Europe's antitrust watchdog sniffs around Apple's music deals

The European Commission asks Apple and labels to explain their pacts for the relaunch of Beats Music to see if they're trying to crimp free offerings from streaming rivals like Spotify, a report says.

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Joan E. Solsman
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Apple bought Beats Music in a $3 billion deal for the company best known for its premium headphones. Apple

Apple's bid to relaunch its Beats streaming music service is already facing scrutiny.

The European Commission has sent questionnaires to several labels and digital music companies about Apple's plans for Beats Music, according to a report in the Financial Times (subscription required). The questionnaires are a first step and don't automatically presage a formal investigation, said the FT, adding that such information gathering is often sparked by a formal complaint. Apple bought the headphone-making company last year in a $3 billion deal that is widely expected to set up its renewed push into streaming services

Streaming music's rapid growth, driven by ad-supported free tiers rather than paid subscriptions, has come at the expense of digital downloads and other sales of music. In the early days of music's digitization, Apple threw the music industry a life line by popularizing paid digital downloads with its iTunes software, but the computing giant's late entry into the streaming format means smaller startups like Spotify have a significant lead. The commission is exploring whether Apple is trying to unfairly use its market heft to give itself an advantage in that race.

Apple declined to comment.

Apple has come under European Commission's scrutiny before. The Commission has looked into the company's deals with carriers over iPhone sales, its practices around in-app purchases and collusion in pricing for e-books.

The company reportedly plans to relaunch Beats Music as an Apple-designed paid streaming service deeply integrated into its iOS mobile operating system, iTunes media store and Apple TV set-top box. For a competitive edge, the company sought deals with labels to offer its Beats subscriptions cheaper than the $9.99-a-month level that has become the industry standard across services like Spotify, Rdio and Google, according to reports.

Meanwhile, the music industry has been growing dissatisfied with streaming companies' performance turning free listeners into paying subscribers that better recompense artists and labels. Singer Taylor Swift put the spotlight on Spotify last year when she pulled her entire catalog from that service with complaints that the proposition devalues music, and a line-up of music megastars relaunched streaming service Tidal earlier this week in a much-hyped unveiling of the artist-owned alternative offering.