Apple's New Digital Subscription Services Rules Raise Possible Antitrust Issues

Apple's new subscription service could draw antitrust scrutiny, according to law professors. Apple will allow magazines, newspapers, Netflix, Amazon, Rhapsody, Hulu and others publishers to sell subscriptions of varying lengths to users of Apple's popular iPad, iTouch and iPhone products. But there are several catches.For starters, subscriptions must be sold through Apple's App Store. For […]

Apple's new subscription service could draw antitrust scrutiny, according to law professors. Apple will allow magazines, newspapers, Netflix, Amazon, Rhapsody, Hulu and others publishers to sell subscriptions of varying lengths to users of Apple's popular iPad, iTouch and iPhone products. But there are several catches.

For starters, subscriptions must be sold through Apple's App Store. For instance, a magazine that wants to publish its content on an iPad cannot include a link in an iPad app that would direct readers to buy subscriptions through the magazine's website. Apple earns a 30% share of any subscription sold through its App Store.

One more potential string attached: If publishers sell digital subscriptions outside the Apple orbit they must allow Apple to offer the subscriptions at the same price or less.

"My inclination is to be suspect" about Apple's new service, said Shubha Ghosh, an antitrust professor at the University of Wisconsin Law School. Two key questions in Mr. Ghosh's mind: Whether Apple owns enough of a dominant position in the market to keep competitors out, and whether it is exerting "anticompetitive pressures on price."

An Apple spokeswoman declined to comment on any possible antitrust implications of the company's announcement Tuesday.

A U.S. Justice Department spokeswoman declined to comment.

[tags]wsj,wall street journal,subscription service,antitrust[/tags]

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