Regulators uncertain over Apple subscription deals

Apple may be facing antitrust scrutiny over the way it allows publishers to sell content on its portable devices. But while there’s interest among US authorities, European regulators appear more relaxed on the issue.

Both the Federal Trade Commission and Justice Department are said to be taking an initial interest in the subscriptions: neither body has got as far as a formal investigation.

There appear to be two main concerns among officials. The first is whether Apple’s 30% cut of in-app subscriptions is too high and, if so, whether that’s the result of an inherent lack of competition.

The second is whether it is fair for Apple to ban publishers from allowing users to jump straight from an app to the publisher’s own website for purchases, thus avoiding the need to pay royalties to Apple. That’s been a particular bone of contention for retailers such as Amazon, which has a Kindle app for the iPhone and iPad, but will soon be barred from linking it directly to Amazon accounts for purchasing purposes.

That’s raised a couple of specific legal questions: whether it’s permissible for Apple to block an app from linking to another purchase site; and whether it can enforce another new clause which means that the sale price through Apple itself cannot be more expensive than from another source. That effectively eliminates the option of putting up the in-app price so that the publisher still gets the same amount of money once Apple takes its cut.

The main difficulty with any regulation is that officials would have to come up with a market definition under which Apple is dominant enough to be subject to competition laws. Simply looking at smartphones, that isn’t the case. In the tablet market the current figures would support such a stance, but the European Commission has noted the rapidly growing tablet market means Apple’s share will likely drop in the future.

Another problem is that if regulators targeted the 30% figure, they might end up arguing about specific numbers rather than general principles. In most cases competition officials try to avoid such debates as they could be accused of trying to regulate prices rather than principles.