A spokesperson for the European Union (EU) has indicated that the primary target of its antitrust investigation of iTunes, announced earlier this week, is not Apple but the four named record companies.
"Our view is that the agreements were imposed on Apple by the record companies," EU spokesperson Jonathan Todd was quoted as saying Tuesday, echoing Apple's own position. "The main focus of our attention is the major record companies." The record companies named in the investigation are EMI, Warner Music, Universal Music, and Sony BMG.
Apple has said the same thing. "Apple has always wanted to operate a single, pan-European iTunes store accessible by anyone from any member state," it said in a statement, "but we were advised by the music labels and publishers that there were certain legal limits to the rights they could grant us."
EU's Problems with iTunes
The EU has had several problems with the way iTunes, the dominant online music sales platform in Europe as well as in the U.S., places country-specific and device-specific limits on its customers.
Consumers, say the regulators, pay different prices and have different selections on iTunes, depending on the country in which they reside. The EU's regulations prohibit restriction of trade between member states, and their comments indicate that this is the crux of the complaint.
The regulators also object to the fact that, until this week, songs purchased through iTunes could only be played on Apple's iPod.
That part of the equation changed on Monday, when Apple and EMI jointly announced at a press conference in London that most of EMI's music library would become available through iTunes without copy projection. These songs, free of digital-rights management (DRM) protection, would be offered at a higher quality and at 30 cents more per song.
No Device Restrictions
Audio files that are available as non-copy-protected AAC files, which is the format used on iTunes, can play on other portable music players besides the iPod, such as Microsoft's Zune and SanDisk's Sansa.
"iTunes customers will have the ability to download tracks from their favorite EMI artists," Apple said in a statement accompanying the announcement, "without any usage restrictions that limit the types of devices or number of computers."
Apple CEO Steve Jobs made clear on Monday that iTunes' move toward DRM-free downloads was expected to expand beyond EMI music. "We think our customers are going to love this," Jobs said in a statement, "and we expect to offer more than half of the songs on iTunes in DRM-free versions by the end of this year."
If iTunes does become mostly or all non-DRM, then the ability to play on other portable music players could become a moot issue for the EU. Some analysts, such as Michael McGuire of Gartner, have said that DRM might have a more promising future as a way to track the sale and usage of music, rather than as a lock to prevent material from being played or copied on various devices.
The companies have two months to respond to the EU's complaints. Penalties could include up to 10 percent of the companies' global annual revenue.