European Commission, miffed by record companies, charges Apple

Stan Beer
Wednesday, 04 April 2007 13:38

Opinion and Analysis

Apple has been forced to take the heat for the business practices of record companies in Europe after regulator the European Commission (EC) charged Apple with anti-competitive practices over the way iTunes operates in different EU countries. The EC has a problem with the way iTunes differentiates between residents of the various EU countries, while recognizing that problem has been imposed upon Apple by the record companies.

The EC complaint concerns the fact that iTunes music available to residents of some EU countries is not available to residents of other EU countries. What's more residents of some EU countries have to pay more for the same iTunes content than the residents of other countries.

According to the EC, the practice of forcing holders of credit cards issued by a bank of an EU country to shop only at the iTunes store of that country violates EU trade treaties.

The EC acknowledges that the iTunes territorial restrictions have been imposed upon the company by Apple's content providers, namely the record companies. However, Apple has agreed to abide by the restrictions and therefore has to bear the brunt of the charges along with record companies operating in the EU.

The iTunes issue, brought to a head by the EC, is one that may well some day expand beyond the boundaries of Europe as the Internet turns the world into a global online trading village.

As iTunes users well know, the content of iTunes stores and the prices of products vary considerably for the online stores in different locations. While US residents get access to the widest possible range of content at the most favorable prices. Residents in countries of the EU and other places generally only have access to a subset of what's available on the US iTunes site, and usually at higher prices than in the US.

There is little doubt that Apple would prefer to have just one iTunes store with its full inventory of downloads available at consistent prices globally without territorial restrictions and boundaries. It would do better business if that were the case. Unfortunately, the way international trade works in the offline world is light years behind what the Internet has made possible and Apple is hamstrung by the outdated distribution policies of its content providers.

Meanwhile, residents of countries other than the US can only browse the US iTunes site with envy while they compare the pale imitation of the site that Apple provides them with locally.