TEXT OF INTERVIEW

SCOTT JAGOW: Yesterday, Apple and the record label EMI made this big announcement: They're getting rid of copy protection on a lot of EMI music so you can download songs from iTunes to any music player, not just the iPod. OK, that was yesterday. Today, the E.U. said it's launching an investigation into the way Apple and the music labels sell music online. Our European correspondent Stephen Beard joins us from London. Stephen, what's the E.U. alleging here?

STEPHEN BEARD: Well the European Commission is saying that Apple and some big music companies believed to include EMI have been breaking E.U. competition law by selling music at different prices in different E.U. countries. For example, someone in the U.K. with an iPod cannot download something from the iTunes website in France. He's got to log onto the U.K. site, where as it turns out, the songs are more expensive. The E.U. says that's a restrictive business practice an illegal under E.U. law.

JAGOW: What does Apple say?

BEARD: Well Apple denies that it's broken E.U. law and it says it always wanted actually to operate a pan-European service but music publishers have always advised it that they can only sell songs country-by-country because of the sort of differing legal rights depending on which country the song is being sold.

JAGOW: I gotta say, it's kind of curious that we had this announcement yesterday with EMI and then today we have the European Commission coming out with this charge against Apple. Is there any connection here?

BEARD: Well, the E.U. says no, but the timing, as you say, does look very interesting and does suggest that both EMI and Apple have staged a sort of preemptive strike here, projecting themselves as pro-consumer, pro-free market just as they're about to get hit with a major E.U. competition inquiry.

JAGOW: And what kind of penalty could they face?

BEARD: Oh massive. The penalties that the E.U. can impose are eye-watering. I mean they're worth up to 10 percent of a company's worldwide annual turnover. Microsoft has so far been fined almost $1 billion having been found guilty of abusing its dominant market position. So the financial penalties are very big indeed.

JAGOW: And paying them is another matter.

BEARD: Yes, that's right. Microsoft certainly hasn't paid $1 billion yet.

JAGOW: Alright Stephen, thanks so much.

BEARD: OK Scott.

JAGOW: Our European correspondent, Stephen Beard.