Apple’s Beats deal finally starts to make some sense
This time last year Apple paid $3bn to acquire a company called Beats that made overpriced headphones and ran an unsuccessful music-streaming business. This acquisition made Beats co-founder Dr Dre the first hip-hop billionaire at the same time as it baffled many observers of the industry. For example, Benedict Evans, a seasoned analyst, tweeted: "If you think Apple's lost it, Beats deal is confirmation. If you don't, it's" perplexing. Few really convincing rationales." This columnist was likewise puzzled. Apple normally designs and makes its own kit, and if it wanted to do headphones it would certainly do better than the Beats products. So the conclusion had to be that if Apple didn't want Beats for the headphones, it had to be the music-streaming service that it craved.
And so it has proved. We have just discovered - in a roundabout way - just how much Apple wants to get into the streaming business. It turns out that two US federal agencies - the Department of Justice (DoJ) and the Federal Trade Commission (FTC) - have been examining Apple's business practices in relation to its forthcoming music-streaming service. The Verge, a well-known tech website, reported that Apple has been "pushing major music labels to force streaming services like Spotify to abandon their free tiers, which will dramatically reduce the competition for Apple's upcoming offering". DoJ officials had already interviewed senior music industry executives about Apple's business practices, but it appears that the FTC (which oversees competition) has "taken the lead" in recent weeks.
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