Apple: European Union Uses Thor's Hammer

The European Union has had enough of the iTune’s monopoly, or so they say.

According to the FT: "Apple and several major music companies are facing a European Commission antitrust probe after Brussels issued formal charges alleging that the deals that underpin the sale of music through the hugely popular iTunes platform violate competition rules."

In some ways it is surprising that the EU took so long. It has been chasing Microsoft over its operating system and media player monopoly for years. The Apple (AAPL) i Tunes platform is so dominant in its industry that the Europeans have really been taking their time. Of course, Apple is not based in Europe.

Several major record companies are also being investigated. These are thought to include EMI, Warner Music Group (WMG) and Sony BMG.

iTunes probably is a monopoly, but the question is open whether that is a bad thing for consumers. Music lovers can find all of their favorite hits in one place, pay very little for them, and play them on a single device that comes in several colors.

Apple now faces the double edged sword that companies like AT&T (T), IBM (IBM), and Micosoft (MSFT) have run into in the past. Success breds government regulation. Companies that do too well serving their customers are viewed as much more likely to fix prices and drive out competition.

But it is hard to say that the deal is bad for people in Europe or anywhere else. Can a competitor really sell a song for $.99 and make money? Will record companies make more if Apple has a direct competitor with signifcant market share?

It is hard to say that the status quo is bad for consumers in Europe or anywhere else.

Douglas A. McIntyre