When was the last time you downloaded a single on Itunes? Originally made from a mp3 player only compatible with Macs, Itunes have evolved into being compatible with windows as well, becoming a multinational corporation. In recent news, an article on USAtoday ( click here ) states that the European Union has launch anti-trust policies on the Itunes company which if passes, it would result to fines up to 10% of of the company’s worldwide annual turnover.
The European Commision states that Itunes violated trading policies due to their limits on what digital players can play music downloaded off itunes. Apple spokesmen Steve Dowling denies this and wants to come to terms with other companies to resolve the issue. One of the latest agreements were with EMI.
When evaluating this article you can see how international polices can greatly effect the way businesses are run. By Keynesian theory, by having government regulation and interference with markets (in this case music) equity and efficiency are provided most effectively. The European Union’s competition polices are there to promote trade and communication amoung companies, making sure that no one company overly take advantage of smaller ones. When Itunes migrated into Europe, their ability to download music and play it on the ipod, caused there to be havoc amoung other comanies as profits were drawn towards buy Ipod’s rather than their products. Thus this case came to be. By Adam Smith’s capitalist theory though by having markets be the forces by the concept of the “invisible hand” consumers will benefit the most and the market system would operate most efficiently. Many economists who value out the moral issues of equity (a purely political issue) would agree that by capitalist theory it would create a higher booming economy and standard of living. If Itunes were able to operate by itself, consumers would be given the best possible product as competition would drive companies to pursue these goals to attact more demand. Capitalism of course is inefficient with income distribution and thus, can create many problems. Thus the complexity of international policies must take place, and so it did as the EU tries to protect local music companies.
[...] The Beatles Available Yet? Hey. Read this post! The EU anti-trust policies on Apple « Who Cares About International Relations? When was the last time you downloaded a single on Itunes? Originally made from a mp3 player only [...]
Pingback by Are The Beatles Available Yet? « IRregular Blogging — April 14, 2007 @ 8:25 pm
I do not profess to be an expert when it comes to global markets and such, but I will claim expertise in the area of iPods. Since recieving a 60GB iPod as a birthday present from my brother several years ago, I have been unable to fathom how I lived without it. I can put all of the CDs that I already owned onto it and then buy any other songs I desired for 99 cents! The world is moving toward digital everything, and music happens to be one of the firsts. What the EU has to do with iTunes though is beyond me? What business is it of theirs? I see your point that the EU is trying to protect local music companies, but is that really their place? If local music companies dont want to go out of business, they need to step up their game and offer people cheap, digital music. Competition is what makes the business world successful…iTunes should not be punished for offering people the services they want.
Comment by MHC — April 18, 2007 @ 9:40 pm
I do not profess to be an expert when it comes to global markets and such, but I will claim expertise in the area of iPods. Since receiving a 60GB iPod as a birthday present from my brother several years ago, I have been unable to fathom how I lived without it. I can put all of the CDs that I already owned onto it and then buy any other songs I desired for 99 cents! The world is moving toward digital everything, and music happens to be one of the firsts. What the EU has to do with iTunes though is beyond me? What business is it of theirs? I see your point that the EU is trying to protect local music companies, but is that really their place? If local music companies don’t want to go out of business, they need to step up their game and offer people cheap, digital music. Competition is what makes the business world successful…iTunes should not be punished for offering people the services they want.
Comment by MHC — April 18, 2007 @ 9:40 pm