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Wednesday, September 23, 2009

Apple, Spotify & the Threat of FCC High-Tech Regulation
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Over at TechDirt, Mike Masnick has an interesting post asking "Why Did Apple Approve Spotify?" which builds on an AdAge column asking a similar question: "Did Apple Sacrifice ITunes With Latest Apps?" As the title of that AdAge piece suggests, some folks are wondering if Apple shot itself in the foot by approving Spotify, a music streaming app that some regard as a potential iTunes killer. I don't really have any comment on the business angle here, rather, I wanted to just comment on Mike's suggestion that one possible explanation for Apple's approval of the app is that:

As we noted when the app was approved, Apple appears to be somewhat gunshy, following the FCC inquiry into why it "blocked" Google Voice on the iPhone (and, yes, Apple still insists it didn't actually block the app, but Google says otherwise). Given the scrutiny, Apple probably realized that it was in for some serious political trouble if it blocked an app like Spotify, which would have received a lot of press attention. Oddly, the AdAge article doesn't mention this at all.

Indeed, it is odd that AdAge didn't bother mentioning that fact. But what I find doubly odd here is that nobody is even blinking an eye at the prospect of such political meddling with -- or even possible FCC regulation of -- Apple, iTunes, or music streaming market in general! Seriously, have we gotten to the point now in our Bold New World of Neutrality Regulation that innovative high-tech companies must live in fear of constant regulatory intervention even when they completely lack any statutory authority to play these games? Moreover, does anyone think that the a bunch of Beltway bureaucrats can micro-manage music and high-tech application markets and give us more options than we have today?

I know the prospect of such meddling makes some academics and regulatory activists groups happy, but I can't see how this ends well for consumers or high-tech markets more generally. Regardless, for those of you who laugh when we suggest that the slippery slope of regulation is real, consider this case to be Exhibit A. Or perhaps it's Exhibit B since the Google Voice spat with Apple was already moving the FCC in the direction of becoming a device regulator and applying "handset neutrality" principles that have no basis in law. It's your anything-goes government at work.

posted by Adam Thierer @ 11:29 AM | Net Neutrality , The FCC

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"Seriously, have we gotten to the point now in our Bold New World of Neutrality Regulation that innovative high-tech companies must live in fear of constant regulatory intervention [...]"

Yes. And this is a good thing.

Suppose Apple had denied Spotify. What excuse would they have other than they want to protect their iTunes Store revenue? I can see how such protection is good for Apple, but I don't see how it's good for consumers or the high-tech markets.

Perhaps it was the fear of regulation that is keeping Apple in line. If that's the case, I say keep it up. The more open stores like Apple are, the more innovative applications we will see and the more value we will receive from our handset investment.

Posted by: Peter at September 23, 2009 9:29 PM

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