Independent music body Impala has filed a complaint with the European Commission alleging that Google subsidiary YouTube is abusing its dominant position. The video subsidiary has threatened to take videos from small labels off its site completely if they don't sign up for its forthcoming music subscription service.

Impala, which has previously lobbied the European authorities about major label mergers, claims YouTube has breached European competition rules in five separate ways while trying to strike deals with its indie members, and asked for urgent action to block YouTube's proposals.



The complaint is the latest in a growing list of antitrust allegations made against Google and its subsidiaries in Europe, though the search giant has not been found to have formally breached any rules.

YouTube is accused of sending contracts to small labels offering worse terms than those already signed by major labels, and trying to force them to sign by threatening to remove their videos from its existing free service if they decline. That has infuriated the labels, which don't believe the two should be connected – and so say Google's business is abusing its monopoly in video to force a position in that of music subscriptions. If the EC's antitrust division agrees, and decides the move is anticompetitive, Google could face hefty fines.

"The formal process has started in Brussels where the European Commission has consistently shown it will take a stance to ensure its competition rules are properly respected," said Helen Smith, executive chair of Impala, in a statement.

Impala and fellow indie trade body WIN hope Joaquín Almunia, the EC commissioner for competition, will take action against YouTube, which could include a fine of up to 10% of its revenues if it is found guilty of abusing its position.

"Commissioner Almunia has already underlined the importance of the contribution made by independent music companies. This is a crucial moment for the development of the online music market with European services leading the charge," said Smith.

"What kind of legacy will Europe give those companies? How does Europe want its artists and consumers to be treated? We look to Commissioner Almunia to take urgent action. It's red card time."

However it is not clear what percentage of music video consumption YouTube has in Europe - although it is by far the largest online video service. Impala does not offer any detail in its press release about the complaint.

Google said it had no further comment beyond a statement provided earlier this month. At that time, a spokesperson told The Guardian: "Our goal is to continue making YouTube an amazing music experience, both as a global platform for fans and artists to connect, and as a revenue source for the music industry. We are excited that hundreds of major and independent labels are already partnering with us."



Growing dissatisfaction

The official complaint follows growing dissatisfaction expressed by Impala during a press conference organised with WIN earlier in June. For his part, Almunia has indicated that he is willing to listen to the independent labels' grievances against YouTube, in a letter sent to colleagues and subsequently leaked to the New York Times.

In the letter, Almunia hinted at new investigations into YouTube's parent company Google including "a potential complaint about the pressure Google is putting on independent music labels to extract better terms in its negotiations for a new streaming product on YouTube".

Impala's complaint remains confidential, but the body has published a summary of its main accusations against YouTube:

"YouTube is insisting on extracting a package of rights that no other partner could get away with. The terms appear to seriously undervalue existing deals in the marketplace with other business partners. They also appear to include a highly controversial ‘least favoured nation’ clause, as well as provisions regarding delivery of content that restrict the freedom of labels and their artists to decide how to handle releases and marketing such as exclusives. This goes far beyond what would be agreed with any other service. The terms are also suspected to breach competition rules because they are not comparable to the terms that are believed to have been reached with the majors."

The filing comes shortly after a contract sent by YouTube to independent labels was published by music industry site Digital Music News.

That leak sparked discussion in particular about its favoured nation clause, which appeared to suggest that if any major label agreed to lower royalty rates for streams of their music on YouTube's new Spotify-style service, independent labels would then be forced to accept those lower rates too.

YouTube has claimed that labels representing 95% of the recorded music industry have signed up for its new service – including several distributors of music for independent labels.

Impala's complaint will not be taken lightly, though: Google is well aware of the potential for European authorities to rule against it in various parts of its business.

Unforgotten

In May, the European Union's Court of Justice backed the "right to be forgotten" when ruling that Google must delete "inadequate, irrelevant or no longer relevant" data from its search results when requested to by a member of the public. Google has now begun removing search links in response to those requests.

Meanwhile, the company remains locked in sensitive negotiations with Almunia over a long-running antitrust investigation into whether it has abused its dominance of online search and advertising.

Google is also facing a complaint filed by Portugese Android app store Aptoide, which has accused the company of anticompetitive behaviour in "systematically setting up obstacles" preventing Android users from installing app stores other than the official Google Play.

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