Apple under scrutiny for exclusive music deals: Report

Justine Underhill
·Reporter

Apple (AAPL) could be facing a new antitrust battle. 

The Federal Trade Commission is probing whether Apple used its dominant position in iTunes music sales to secure exclusive rights to songs for its Beats streaming service, according to Bloomberg and The Verge. These exclusive deals have raised concerns that other streaming services, such as Spotify, could be at a disadvantage.

Streaming revenue surged 29% last year while digital download sales slumped, according to a report from the Recording Industry Association of America. In an attempt to capture a part of the music streaming market, Apple acquired Beats Electronics for $3 billion last year. Apple is expected to relaunch Beats music this summer.

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Yahoo Finance Senior Columnist Michael Santoli notes that an antitrust case could setback the relaunch of Beats.

"The key here is whether the music publishers, the actual people who would be providing the content for the streaming service, are going to be able to treat all the other competing services in the same way or will Apple try to lock them up," he says. "So that's the level of scrutiny. Obviously not a tremendous needle mover for Apple's business as a whole, but perhaps for its ambition with regard to Beats."

Santoli adds that an antitrust case isn’t likely to damage Apple’s image.

"I think Apple for the most part is going to be immune to this, but it doesn't mean they don't play hardball," he says.

Currently Spotify is the largest streaming subscription service, with over 15 million paid members and 60 million active users as of January. Despite Spotify’s strong numbers, Santoli notes that the service should be wary of Apple.

"I think if you're Pandora (P) you're worried about everybody," he says. "For Spotify you are worried about Apple because that seems to be the chain of where the power lies."