Can we trust Google's 'Apple iTunes-killer'?

By Jonny Evans

Apple [AAPL] has beaten many so-called "iTunes-killers" in its time, but this time round it faces a killer who is also the world's biggest search engine. Google Music has entered the fray. Should Apple be concerned?

For the music

Google  yesterday introduced a new service designed to put media inside of the Android ecosystem and to take on Apple's multimedia service, iTunes. It's only available in the US at the moment, pending licensing deals.

You can purchase songs and music at iTunes prices; share your purchase on Google + (think iTunes Ping with a little more user input) and friends can give tracks you recommend a free listen.

You can look forward to free playbacks of some tracks, and choose from a catalog of 13 million tracks eventually, though Warner Music hasn't signed-up for the service, the rest of the majors and a thousand indies already have.

Do these deals match?

There's also an iTunes Match-style music locker service which lets you stash up to 20,000 songs for free.  Announcing this, Google's Jamie Rosenberg took a veiled shot at iTunes, saying: "Other cloud services think you have to pay for music that you already own."

It is remarkable that music labels are permitting Google to deliver full track playback and music locker services. Apple coughed up millions for its locker license, and labels make cash out of that.

Has Google paid the same rate? If not, regulators may want to ask what clout Google -- the world's leading search engine with the biggest smartphone OS market share -- used to get what might then seem to be a preferential deal.

A special welcome

Ben Drury, CEO of 7Digital welcomes Google's move into music, but is barbed in his commentary, telling me in a statement:

"Google's long overdue entry in the market is welcome as the company has a special market role, in helping combat piracy through the power to control search listings, Adwords advertising and dodgy MP3 apps on Android market, and also in showing consumers there is choice beyond iTunes. Google's acquisition of Motorola earlier in the year and the role as market leader in mobile OS's show Google Music will be focused on Android, and by default Motorola. Google is definitely not the neutral, open and agnostic player that it once could claim to be."

That's an interesting point.

Google Music is certainly a potential threat to iTunes.

Google's challenge will be to convert the millions of Android users into happy Internet shoppers. Given that so many of the people choosing Android devices do so because they want a low-cost device, I'm not convinced it will do so well. Google needs to build trust as a music provider, needs to evangelize its services among its users, and more.

Googling your wallet

In any case, it isn't just about music. Google is offering the service to shore up Android by providing a multimedia ecosystem, and also -- presumably -- to gather credit card information for future expansion of its adventures in smartphone-based banking, a la Google Wallet.

(Reassuringly for mobile bankers, a new study from the Juniper Global Threat Center claims malware on Android rose an incredible 472% since July 2011.)

Google Music offers artists an iTunes-matching 70 percent of song sales. The rest of the cash goes to pay for the service. Except for the profits.

This means Google's message to hardware makers could be paraphrased/imagined as one in which the firm says: "We will give you free software. You will install this on mobile devices which you manufacture at your own risk. We will try to make your devices more relevant in the multimedia age with our Google Music store. We will not give you any money from the sales we make via that store."

Apple's iTunes sales help it finance hardware development.

Follow the money

Google will soon own Motorola at a cost of over $12 billion.

-- That's 12 billion reasons not to believe the company won't favor devices made by Motorola in future.

-- Twelve billion reasons every other Android device maker must consider just how much they can trust their OS provider.

It may also be revealing to ponder Google's approach to search. There's numerous companies who claim it unfairly demotes their content in favor of its own. These include Microsoft, ShopCity and Foundem, to name three.

The FTC and European Commission are currently asking if Google has abused its Internet search dominance to push down competitors in search results and promote its own services. There's also investigations in several US states.

How might such practices apply to Google Music?

At present when you search for music you often get presented with an iTunes link from which you can purchase the track. I'm sure regulators will be interested to see if that iTunes link remains as high up the search results as it has been in the past, or if it slips. It will be interesting to see where Google's own music links sit in future results

Don't be evil

After all, with 65 percent search engine market share, should the firm favor its own music-related product?

If it does, is it anti-competitive to favor its own mobile OS service above those of its biggest competitor?

In the end it is about choice. That demands a fair and regulated competitive environment in which dominance in one industry is not exploited in order to take over another.

Many may feel regulation isn't required. They may think it enough to trust Google's now-abandoned "Don't be evil" mission statement. I wonder what Steve Jobs said about that?

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