On
the same day that the EMI deal was announced the European
Commission issued record labels and Apple with a Statement of
Objections, alleging that their business practices are
restrictive.
The Statement does not allege that Apple is in a dominant market
position and is not about Apple's use of its proprietary Digital
Rights Management (DRM) to control usage rights for downloads from
the iTunes on-line store.
The Commission said today: "consumers can only buy music from
the iTunes' on-line store in their country of residence. Consumers
are thus restricted in their choice of where to buy music, and
consequently what music is available, and at what price. The
Commission alleges in the Statement of Objections that these
agreements violate the EC Treaty's rules prohibiting restrictive
business practices (Article 81)."
The iTunes service verifies consumers' country of residence
through their credit card details, according to the Commission. For
example, in order to buy a music download from the iTunes' Belgian
online store a consumer must use a credit card issued by a bank
with an address in Belgium.
Apple also faces continued pressure in Norway as a deadline
remains for it to overhaul the way it sells music there after a
ruling by that country's Ombudsman.
Until now all songs sold by the world's biggest download shop
have contained technology intended to stop the song being copied.
This digital rights management (DRM) software also makes sure that
the song cannot be used by devices that rival Apple's iPod in the
form in which it is sold.
DRM technology is controversial because it restricts a
consumer's use of bought music to a greater degree than records or
CDs do. Apple's particular DRM has caused it trouble in Europe
where its control of consumers' purchases are seen as a restrictive
trade practice.
"Consumers can only buy music from the iTunes online stores in
their country of residence and are therefore restricted in their
choice of where to buy music, and consequently what music is
available and at what price," Jonathan Todd, European Commission
spokesman, told news agency Reuters.
Apple said that it wanted to operate a pan-European shop but
that record labels had stopped it. The Commission has also sent is
objections to record labels.
Apple continues to face objections elsewhere in Europe to
iTunes' tie-in with its iPod music players. Norway's consumer
council objected to the fact that iTunes-bought tracks cannot be
played on any portable device but an iPod and complained to
Norway's Consumer Ombudsman. Similar cases were lodged in Denmark
and Sweden.
The Ombudsman ruled in January that Apple's Fairplay DRM system
did break the law in Norway. It has given the company until
September to comply with Norwegian law.
"It's important to note that this move does not take the heat
off iTunes for the end of September deadline," said Torgeir
Waterhouse, senior adviser at the Norwegian Consumer Council, or
Forbrukerradet, welcoming the EMI deal with Apple. "By the end of
September Apple need to alter the terms of service and DRM used in
the iTunes Music Store to provide a fair deal to the consumers who
legally buy music."
"I really hope that all relevant market players now show the
determination that we've seen today by EMI and Apple and that today
marks the beginning of a new era – an era where the entertainment
industry works with the customer and not against them," Waterhouse
told OUT-LAW. "As of today we might very well be back on track for
a future in a well functioning information society with a focus on
access to content and interoperability."
The European Commission action was the result of a complaint by
Which? about the fact that UK users of iTunes paid more for songs,
79p, than those in other European countries, which paid €0.99
(approximately 67p).
The EMI deal with Apple sees higher quality versions of songs
without DRM on sale for $1.29 rather than $0.99. Previous
purchasers of DRM restricted music can upgrade to the non-DRM files
for 30 cents, though, and albums will be the same price regardless
of the version. The new tracks will be double the file size of the
DRM protected ones, which will result in increased sound
quality.
