FTC looking into Apple Music antitrust claims, while Apple pockets 92% of smartphone industry profits
Apple made its music streaming service, Apple Music, available to the masses at the end of June. While a three-month trial period is available, the subscription for the service is $9.99 in the US, pretty much in line (identical) with what other competing companies (like Spotify or Rhapsody) are charging for their offerings. However, according to a recent Reuters report — that cites three distinct industry sources — the Federal Trade Commission (FTC) is looking closely at Apple’s Apple Music service. While Apple is charging the same amount as main competitors ($9.99) for its own offering, the Cupertino-based company is taking a 30 percent cut (basically on everything); according to the report, some competitors have been complaining that this business model of cutting almost a third ” forces them to either charge more in the App Store than they do on other platforms or erode their profit margins”. This is what the FTC is looking at, reportedly, in terms of antitrust and Apple’s treating its competitors with Apple Music.
On a completely different note, the Wall Street Journal says that, while more than 1,000 companies are making smartphones, Apple claims 92% of the total operating income relative to the top eight smartphone makers (while selling less than 20% of smartphone units). The numbers refer to the first quarter of the year (27 percent from last year), and belong to Canaccord Genuity’s managing director, Mike Walkley. Walkley also claims that Samsung can call 15 percent its own.
Yes, that’s beyond 100 percent combined (summing up Apple and Samsung), but Conaccord explains that this is possible due to the fact that a lot of other smartphone makers lost money (or broke even at best).
To better understand the picture, WSJ paints it, and we’ll quote it word for word: “Apple is asking suppliers to make a record number of new iPhone models. Meanwhile, Samsung forecast disappointing profits, HTC Corp. reported a quarterly loss, and Microsoft Corp. wrote down 80% of the value of the smartphone business it acquired from Nokia Corp. last year”