Tuesday, May 12, 2015

Can Apple Beat Antitrust Scrutiny

Apple’s bid to debut a new version of the popular Beats Music streaming service has hit a snag. According to some media reports, Apple’s attempt to set up deals with record labels in order to provide music for the service has fallen under antitrust scrutiny with the Federal Trade Commission. At the heart of the matter is an accusation of undue market pressure. Apple is said to be attempting to leverage its position as top music download seller to put rivals such as Spotify at a unique disadvantage.

While scrutiny does not necessarily signify any wrongdoing, the FTC move has market watchers wary. On the surface, though, the deal seems fairly straightforward. Apple purchased Beats in order to field a strong competitor to Spotify and other streaming services, applications that have been slowly bleeding revenue and sales from iTunes in the same way iTunes stalled physical album sales.

Still, though, some market watchers are concerned that Apple’s foray into streaming is little more than an attempt to create an umbrella monopoly of two markets – digital downloads and streaming audio. The company, of course, argues that this is just smart business. And, in fact, that may end up being what the FTC decides.

In the meantime, Spotify and other streaming services have a rare moment to make a surge and get their market position secure. While consumer focus is on the potential issues with the Apple-Beats deal, potential competitors must seize the moment to solidify their customer base and make a potential competitor that much less attractive to music fans.

While the apps may not be able to compete with Apple on price, they have an opportunity to win in the venue of experience. Apple products and services are notoriously single-minded in the realm of user experience. You get one version – Apple’s version – and you are expected to like it.

Given that all Apple platforms are focused on cross-platform connectivity, it’s likely any future Apple-influenced iteration of Beats will be increasingly tied to other Apple properties.

This is at least one potential opportunity for the competition. There are other windows open as well, as long as these brands act quickly.

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