European Union Investigates iTunes

LONDON (April 2, 2007) — European Union regulators are investigating Apple Inc.’s iTunes online music store for possible violation of competition rules, a British newspaper reported Monday.

The Financial Times said Apple and several major music companies had been sent a “statement of objections” alleging that the deals underpinning the sale of music through iTunes in Europe might violate competition rules.

The newspaper said the European Commission had sent a letter outlining the accusations to Apple and “major record companies” including Sony BMG Music Entertainment, Universal Music Group, Warner Music and EMI Group PLC.

The newspaper said the charges centered on the fact that, in Europe, iTunes prohibits users in one country from downloading music from a Web site intended to serve another.

It quoted a spokesman for EU competition commissioner Neelie Kroes as saying that Apple’s agreements restricted music sales “in the sense that consumers can only buy music from the iTunes store in their country of residence” — a possible violation of the EU’s rules against restrictive business practices.

Apple spokesman Steve Dowling said the company wanted to operate a single store for all of Europe, but music labels and publishers said there were limits to the rights that could they could grant to Apple.

“We don’t believe Apple did anything to violate EU law,” he said. “We will continue to work with the EU to resolve this matter.”

The cost of buying a single song across the 27-nation bloc varies among the available iTunes stores in EU nations.

For example, downloading a single in Britain costs $1.56, in Denmark $1.44, while in countries using the euro such as Germany and Belgium, a single costs $1.32.

Also Monday, Apple and EMI announced a deal that would allow EMI’s music to be sold on iTunes minus anti-piracy software that limits its use on some players. The move is expected to be watched — and likely followed — by other record labels.

The lock between download services and players have also drawn criticism from European industry regulators, who argue that they limits buyer choice.