Apple Changes to IPad Newspaper Access Spark European Opposition

Apple Inc.’s planned changes to the way newspaper and magazine subscriptions are sold for its iPad tablet are encountering resistance from some European publishers.

Belgian publications say they are troubled by Apple’s behavior after Dutch newspaper NRC Handelsblad said it was banned from selling or giving away iPad subscriptions outside of the iTunes store from the start of April. The move triggered antitrust complaints by politicians.

“What we’re worried about is that Apple will hijack our customer relationship,” said Caspar Van Rhijn, innovation director at Belgium’s largest publishing group Corelio Publishing NV. “If Apple would force us to use the Apple iTunes store, we wouldn’t know the data of our subscribers, only Apple would have the data.”

Publishers, including News Corp.’s Rupert Murdoch, are betting the popularity of the iPad will draw subscribers in a bid to confront shrinking print advertising revenue and the reluctance of Internet users to pay for content. Apple’s tablet dominates the market, with sales of more than 14.8 million units worldwide since its introduction in April.

Belgian newspapers have already succeeded in curbing some of the practices of a U.S. technology giant. A court ruling against Google Inc. in 2007 forced the owner of the world’s most-used search engine to remove links, photos and graphics to Belgian newspapers from all its sites. Google’s appeal is pending.

Developer Terms

Apple has “not changed” its “developer terms or guidelines,” Alan Hely, a London-based spokesman said in an e- mail. Apple now requires companies that sold books for an iPad program outside of the platform to also sell them “from within the app with in-app purchase.” He declined to comment on sales of newspaper subscriptions.

NRC Handelsblad’s digital publisher Han-Menno Depeweg said in an e-mail today that Apple told the paper last month that it must route purchases via iTunes starting from April 1.

According to Depeweg, Apple told the paper that offering paid subscriptions to its online version and including the iPad version in the price was no longer an acceptable business model in the App Store environment.

“Apple has to find a balance between its own self- interest” and publishers’ demands to retain some control over customer data and payments, said Greg Sterling, an analyst at the Internet2Go consulting firm in San Francisco. It risks “pushing people into the arms of Google” as it tries to get more revenue from the applications sold for its devices.

Tablets based on Google’s Android operating system are starting to gain ground, capturing 22 percent of global tablet shipments in the three months to Dec. 31.

Leverage

While Apple is trying to leverage the popularity of the iPad, newspapers hold the upper hand in any negotiations, said Joris van Manen, a media lawyer at Hoyng Monegier LLP in Amsterdam. “For Apple it’s very important that newspapers stay with Apple but if it’s going to be too costly for the newspapers they will probably go and find something else.”

Apple is trying to grab “a bigger piece of the pie, to make money out of our product” by taking control of newspaper subscribers’ data, said NRC Handelsblad’s Depeweg in a phone interview Feb. 1. The iPad “is a fantastic product but we bring the content.”

Apple is “giving a very bad signal,” said Philippe Nothomb, head of legal affairs of Rossel et Cie., which owns Le Soir, the most-read French-language daily in Brussels. “Unless Apple is open to constructive negotiations, the editors will have to look at other possible options.”

Apple doesn’t let newspapers have a direct relationship with their iPad readers, said Margaret Boribon, secretary- general for the francophone newspapers in Belgium. “Apple puts itself right in between the Internet users and the editors.”

Market Power

Belgian Economy Minister Vincent Van Quickenborne last month urged national competition regulators to investigate the new terms for a possible “abuse of market power.” The agency should also examine whether Cupertino, California-based Apple’s sales commission of 30 percent of the subscription price is justified.

Ingrid Lieten, a minister for Belgium’s Flanders region also wrote to Apple and European Union regulators on Jan. 31.

The country’s antitrust agency didn’t respond to an e-mail seeking comment.

None of the newspaper companies contacted by Bloomberg News said they had made formal complaints to antitrust authorities.

France’s daily press association on Jan. 20 said it would seek a probe by the country’s competition regulators into the new policy, according to Le Monde. Officials at the association, the Syndicat De La Presse Quotidienne Nationale, didn’t return four calls and three e-mails.

France’s antitrust authority hasn’t yet received the newspaper group’s complaint, a spokeswoman for the regulator who could not be cited by name under agency policy, said by telephone yesterday.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net; Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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