Justice Department Expands Apple Probe to Hollywood

The Justice Department is extending its probe of Apple’s tactics beyond the music industry to other media outlets including Hollywood, underscoring the increased scrutiny of tech companies under the Obama administration.

People familiar with the matter say federal regulators have been reaching out to several media giants to get their insights on Apple’s practices in selling content online.

The interest in Hollywood comes after several executives at major movie studios have turned their backs to Apple’s standard, instead favoring Flash technology, which gives their content wider online exposure.

“If Apple thinks it’s going to increase its monopoly with the iPad, it should look at the history of other walled gardens,” said one Hollywood source.

The antitrust probe started when Adobe, the developer of the Flash format for online video, filed a complaint with the administration. In April, Apple’s chief executive Steve Jobs published a scathing essay slamming Adobe, calling Flash a battery hog, unreliable and ill-suited for its iPhone and iPad devices.

Adobe’s chief executive Shantanu Narayen struck back by taking out full-page ads in leading newspapers to express his displeasure with Apple’s no-Flash policy, accusing the iPhone maker of exerting tyrannical control over developers.

Escalating tensions between the two Silicon Valley giants, tech companies, including Google, Nokia and browser firm Opera, have rallied behind Adobe’s fight against Apple.

“The Adobe thing is just inviting the wrath of everybody,” said the source. “The Justice Department is doing outreach.”

Federal regulators are also probing Apple’s music business. Earlier last week, the Justice Department contacted record label executives and Internet start-ups to see if the company uses iTunes to practice in anti-competitive behavior.

In particular, the agency is investigating Amazon’s inability to secure exclusive release deals with the labels. Sources say Apple requested the companies not participate with the online retailer, even punishing those that did by withdrawing marketing support for their artists on its iTunes store.

The antitrust inquiries surrounding the Cupertino, Calif.-based company underscore the dominant position it has carved for itself in online content distribution by restricting access to iTunes to consumers using its products or dedicated software.

Last month, Apple posted “staggering” profits by nearly doubling shipments of its iPhones and selling over a million iPads to overtake Microsoft and become the largest tech company in the world.

Jobs, meanwhile, is widely expected to unveil the new iPhone 4 at Apple’s Worldwide Developers Conference on June 7.

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