Apple Music faces antitrust investigations in New York, Connecticut

While Apple Inc was busy unveiling is online music service, Attorneys general of New York and Connnecticut were quietly investigating whether the deals brokered between Apple and music labels had violated antitrust laws.

The online music service industry is being investigated for potential antitrust violations, spokesmen of both attorneys general of New York and Connnecticut told Reuters.

According to New York Times, the attorney general of New York, Eric T Schneiderman and the attorney general of Connnecticut, George Jepsen, were investigating deals brokered between Apple and the music labels. The offices of both the attorneys general wanted to know whether Apple and the music labels were working together - pressured or otherwise -- to withdraw support to free online music services.

Spotify, the leader in music streaming service offers its user free music. Also, Apple with its new music streaming service is direct competition with Spotify. Spotify recently raised $526 million from global investors to counter Apple's music streaming service. The company has 60 million users out of which 15 million pay for its music service. Last year Spotify reported a profit of $1.3 billion out of which 91 percent of the profit came from subscriptions. But it also reported an operating loss of $197 million.

Free music streaming service is called Freemium service and the companies which employ this model of business relies on ads to generate revenue and if the users fee that they what the music service without ads then they have to pay for the premium deal.

Last year, Freemium service was in the spotlight when singer Taylor Swift removed her music from Spotify. Major music labesl too have been critical of the free online music service. They say that freemium can't generate enough revenue as is doesn't seek payment from users, while independent music labels and some artists have been defending it.

Universal Music Group via its legal firm, Hunton & Williams, in a letter to both Attorney general's offices said it had no deals with Apple or with music labels Sony Music and Warner Music Group that would impede the availability of free or ad-supported services.

Attorney general Jepsen in a statement said that his office was satisfied with Universal Music Group's response, Bloomberg reported.

Jepsen said: "We will continue to monitor that market to ensure that consumers and competition are protected."

The European Commission is also looking into deals broker between Apple and music labels.

This will be Schneiderman and Jepsen's second pre-emptive attempt at digging up whether Apple has violated antitrust laws. Back in 2013, they were trying to nail Apple on grounds of violating antitrust laws regarding hike in ebook prices. It is said that Apple in collaboration with book publishers tried to raise ebook prices above the standard price of $9.99.