Apple facing questions over 30% app “tax”

Apple may be taking a smaller cut of App Store and iTunes sales, after attracting the stern gaze of the Federal Trade Commission.

The US antitrust agency is examining Apple’s policy of taking a 30% cut of monthly subscriptions fees for rival music streaming apps downloaded in its App Store.

This is forcing rivals as Spotify, Pandora and Rdio, all who pay a similar US$9.99 for a month’s subscription, to push their prices up in the App Store to $12.99 or cut into their profit margin.

The FTC has not started an investigation, as yet. But it has been in discussions with some of the tech giant’s rivals (read: “concerned parties”).

One of these is certain to be Spotify, which has been grumbling about it since May and referring to the 30% as an “Apple tax”. It has even suggested to iPhone subscribers who pay their monthly fees via the App Store to do it through its website instead so it avoids the Apple tax.

Another could be Deezer, whose CEO Tyler Goldman told Reuters that Apple's cut leaves little room for profit. "The margin in music is quite small, and the App Store diminishes the margin," he said. "It will be an issue for the industry going forward. You can either raise your prices and not be competitive with Apple's price, or you can have no margin."

What is causing concern to the FTC are restrictions, which prevent companies from letting their customers know they can buy the product from their own sites, or linking to their sites from inside the app, or that they can be bought from other platforms like Google Play.

The argument is, does this constitute unfair or deceptive practice, or aggressive and irritating but still legal?

Certainly Apple’s policies have raised eyebrows –not to mention clenched fists – in the past. Its hard-assed negotiations with record labels over streaming had the Attorneys-General of two US states looking closely at what was being discussed that would weaken their rivals.

Then there was the sheer publicity train wreck of trying to cut income from artists and labels during the free three month trial of Apple Music.