spotify has sent emails to its iOS users explaining how they can switch to the cheaper web-based payment method; doing so will lower the monthly bill by £3, but will not affect their ability to play music on the iOS app.

IBTimes UK has asked Apple for a comment and will update this article when we get a reply.