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Apple head over heels in antitrust inquiry

on May 26, 2010, 3:00pm

There’s probably a lot of cleaning up going on at Apple’s headquarters in Cupertino, Calif., and we don’t think there’s an app for this:

In a development that Google is sure to watch closely, the New York Times reports that the U.S. Justice Department is handling an antitrust inquiry focused primarily on Apple’s tactics of selling music online. Additionally, the Federal Trade Commission is also investigating a complaint issued by Adobe Systems regarding Apple’s rules for developers creating apps for the iPhone operating system.

While the inquiries are still in their very early stages, it looks as though Steve Jobs is going to have a hard time not being officially cast as the evil genius. It’s all just proof that just when you start thinking you’re big man on the block, Big Brother will eventually come down and grab you by your shiny, Snow Leopard balls.

The inquiry regarding the dynamics of Apple’s method of selling music is centered on reports that the company asked labels not to take part in Amazon’s “MP3 Daily Deal,” which gave the online retailer exclusive rights to sell certain songs a day before being widely released.

In response to the “Daily Deal,” Apple allegedly told labels that they would withdraw their (very powerful) marketing support for certain releases featured in the promotion. As a result, releases from Corrine Bailey Rae, Lady Antebellum, and Ke$ha, were scrapped from a list of potential “Daily Deal” promotions.

Losing the power of iTunes does not bode well for labels trying to make money since the online retailer – which has now sold over ten billion downloads – enjoys a 69 percent share of the market. Meanwhile, according to marketing consultancy NPD Group, Amazon comes in second with a very modest 8 percent share of the online music market.

However, the behemoth that is iTunes can still be wounded. Earlier this year, Vampire Weekend sold its latest album – Contra – for just under four bucks on Amazon.com, moved 124,000 copies in its first week and debuted at No. 1 on the Billboard Top 200.

So while it looks like other retailers like Amazon and eMusic will still play second fiddle to iTunes, at least someone (even if it is Big Brother) is pushing back. More details as they become available.

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