Apple Music Strategy Under Government Scrutiny

Apple’s forays into the music industry are apparently under examination by the Department of Justice, suggests a May 25 report in the New York Times, with agency staffers reportedly questioning “major music labels and Internet music companies.”

The article quotes unnamed sources as suggesting that any investigation was nascent, and focused primarily on any tactics Apple might have used to gain an advantage over Amazon.com, which also sells digital music online.

Reportedly, the Justice Department seems interested in whether Apple may have secured exclusive rights to publish songs on its iTunes store before Amazon.com and other digital-music retailers, via the leverage that comes with being the country’s largest online music seller.

Apple had not returned eWEEK’s request for comment by press time.

Mobile App Policy

That news follows earlier reports of Apple under scrutiny by either the Justice Department or the Federal Trade Commission over its mobile-applications policy, which forbids the use of third-party development tools in the creation of apps for Apple’s App Store. According to an unnamed source quoted in a 3 May article in the New York Post, the two agencies were close to deciding which of them could pursue an actual case.

A clause in Apple’s developer agreement for the recently unveiled iPhone OS 4, which stipulates that “applications may only use Documents APIs in the manner prescribed by Apple and must not use or call any private API” and that “applications must be originally written in Objective-C, C, C++, or JavaScript as executed by the iPhone OS WebKit engine, and only code written in C, C++, and Objective-C may compile and directly link against the Document APIs.”

In effect, this excludes applications built with tools such as Adobe Flash CS5, and may force developers to choose between building applications exclusively for Apple or for the broader smartphone ecosystem that supports those tools. Forcing developers to make that choice, in the government’s eyes, may be cause for an antitrust investigation.

Apple Bigger Market Cap Than Microsoft

Despite these reported issues, not all of Apple’s news had a negative cast: the company’s market capitalisation passed that of Microsoft on 26 May, making it the most valuable U.S. technology company, with a value of $227.1 billion (£157bn) based on stock price. That managed to barely edge out Microsoft, whose capitalisation stands at $226.3 billion, and place Apple second on the list of highest-valued American companies, behind Exxon Mobile and its $282 billion market capitalisation.

The achievement also mirrors another from August 2008, when Apple’s market capitalisation briefly exceeded that of its other major rival, Google; at the time, Microsoft’s market cap stood at $254.83 billion. And as Microsoft and Google have both learned, with larger size often comes more scrutiny.