Is Apple's subscription policy in violation of antitrust laws?

Apple’s new policy for digital subscriptions has certainly raised some eyebrows in the tech community. It was rumored that Apple may start charging a percentage of subscription fees to publishers who want their content on iDevices, but many people thought that the idea was simply crossing the line of developer expectations. Nevertheless, Apple has gone through with the policy, and publishers now have to fork over 30% of subscription fees to Apple to get access to the App Store. With the speculation out of the way, experts are now asking the next question: Is this legal?

The legality in question is in terms of anti-trust law, according to the Wall Street Journal. Shubha Ghosh, a law professor at University of Wisconsin who specializes in antitrust, is wary of the idea. “My inclination is to be suspect,” he said. The main issues to consider are Apple’s dominance in the market, and whether or not the measures it’s taking are considered anticompetitive.

Deciding dominance is important because it shows that Apple is using its market share position to coerce publishers to pay more for a service and restrict competition. Herbert Hovenkamp, another antitrust professor at the University of Iowa law school, doesn’t think that Apple has the requisite dominance in the digital media space to warrant an antitrust argument. Nevertheless, once apple begins to sell 60% of all digital media subscription, a case can be made.

There are many ways Apple could get out of potentially disastrous antitrust litigation, and the simplest way, according to Ghosh, is to formulate a “business justification” for the practice. If they can convincingly show that the “subscription tax” is necessary to bolster the platform, antitrust doesn’t apply. Another possible argument is that there are other avenues for digital publication. There is nothing stopping publishers from using ad revenue to support a free subscription model and while the financial feasibility of such a venture is unclear, don’t be surprised if you we start seeing ad-based subscriptions popping up in the App Store very soon.

Report a problem with article
Previous Story

Nvidia Kal-El: Quad-core coming to a mobile near you

Next Story

IBM's Watson beats Jeopardy champions in first round

52 Comments - Add comment