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5/26/2010
04:57 PM
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Apple Facing Music Antitrust Inquiry

The Department of Justice is said to be looking into Apple's business tactics in the music industry.

The U.S. Department of Justice has reportedly begun a preliminary inquiry into the way Apple does business with its music industry partners.

The antitrust inquiry is said to stem from Apple's alleged attempt to pressure music companies not to participate in an Amazon.com promotion called "MP3 Daily Deal," which would have allowed Amazon to sell certain songs exclusively for one day, The New York Times said on Tuesday.

A spokesperson for the Department of Justice declined to comment. Apple did not respond to a request for comment.

Inside Apple's iPad: FCC Teardown Photos
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Inside Apple's iPad: FCC Teardown Photos

Amazon's promotional arrangement could have a negative effect on Apple's iTunes Store, the leading seller of music in the U.S

The iTunes Store accounted for 28% of all music purchased in the U.S. during the first quarter of the year, according to market research firm NPD.

However, Amazon, thanks to its combination of CD sales and digital downloads, has seen its music sales grow at a faster rate than Apple's. With 12% of U.S. music sales in the first quarter, Amazon is now tied with Wal-Mart as the second largest music seller in the country.

Apple appears to be keeping government regulators busy. The company's decision to alter its iPhone OS SDK developer agreement to effectively forbid the use of Adobe's Flash technology and other third-party programming tools recently led Adobe to solicit regulatory intervention.

Several weeks ago, the Federal Trade Commission and the Department of Justice were reportedly negotiating to see which agency would investigate the issue. The New York Times says that the FTC ultimately began looking into Adobe's complaint.

An FTC spokesperson declined to comment.

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